Exhibit 9.4  Variation in Growth over Product Life Cycle
100
% of U.S. households
90
80
70
60
50
40
30
20
10
0
1900
1915
1930
1945
1960
1975
1990
2005
Air-conditioning
Electricity
Refrigerator
Clothes washer
Clothes dryer
Dishwasher
VCR
Internet
Cell phone
Computer
Color TV
Microwave
Telephone
Stove
Radio
Auto
Life cycle for selected products
Generic product life cycle
Revenues
Years
Source: W. Cox and R. Alm, “You Are What You Spend,” New York Times, February 10, 2008. 
164

Why Sustaining Growth Is Hard  165
business almost half your current size and close to a Fortune 500 company.7 
If your product markets are growing at only 5 percent, how can you possibly 
achieve that magnitude of growth?
Given this difficulty, the growth targets that some companies embrace are 
simply unrealistic. One with sales already in excess of $5 billion announced 
organic growth targets of more than 20 percent a year for the next 20 years. 
Since annual world economic growth is typically less than 4 percent in real 
terms and many companies are competing for a share of that growth, such 
growth targets are hardly achievable.
Sustaining growth is difficult because most product markets have natural 
life cycles. The market for a product—which means the market for a narrow 
product category sold to a specific customer segment in a specific geography 
—typically follows an S-curve over its life cycle until maturity, as shown on 
the left side of Exhibit 9.4. The right side shows the growth curves for various 
real products, scaled to their relative penetration of U.S. households. First, a 
product has to prove itself with early adopters. Growth then accelerates as 
more people want to buy the product, until it reaches its point of maximum 
penetration. After this point of maturity, and depending on the nature of the 
product, either sales growth falls back to the same rate of growth as the popu-
lation or the economy, or sales may start to shrink. To illustrate, autos and 
packaged snacks have continued to grow in line with economic growth for 
half a century or more, while videocassette recorders (VCRs) lasted less than 
20 years before they started to decline and then disappeared.
While the pattern of growth is usually the same for every product and 
service, the amount and pace of growth will vary for each one. Exhibit 9.5 
7 The cutoff point for the Fortune 500 in terms of revenues was around $5.5 billion in 2018.
Exhibit 9.5  Walmart and eBay: Growth Trajectories
0.01
0
5
10
15
Revenues, index, 2009 = 100, in log scale
Revenue growth, %
20
25
30
35
Walmart
eBay
Walmart
eBay
40
0
5
10
15
20
Years after start of company
Years after start of company
25
30
35
40
0.10
1.00
10.0
100.0
0
10
20
30
40
50
60
70
80
90
100

166  Growth
compares Walmart and eBay. While both have some activities outside their 
core business, they are largely one-product companies. Walmart’s growth did 
not dip below 10 percent until the end of the 1990s, some 35 years after it 
was founded. In contrast, eBay saw its growth fall to below 10 percent after 
only 12 years, having grown very rapidly to reach maturity early. Because 
eBay is an Internet-based auction house, it doesn’t need to add many more 
staff members in order to grow. In contrast, Walmart, as a physical retailer, 
has to add people as quickly as it adds stores and sales. The speed at which 
Walmart can hire and train people limits its rate of growth relative to eBay. But 
Walmart’s core market is much larger than eBay’s. In 2018, Walmart generated 
$500 billion of revenues, mostly from its core discount and supercenter stores, 
whereas eBay generated only about $10 billion of revenues because its core 
addressable market is so much smaller.8
Sustaining high growth presents major challenges to companies. Given 
the natural life cycle of products, the only way to achieve consistently high 
growth is to consistently find new product markets and enter them success-
fully in time to enjoy their more profitable high-growth phase. Exhibit 9.6 il-
lustrates this by showing the cumulative sales for a company that introduces 
one new product in one market (geographic or customer segment) in each 
year. All products are identical in terms of sales volume and growth; their 
growth rates are very high in the beginning and eventually slow to 3 per-
cent once the market is fully penetrated. Although the company continues to 
launch new products that are just as successful as their predecessors, aggre-
gate sales growth slows down rapidly as the company gets bigger. In the long 
term, growth approaches 3 percent, equal to the long-term growth rate of the 
markets for the company’s products. Ultimately, a company’s growth and size 
are constrained by the growth and size of its product markets and the number 
of product markets in which it competes.
8 The comparison is somewhat distorted: eBay spun off its subsidiary PayPal in 2012, reducing its rev-
enues by $6 billion from $14 billion at that time.
Exhibit 9.6  The Challenge of Sustaining High Growth
0
2,000
4,000
6,000
8,000
10,000
12,000
1
3
5
7
9
11 13 15 17 19 21 23 25
0
20
40
60
80
100
120
140
160
0
2
4
6
8 10 12 14 16 18 20 22 24 26
Year
Year
Revenue growth, %
Revenue, $ million