The 1-in-7 Problem: Why Most Growth Strategies Don't Actually Work
One in seven. That's the number McKinsey found when they looked at which companies actually outperformed the market over the past five years. The other six were trying - they had strategies, growth plans, slide decks full of initiatives. They just didn't work.
The interesting question isn't why companies fail. It's why the success rate is so predictably low. If strategy were the differentiator, you'd expect high variance. Instead you get a consistent ceiling. Something structural is happening.
Melvin Conway figured out part of the answer in 1968. His observation - later called Conway's Law - is that any system will mirror the communication structure of the organization that built it. Engineers noticed it in software architecture. Marketers are starting to notice it in products. Branding Strategy Insider recently framed it bluntly: every product is a mirror of the organization that built it.
This matters because it means you can't have a better strategy than your organizational structure allows. A company with siloed teams won't ship integrated products. A company with weak customer research won't build things customers want. The product exposes the org, relentlessly, whether you want it to or not.
The implication for growth is uncomfortable. If your strategy says "become customer-centric" but your org still makes decisions the old way, the strategy is decorative. The product will reveal the truth before the strategy does.
Strategy vs. Hope
The retirement planning world has its own version of this problem. Kiplinger recently challenged the conventional wisdom around "buy and hold" investing, arguing that what works during the accumulation phase becomes risky during distribution. The strategy doesn't fail because it's wrong in theory - it fails because the context changes and the strategy doesn't. Most people don't update their strategy; they just hope the original one holds.
This is "buy and hope" dressed as "buy and hold." And the business world has its own version: the company that ships version 2.0 using the same process that produced version 1.0 - average - hoping for different results.
McKinsey's research on the outperforming 1-in-7 identified something specific: "granularity." Not broad strategic direction but the ability to make precise bets in precise markets at precise times. Broad strategy is easier to write. Specific strategy forces you to be wrong in ways you can learn from. The granular companies aren't just smarter - they've built the organizational structures that can actually execute specificity. Which brings us back to Conway.
The Noise Floor Is Rising
Meanwhile, the environment that growth strategies operate in keeps getting noisier. Google recently pulled 115 Android apps tied to an ad fraud scheme affecting 25 million devices. The Adweek report noted the obvious implication: AI is making fraud cheaper and faster to scale. For companies relying on paid acquisition as their growth engine, the signal-to-noise ratio is declining. The money you spend on digital advertising buys less actual customer attention than it did before, and the gap is widening.
This creates a selection pressure worth thinking about. Companies whose growth strategies depend on paid attention are running on a treadmill that keeps speeding up. The 1-in-7 that outperform probably aren't winning on ad efficiency. They're winning on something harder to copy.
The fraud problem is also a trust problem. When the channels you use to reach customers are polluted with bad actors, every signal becomes suspect. Your real customers are navigating the same polluted environment - and they've adapted.
What Customers Already Know
Roger Dooley's neuromarketing research points to a finding from Frontiers in Human Neuroscience: the brain has a built-in price anomaly detector. When a price is wrong - either too high or too low for the context - the brain signals it before conscious reasoning kicks in. Customers have a BS detector, and it operates faster than your marketing messages can.
This isn't just about pricing. It extends to brand authenticity, product quality signals, and whether a company's behavior matches its stated values. Customers read these signals quickly and often unconsciously. When the signals are off, no amount of messaging fixes the underlying mismatch.
A company that has genuinely built something useful, priced honestly, doesn't have to fight this instinct. A company running on hope has to fight it constantly.
The Pattern
What connects these pieces is a gap between what organizations think they're doing and what they're actually doing.
McKinsey's 1-in-7 finding shows most companies aren't growing, despite having strategies. Conway's Law explains part of why - the strategy can't outrun the org structure. The retirement planning parallel shows the danger of letting a strategy become a background assumption rather than an active choice. The ad fraud environment shows external conditions degrading the effectiveness of conventional approaches. And the neuromarketing research shows customers already know when something's off - the signal travels faster than the explanation.
The 1-in-7 probably aren't smarter. They're more honest about what their organizations can actually do, more specific about where they're placing bets, and less dependent on channels that are being systematically gamed.
Most strategic plans are sophisticated rationalizations of the status quo. They describe what the org is already capable of doing, dress it in the language of ambition, and call it a plan. The product will reveal the truth eventually. So will the growth numbers.
Sources
- Inspired for business growth: How five companies beat the market - McKinsey Insights
- Every Product Is A Mirror Of The Organization That Built It - Branding Strategy Insider
- Buy and Hold or Buy and Hope? It's Time for a Better Retirement Planning Strategy - Kiplinger
- EXCLUSIVE: Google Pulls 115 Android Apps Tied to Ad Fraud Scheme Affecting 25M Devices - Adweek
- Your Brain's BS Detector for Prices - Roger Dooley's Neuromarketing