Excerpt from Fast-Expanding Markets: Where New Growth Can Be Found!, European Business Review, March 10, 2013
“After the financial and economic crisis, we live in a world in which people have no choice but to start (belatedly) exercising financial discipline. Such discipline has taken many forms, ranging from austerity in the countries in which overspending was a habit to parsimony in those that were always prudent. In today’s world, individuals find themselves questioning their ability to hang on to their jobs on a daily basis. Consumer confidence has plummeted, severely affected by diminished prosperity and uncertain job prospects. This, combined with deep cuts in public spending, has left individuals financially conservative and spending savvy (if they spend at all). In addition, many companies and businesses have shifted their focus away from profitability and towards ensuring their economic survival.

“From this vantage point, we argue that it is far more paramount for firms to concentrate on top-line growth than on lowering costs. While cost cutting can lead to an immediate increase in profit, an expansion of the sources of revenue will lead to far more sustainable advantages. While new ways of lifting sales in tough times have been widely discussed in the past, we suggest a new possibility: the identification of business opportunities in new markets, which we call “Fast-Expanding Markets” (FEM).

“Put simply, “Fast-Expanding Markets” refers to any rapidly growing opportunity in which the market is the focal point. Such a market may exist at the supranational, national, regional, industrial, cluster, sector, corporate or product level. FEM are everywhere. At times, they grow intuitively, while at other times they grow counter-intuitively, so that the application of traditional market and economic theories is often inappropriate. Which place in forecast and predictability a quintessential part of how value is generated. FEM are distinct from some of the previous concepts related to new markets and new market spaces due to the fact that FEM represent potentially extremely lucrative markets that many people are unaware of or have overlooked.
This is not meant to be an alternative to traditional growth models. Growth is a behavioural response to needs that become new demands, sparked by social trends, business opportunities and entrepreneurs. There is no novelty in this. And there is also no real distancing from free markets theory, the free movement of people and goods, and open government policies. This is still capitalism and liberal market society.

No matter how deconstructionist of the current growth model we are, we defend the capitalist system, which continues to be the only economic model seemingly working, as also outlined in the seminal concept of shared value, suggested back in 2011 by Porter and Kramer. There is now ample evidence that those countries that liberalise their markets increase opportunities for their citizens to have a life worth living and to fulfil their potential. While many aspects of capitalism are still flawed and self-directed to a very small number of privileged people, the ideals are still foundational to what modern societies should aspire, especially if we consider capitalism in its most conscious form.

However, we have become sceptic of the application of this growth model to the current needs of society. Most of what used to work in the past has simply stopped working today because of the inevitable aging of frameworks and ideas. The assumption that past performance can equate future output is a contradiction in itself. This should not be a surprise. Frameworks are created in the mindset of the time, with expectations and issues that are moulded by the context in which events take place.

If growth has historically been a concept exclusively measurable in the form of aggregate supply and demand, it is because it was the only way we could possibly make sense of a disorganized and complex reality. It is not hard to see that GDP — and its macro lens of analysis — is an instrument that was created in the aftermath of the 1929 Great Depression. In those years, governments were still the largest shareholders and countries were fighting to gain federal attributes, emerging from divisive fragmentation of territories. Our political and economic geography was hardly comparable to the one of today and the old western model of colonial dominance was still a state of play in those days in a number of countries. The world was more monotonous than the limitless shades of colours it presents today.

Today the world is very different and while we recognize it, we don’t want to fall in the obvious. What we want to acknowledge is that growth has now largely moved from governments to the private sector for decades now; globally. Even in countries like China, this is becoming truer now than what one could expect. We know by now that corporations are the largest drivers for growth and governments have morphed into minor but cumbersome actors, with limited capacity to create progress and an inadvertent capacity to garner debt.

Corporations are unmatched in their contribution to wealth. There is no public spending or NGO that can come close to rivalling what companies do. Governments can facilitate, ban, promote, but they can’t create wealth — at least not in any fundamental sense. On the other hand, micro players such as firms, consumers and businesses can do so, because growth occurs as the exchange currency of taking risks and succeeding by scaling up. This is why we celebrate markets that grow at the grassroots level, since it is where growth is ultimately meant to originate.

In light of this, our concept of growth and its detection need to be updated. We think that growth is everywhere and it permeates the wrinkles of society, in ways unknown to the economists of the past century. Growth is by definition organic and it grows from the bottom. It is wired and predisposed to aspire to new heights, but growth does not necessarily always ‘verticalise’. It can also expand in ways in which it never reaches a critical mass or a hierarchy and it can be hardly synthesized by binary models or mathematically ordered assumptions. Measuring growth needs to follow growth in the first place and its evolution. It is like following a kite in the sky. Regardless of expected trajectory, it will be winds that will determine its movements.

Dancing with growth is the story behind fast expanding markets and why this idea is now becoming visible to many. It is about reorganizing our thinking and action to support the trends that emerge from the real economy in shapes and sizes that characterize how societies move on. Fast expanding markets are a non-scientific elevation to a sense of progress which is not cognitive per se’, but simply put, human-centric. We think it is time to put people at the centre of the process and not just linear abstractions and this is how we want to speak of growth and other things…



  • “The authors’ research on Fast Expanding Market is sponsored by the KPMG/ESCP Chair for Governance, Strategy, Risks & Performance”
  • This post gives the views of its authors, not the position of LSE Business Review or the London School of Economics.
  • Featured image credit: Jakob Montrasio CC-BY-2.0

Mark Esposito is a professor of business and economics at Harvard University Extension School, and at Grenoble Graduate School of Management in France, and a senior associate at the University of Cambridge-CISL in the UK. Follow him on Twitter@Exp_Mark.


TerenceTse001.1Terence Tse is an associate professor of finance at ESCP Europe and the head of competitiveness studies at i7 Institute for Innovation and Competitiveness. Follow him on Twitter @terencecmtse.


khaled soufaniKhaled Soufani is a senior teaching faculty member in Finance at the University of Cambridge Judge Business School. He holds a Master’s degree in Applied Economics and a PhD in Financial Economics. Dr Soufani has published extensively in the area of financial management, corporate restructuring, M&A, private equity, venture capital and family business, and also the financial and economic affairs of small-medium sized enterprises. Before joining academia, he worked in investment banking in the area of bond and money market trading.