Traditionally, the most reliable way for a firm to find its next wave of growth was to apply the capabilities of its core business in an adjacent market. But recently a new pattern has begun to emerge. More firms are learning the art of building large second cores--what Bain's Zook and Allen call "engine twos." Given that in the past five years, 60% of big public companies have seen their growth stall out or stagnate--often because of technological disruption--finding an engine two has become increasingly imperative. What does it entail? Successful engine twos have four factors in common. They target markets where the profit pool is sizable and growing or shifting, as Amazon's cloud computing business did. They have a differentiated competitive advantage, which is often built up through acquisitions, as happened at Disney+. They adopt entrepreneurial approaches, like Bradesco's digital unit, Next, and leverage the scale and assets of the original core, as the industrial cleaning company Ecolab's new water-purification business did. In combination these four elements magnify one another's effects, often creating businesses that have much greater potential than firms' original cores.

Most successful new companies eventually face a predictable crisis that the authors call "stall-out"--a sudden large drop in revenue and profit growth or a collapse of once high shareholder returns to well below the cost of capital. Stall-out occurs when the growth engine that powered companies to success stops working. This rarely happens because the business model has suddenly become obsolete--a common misconception. Rather, research by Zook and Allen shows that the business has almost always become too complex, most often owing to bureaucracy that slows the company's metabolism, or internal dysfunction that distorts information and hampers managers' ability to make rapid decisions and take swift action on them. But stall-out can be overcome. The authors find that most companies that achieve sustainable growth share attitudes and behaviors: (1) They view themselves as business insurgents, fighting in behalf of underserved customers; (2) They have an obsession with the front line, where the business meets the customer; and (3) They foster a mindset that includes a deep sense of responsibility for how resources are used and for long-term results. Those qualities can help any company restart its growth engine by removing gunk and complexity that have built up over the years, inhibiting the clean execution of strategy.

The sharper a company's differentiation, the greater its competitive advantage. In studying companies that sustained a high level of performance over many years, the authors, both partners at Bain, have found that more than 80% of them had a well-defined and easily understood differentiation at the center of strategy. But differentiation can wear with age: The growth it generates creates complexity, and complex companies tend to forget what they're good at. Often they respond by trying to reimagine their entire business models quickly and dramatically. That's rarely the answer, the authors write. Really successful companies relentlessly build on their fundamental differentiation, going from strength to strength. They learn to deliver it to the front line, creating an organization that lives and breathes its strategic advantages day in and day out. They learn to sustain it through constant adaptation to changes in the market. And they learn to resist the siren song of today's hot market better than their less-focused competitors do. The result is a simple, repeatable business model that a company can apply to new products and markets over and over again to generate sustained growth.

During a recession, when many companies face declining revenues and earnings, executives often conclude that innovation isn't so important after all. According to the authors, that's because it isn't integral to the workings of most organizations, so the creativity that leads to game-changing ideas is missing or stifled. Rigby, Gruver, and Allen, all partners at Bain & Company, point to the fashion industry as a model. Every season, successful fashion companies must reinvent their product lines - and thus their brands - or face certain death. They manage this constant challenge by creating unusual partnerships at the top that consist of an imaginative, right-brain creative director and a commercially minded, left-brain brand CEO. The authors call these alliances "both-brain" teams. Some famous examples exist outside the fashion industry: Steve Jobs and his COO at Apple, Tim Cook; the creative Bill Hewlett and the savvy David Packard; Bill Bowerman, the former track coach who developed Nike running shoes, and his business partner, Phil Knight. But fashion has gone the furthest to incorporate both-brain partnerships in its organizational model. Gucci Group and others have learned to establish and maintain effective partnerships between creative people and numbers-oriented people; to structure the business so that the partners can run it effectively and are clear about which decisions they own; and to foster left-brain-right-brain collaboration at every level in order to continue attracting talent. What makes these partnerships work? The authors have identified seven characteristics of successful partners: They are aware of their own strengths and weaknesses, have complementary cognitive skills, trust each other, possess raw intelligence, bring relevant knowledge to the team, speak to each other frequently and directly, and are highly committed to the business and each other.

Growth in an adjacent market is tougher than it looks; three-quarters of the time, the effort fails. But companies can change those odds dramatically. Results from a five-year study of corporate growth conducted by Bain & Co. reveal that adjacency expansion succeeds only when built around strong core businesses that have the potential to become market leaders. And the best place to look for adjacency opportunities is inside a company's strongest customers. The study also found that the most successful companies were able to outgrow their rivals consistently and profitably by developing a formula for pushing out the boundaries of their core businesses in predictable, repeatable ways. Companies use their repeatability formulas to expand into any number of adjacencies. Some companies make repeated geographic moves, whereas others apply a superior business model to new segments. In other cases, companies develop hybrid approaches. The successful repeaters in the study had two common characteristics: they were extraordinarily disciplined, applying rigorous screens before they made an adjacency move, and in almost all cases, they developed their repeatable formulas by carefully studying their customers and their customers' economics.