The transformative power of growth is akin to the alchemy of old. Always a mystery, alchemy’s magical blend of science, philosophy, art, and spirituality held secrets that even its practitioners found difficult to penetrate. Still, they were all drawn to its alluring aim: To transform the everyday into the exalted.

The pursuit of corporate growth seems to prompt a similar reaction. Managers
are excited by growth’s promise, by the generous rewards it offers. But unlike
the alchemists, they often hesitate to act, feeling under pressure to take care of
today’s business problems and sometimes uncertain about where to begin. This
was the starting point for The Alchemy of Growth, a special research initiative by
McKinsey & Company, aimed at helping our clients in their search for growth.

Over the course of three years, we attempted to find a pattern that could explain
the success of fast-growing companies. Analyzing over 600 recent growthrelated
engagements in the firm and digging deeply into the workings of 30 fastgrowing
companies willing to participate in the research, we arrived at some
very interesting conclusions. There is no magic formula, of course, but there is a
formula.

The problem? Companies tend to be so preoccupied with managing the crises of
their current businesses that they neglect to keep the pipeline full of businessbuilding initiatives. The result is that when existing growth engines begin to falter, as they invariably do, there are not enough new ones ready to roll out to take their place.

What complicates management’s task when it comes to growth is that the risks
and opportunities change as a business progresses through the development
pipeline. For this reason, we broke down the growth process into three more
manageable phases, or horizons, each of which represents a different period in
the creation and development of a business – i.e., embryonic, emergent, and mature.