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From The Editor
James M. Borneman, Editor In Chief

Three Flavors Of Growth

By James M. Borneman, Editor In Chief

R ecently, Tom Stewart, editor of the Harvard Business Review, did a commentary on the Nightly Business Report that presented real insight into the nature of growth — or better yet, top-line growth.

In short, Stewart broke growth into three categories: cyclical; structural; and self-created. Cyclical growth, according to Stewart, is derived from broad economic changes like an expanding economy and increases in consumer spending. Structural growth is based on business trends like consolidation, aging baby boomer consumers or the rise of e-commerce. And self-created growth comes from the development of new products, new services or new markets.

Stewart’s analysis grows legs when he provides simple investment advice: “Cash in [on cyclical growth],” but he cautions not to invest heavily because when the down cycle eventually comes, investment lies fallow as a “white elephant.” In terms of structural growth, he says, “you’d better invest there, or you’ll find your business has moved out from under you.” And in terms of self-created growth, “best bet is to look for new business close to your core.”

It may seem funny to be talking about growth in the textile industry, but don’t kid yourself. The minute a business or industry takes the foot off the accelerator — when it stops the active search for relevance in the marketplace — that’s when the doors of growth slam shut.

In each segment of the industry, from apparel to technical textiles, surely business executives can identify the trends, albeit not all positive, in each form of growth outlined by Stewart. Some are so bound in losses due to elements of structural or cyclical change that it is difficult to pursue other forms of growth and really consider investment.

Globally, Textile World editors have witnessed an investment fervor reminiscent of the “bad” old days of US textiles. The recent ITM exhibition in Turkey, reviewed in this issue, was largely the type of show hosted in the United States in previous years, with its fair share of new technology, high exhibitor and attendee participation, and company investment — investment in high-end technology. Recent Italian Association of Textile Machinery Producers (ACIMIT) data shows Turkey’s purchase of Italian textile machinery was up 41 percent in 2003 to 412 million euros, while China’s was down 11 percent to 396 million euros.

While global textile investment appears to have shifted rapidly in recent years, Stewart’s growth analysis is an interesting way to look at investment in difficult times. In the end, Stewart cautions: “Don’t take credit for growth that’s cyclical or structural. If you don’t fool yourself, you’ll be ahead of the game.”

With so many cyclical and structural issues tormenting the textile industry, one wonders whether if you don’t concentrate on self-created growth, there’s a chance you won’t even be in the game. US textiles can play a dominant role in innovative, branded products — harnessing growth with modern business practices is key to that end.

August 2004