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When growth isn’t the right plan

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Market trends can be very tempting — and very distracting. When an established company, used to seeing growth, starts to falter, the first reaction is often to expand. Often, what is more effective is to return to your roots, identify what you’re good at and put all your energy into doing that one thing better than anyone else. Take W. H. Smith, one of the U.K.’s leading book retailers. After a decade of losses, their CEO could very well have made a large acquisition or switched to online selling. Instead, she tightened operational efficiency and pushed higher margin products in existing stores. The result? From 2004 to 2012, WH Smith’s net profits grew by 90 percent while its top-line revenue shrank by 15 percent.