Marketers often worry that performance marketing and its focus on short-term sales is crowding out brand-building activities aimed at enhancing customer perceptions of their brand-and is sometimes working against brand strategy. Brand-building activities are typically measured using metrics that have no predictive or retrospective connection to financial returns. And performance marketing typically lacks measures that account for its impact on brand building, focusing only on sales, leads, and clicks. To achieve performance- accountable brand building and brand-accountable performance marketing, firms must create metrics that measure the effects of both types of investments on a single North Star metric: brand equity. That is then linked to specific financial outcomes-such as revenue, shareholder value, and return on investment-and deployed as a key performance indicator for both brand building and performance marketing. In doing so, companies are better able to make decisions that fortify the financial contributions of both and get them working better together.

Many CEOs don't seem to care about organic growth. They either give up on it, in the belief that their companies will inevitably become low growth, or they cede responsibility for it to the operating units. Those are big mistakes. In an uncertain business environment, all corporate leaders need to be actively engaged in organic growth. Four rules can help them support the operating units in the quest for the best opportunities: 1) Keep an eye on the big picture by setting standards and assembling data that steer the company toward promising areas, nurturing an enterprisewide organic growth capability, and looking across markets and businesses for small opportunities that can be bundled. 2) Fight the short-term pressures of the business cycle by earmarking local cost savings for local investment and demonstrating, through a special corporate fund, that good ideas can always attract resources. 3) Resist typecasting some units as "growth engines" and others as "cash cows." Those labels shape beliefs about growth and affect the operating units' behavior. 4) Create a language for organic growth that helps the company clarify its priorities and develop a coherent, high-performing pipeline of opportunities.

In tough times, many retailers focus on their most loyal customers. That seems sensible enough. But, paradoxically, your most loyal customers are not your best source of revenue growth in a recession. You're already collecting most of the money they're spending. If they suddenly spend 25% less, most of that will come out of what they spend in your stores. It's not likely that you'll pry away customers who are fiercely loyal to other retailers either. Your best opportunity lies with "switchers" - the people who spend money both in your shops and elsewhere. If you collect, say, only 20% of what they're spending today but can increase that to 30%, you'll still realize a net gain even if their total spending drops by 25%. Drawing on a study of more than 50 major U.S.-based retailers and over 20 years of global consulting experience, consultants Favaro, Romberger, and Meer set out five operating rules to help retail executives determine where to direct recession-squeezed resources for the biggest return. These rules basically boil down to: (1) Identify the people who are shopping both in your stores and in others'. (2) Figure out what they're buying elsewhere (or want and can't find at all) and adjust your offer so you can give it to them. (3) Analyze which of your costs contribute to producing the benefits the switchers want, then spend more on those activities and less on the ones that don't matter to them. (4) Organize your efforts efficiently by grouping your stores into clusters based on different populations of switchers. And, finally, (5) focus your customer research, merchandise-planning, performance management, and strategic-planning processes on the switchers. By following those rules, struggling retailers will discover that they have a larger universe of growth opportunities than they might think.

Of all the competing objectives every company faces, three pairs stand out: profitability versus growth, the short term versus the long term, and the whole organization versus the units. In each case, progress on one front usually comes at the expense of progress on the other. The authors researched the performance of more than 1,000 companies worldwide over the past two decades and found that most struggle to succeed across the three tensions. From 1983 to 2003, for example, only 32% of these companies more often than not achieved positive profitability and revenue growth at the same time. The problem, the authors discovered, is not so much that managers don't recognize the tensions--those are all too familiar to anyone who has ever run a business. Rather, it is that managers frequently don't focus on the tension that matters most to their company. Even when they do identify the right tension, they usually make the mistake of prioritizing a "lead" objective within it--for example, profitability over growth. As a result, companies often end up moving first in this direction, then in that, and then back again, never quite resolving the tension. The companies that performed best adopted a very different approach. Instead of setting a lead objective, they looked at how best to strengthen what the two sides of each tension have in common: For profitability and growth, the common bond is customer benefit; for the short term and the long, it is sustainable earnings; and for the whole and its parts, it is particular organizational resources and capabilities. The authors describe how companies can select the right tension, what traps they may fall into when they focus on one side over the other, and how to escape these traps by managing to the bonds between objectives.

Paragon Tool, a thriving machine tool company in an increasingly tough industry, has been pouring money into growth initiatives. These efforts have shrunk the company's margins, but CEO Nikolas Anaptyxi believes they'll provide the foundation for a profitable future. Now Paragon is weighing the acquisition of MonitoRobotics, a company with proprietary technology for monitoring the functioning of robotics equipment. The acquisition, which would nearly double Paragon's revenue, could help transform Paragon from a slow-growth manufacturer into a high-growth technology company, bolster its struggling services business, and ultimately allow it to set the standard for how machines communicate with one another. At least, that's what the CEO thinks. Paragon's CFO, William Littlefield, isn't so sure. He says the move would introduce all the risks that come with acquisitions and put further downward pressure on profits. Paragon's management team is divided, and Anaptyxi must decide how to move forward. This case study explores growth issues that companies in many industries currently face. The specific dilemma here is, How far should Paragon go in sacrificing profits up front with the aim of generating real profits down the line? In R0209A and R0209Z, commenting on this fictional case are Rand Araskog, former CEO of ITT; Ken Favaro, CEO of consulting firm Marakon Associates; W. Brian Arthur, an economist known for his work on the idea of increasing returns; and Jay Gellert, CEO of Health Net, a managed-health-care company.

Paragon Tool, a thriving machine tool company in an increasingly tough industry, has been pouring money into growth initiatives. These efforts have shrunk the company's margins, but CEO Nikolas Anaptyxi believes they'll provide the foundation for a profitable future. Now Paragon is weighing the acquisition of MonitoRobotics, a company with proprietary technology for monitoring the functioning of robotics equipment. The acquisition, which would nearly double Paragon's revenue, could help transform Paragon from a slow-growth manufacturer into a high-growth technology company, bolster its struggling services business, and ultimately allow it to set the standard for how machines communicate with one another. At least, that's what the CEO thinks. Paragon's CFO, William Littlefield, isn't so sure. He says the move would introduce all the risks that come with acquisitions and put further downward pressure on profits. Paragon's management team is divided, and Anaptyxi must decide how to move forward. This case study explores growth issues that companies in many industries currently face. The specific dilemma here is, How far should Paragon go in sacrificing profits up front with the aim of generating real profits down the line? In R0209A and R0209Z, commenting on this fictional case are Rand Araskog, former CEO of ITT; Ken Favaro, CEO of consulting firm Marakon Associates; W. Brian Arthur, an economist known for his work on the idea of increasing returns; and Jay Gellert, CEO of Health Net, a managed-health-care company.