Tuck School of Business at Dartmouth
Breakout Strategy: Meeting the Challenge of Double-Digit Growth

Read on for excerpts and details from the book.


"Revolutionary companies invariably are intensely market-facing.  They perceive that customers could and should get a much better deal than any that are presently being offered. They may identify quality or performance problems with existing products, or they may see ways of delivering products of similar quality at much lower prices.  In essence, they believe that incumbent suppliers have become inward-facing and self-serving, comfortably complacent rather than dedicated to improving the lot of the customer.  Upon entering the market, they almost invariably position themselves as "champions of the people," as luminaries striving for a much better deal for customers."
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Additional Resources

Building Breakout Strategy (1.7 MB PDF)


"There is nothing new about industrial restructuring on a grand scale.  In the United States, the late nineteenth and early twentieth centuries witnessed a battle royal for industrial control, led by all-conquering companies such as Standard Oil and Carnegie Steel and by all-powerful individuals such as John D. Rockefeller and Andrew Carnegie.  Indeed, the breakout strategies of Rockefeller and Carnegie remain prescient.  It was Rockefeller who gathered 40 companies into the Standard Oil Trust in 1882 to control 90 percent of refining capacity in the United States.  The master plan was to invest massively in a network of pipelines connecting oil fields with refineries and to concentrate production in a small number of highly efficient refineries.  This bold move was driven by the potential to cut the costs of production dramatically through the realization of economies of scale.  It paid off handsomely.  Standard Oil became highly cash generative and applied its enormous financial resources to integrate backwards into crude oil production and forward into distribution."
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Four main breakout strategies  
  • Taking by Storm: Think Cisco in the early days, creating a new type of technology that blew away existing applications. Or Costco, with that quirky (and original) combination of high-end products in a discount warehouse store. Or Google, the archetypal band of Silicon Valley smart guys that made "Search" the most exciting word on Wall Street. Each of these companies started in a weak, or even nonexistent, position in their markets and took an original, sometimes revolutionary, idea and built a company around it. These are the classic entrepreneurs, misfits, and mavericks, and our research on these "taking by storm" companies identified the key features that we adapted for the world of larger breakout companies as well.

  • Expanding Horizons: These are companies that have rapidly expanded from a narrow or regional geographic base to a broad, national or international footprint. Expanding horizons is all about leveraging your position in one market to many others, taking advantage of a blossoming brand name (Starbucks), deep knowledge (CEMEX), or both (Toyota). The beauty of the "expanding horizons" strategy is that it brings growth, and profitability, to a company that executes on the essential principles of breakout. Rather than getting into a knock-out market share game that inevitably beats up profits, these breakout companies keep changing the playing field to stay one step ahead of competitors.

  • Laggard to Leader: Every industry has this – once proud, even dominant, companies that seem to sit by while new competitors change the rules of the game on them. In many ways this is the toughest type of breakout, because you are not only losing the battle, you can't seem to find a way out of it. Well, as it turns out, there are some great companies that have risen from the depths – we call them laggards to leaders – and when you isolate their strategic turnarounds you find the breakout toolkit in action. Just think about the big-time resurrection of Harley-Davidson in the 1990s and Adidas even today, and you'll know where we're going with this.

  • Shifting Shape: The final type of generic breakout strategy is perhaps the most unusual of all. A company that is still going strong chooses to transform its business so that when the changes come they will be one step ahead, again. Apple's shift from Mac as outlier to iPod as core before the traditional consumer electronic companies knew what was happening; Gallo's move upscale in advance of a horde of low-priced wines from all over the world; Samsung's elevation from second-tier low-cost player to world-class brand. Each of these stories highlights how shape shifters accomplish one of the toughest challenges in business – positioning yourself to take advantage of, rather than getting eaten up by, the changes coming in your marketplace.

    Armed with an understanding of the major types of breakouts, managers have four potential pathways to success. The first step is assessing your own profile and aspirations to see which type of breakout is most feasible given where your company stands today. However, while each of these breakout strategies is different, what they share in common is an adherence to an essential breakout strategy toolkit. Executing on breakout requires five key steps – changing the company's vision from "motherhood and apple pie" to stakeholder driven competitive advantage; becoming a magnet company that defines its value proposition in a much more nuanced and complete manner than in the past; delivering a business model that is closely aligned with vision and value proposition; bringing the people and systems sides of organizational life into sync to help execute the strategy; and infusing leaders with the set of competencies that our research and consulting work have identified as the real drivers of breakout.

    While none of this sounds easy, and it isn't, the truth is that there are numerous companies around the world that have made this work. Best Western did it in hotels, eBay did it in online commerce, Gucci did it in fashion, Tesco did it in supermarkets, and Fidelity did it in financial services. It takes desire, it takes discipline, and it takes know-how. Breakout Strategy can help managers and leaders go to a whole new level of success – to become major hits in their marketplaces – by offering best practice examples, hands-on and proven tools, and an inspirational reality-based message that breakout is absolutely possible. Because it is.