McKinsey Says 85% of Businesses Can’t Crack Profitable Growth — What the Other 15% Get Right
New research analysing nearly 5,000 global businesses finds that just one in seven delivered both revenue growth and improved profitability between 2019 and 2024. The outperformers — from semiconductors to grocery — share three characteristics that any CEO can act on.
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Just one in seven companies delivered revenue growth and improved profitability between 2019 and 2024, outperforming peers by an average of five percentage points in revenue growth and seven in profitability, according to new research from McKinsey & Company that analysed nearly 5,000 global businesses. The 61 outperformers identified in the study — including Walmart, JPMorgan, ASML, Progressive and Builders FirstSource — share three common characteristics: conviction over foresight, treating AI as a growth accelerator rather than a productivity tool, and moving into growing markets only when they had the capabilities to win. The research also shows that growth trajectories are not fixed — 16 per cent of companies that were in the lowest quartile from 2014 to 2019 moved to the top quartile in the following five years.
Why did 85% of companies fail to grow profitably?
The period from 2019 to 2024 was punishing. It included the Covid-19 pandemic, a global inflation surge, acute labour shortages and the onset of geopolitical instability that has since become a structural feature of the business environment. For most companies, growth came at the cost of margin — or margins were protected at the expense of growth. Achieving both simultaneously proved extraordinarily difficult.
McKinsey’s research across nearly 5,000 businesses found that the coveted combination of accelerating revenue and margin growth was sector agnostic. Outperformers were identified in industries ranging from beauty to grocery to building materials and semiconductors. The common thread was not industry tailwinds but leadership behaviour and capital allocation discipline.
Critically, 72 per cent of CEOs surveyed said they wake up wanting to run a growth company — but only 22 per cent said they had the right team in place or had allocated resources to support growth investments. That disconnect, as Fortune reported, helps explain why the gap between ambition and execution remains so wide. As we explored in our 2026 outlook for defence, energy and the new power economy, the companies pulling ahead are those treating disruption as an investment thesis rather than a risk to be managed.
What do the top 15% do differently?
The research identifies three characteristics common to CEOs who drove outperformance.
Conviction, not foresight, distinguishes growth leaders. CEOs of outperforming companies did not necessarily predict the future better — they acted more decisively. They maintained an unwavering commitment to growth, shaping strategy, capital allocation and organisational priorities around it even during periods of extreme uncertainty. Only 30 per cent of leaders increase resources for growth initiatives during uncertain times, according to McKinsey. The outperformers were disproportionately represented in that minority.
They treat AI as a growth accelerator, not just a productivity tool. The top performers integrated data, digital tools and AI into strategy, operations and decision-making. Rather than deploying AI solely to cut costs, they actively invested in redesigning end-to-end workflows, increasing speed and precision, and unlocking entirely new business opportunities. As we reported in our analysis of how AI is reshaping global supply chains, the companies gaining the most from AI are those embedding it into revenue generation — not just back-office efficiency.
They move into growing markets only when they have the capabilities to win. McKinsey’s research identifies 18 future arenas projected to generate up to $48 trillion in revenues by 2040. But most companies competing in these spaces will still underperform unless they have a distinct strategic advantage — either through in-house capabilities or partnerships that strengthen their competitive edge. The outperformers maintained a strategic portfolio of investments rather than making single large bets, and had the discipline to exit initiatives that were clearly not working.
Which companies got it right?
The report spotlights five standout companies that illustrate different paths to profitable growth.
Walmart built platform-based growth engines on top of traditional retail. Its advertising business, Walmart Connect, now accounts for roughly 30 per cent of the company’s operating profit — a striking example of how an established company can create significant new revenue streams by leveraging existing data and customer relationships.
Builders FirstSource used M&A and digital transformation to diversify through economic cycles, building a more resilient, technology-enabled growth model in the US construction supply market.
ASML, the Dutch semiconductor equipment manufacturer, committed capital years ahead of demand, deepening its core lithography technology to an extent peers could not match while making targeted acquisitions. As we examined in our coverage of Europe’s top corporate gateways, ASML’s dominance from its Veldhoven base demonstrates that European companies can lead globally when investment horizons are long enough.
Progressive invested consistently in data and AI across its entire insurance value chain, embedding analytics into pricing, underwriting and claims while developing new growth engines beyond its core auto insurance business.
JPMorgan paired bold strategic bets with disciplined technology investment, deliberately diversifying its growth engines to future-proof its core banking franchise. The bank has invested more than $15 billion annually in technology — a commitment that has made it one of the most profitable financial institutions in history. As we reported in our analysis of why capital is rotating from Wall Street into European equities, the competitive intensity of US financial institutions like JPMorgan is one of the forces driving European investors to seek opportunities closer to home.
Can companies change their growth trajectory?
One of the most significant findings in the research is that growth trajectories are not fixed. Within the outperformer set, 16 per cent of companies that ranked in the lowest quartile for revenue CAGR from 2014 to 2019 moved to the top quartile between 2019 and 2024. The shift underscores that profitable growth is not predetermined by industry position or company size — it is a function of leadership conviction, capital allocation and the willingness to build multiple growth engines simultaneously.
As McKinsey senior partner Greg Kelly told Fortune, the research reinforces that growing in your home market and core category is necessary but not sufficient. The companies that outperform are those that build multiple engines — and that insight applies as much to European mid-caps as it does to Fortune 500 giants.
Frequently Asked Questions
What percentage of companies achieved profitable growth between 2019 and 2024?
Just one in seven — approximately 15 per cent — of the nearly 5,000 global companies analysed by McKinsey delivered both revenue growth and improved profitability between 2019 and 2024. These outperformers beat their peers by an average of five percentage points in revenue growth and seven percentage points in profitability. The finding was sector agnostic, with outperformers identified across industries from beauty and grocery to semiconductors and building materials.
What are the three characteristics of companies that grew profitably?
McKinsey’s research identifies three common traits among CEOs who drove profitable growth. First, conviction over foresight — they acted decisively and maintained commitment to growth through uncertainty rather than predicting the future better. Second, they treated AI as a growth accelerator, embedding data and AI into strategy and revenue generation rather than using it solely for cost reduction. Third, they moved into growing markets only when they had the capabilities to win, maintaining diversified portfolios of growth bets rather than making single large wagers.
Can underperforming companies change their growth trajectory?
Yes. McKinsey’s research found that 16 per cent of companies in the lowest quartile for revenue growth between 2014 and 2019 moved to the top quartile between 2019 and 2024. This demonstrates that growth trajectories are not fixed and can be materially accelerated through changes in leadership behaviour, capital allocation and strategic focus. The five companies spotlighted in the report — Walmart, JPMorgan, ASML, Progressive and Builders FirstSource — illustrate different but replicable paths to achieving this shift.
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