TSR Value Creation S-Curve: The Maturity Phase — Operate for Efficiency
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February 10, 2026
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In the first two articles of this series, we introduced the Total Shareholder Return (“TSR”) value creation S-Curve framework and explored how companies in the growth phase can accelerate TSR through securing market share and building scalable support platforms. The next phase of the S-Curve — maturity — presents a different set of challenges and opportunities. While topline growth often moderates, disciplined execution and operational excellence become the primary drivers of shareholder value.
For companies in the maturity phase of their lifecycle, the strategic imperative shifts from investing for growth to operating for efficiency. Competition is intense, markets are more saturated, and growth has slowed. As a result, value creation depends less on continued topline expansion and more on improving profitability, cash flow and capital efficiency.
The Maturity Mandate: From Growth to Optimization
Mature businesses often benefit from scale, established vendor relationships and predictable demand. However, these advantages can be offset by structural complexity, cost creep and legacy operating models that are no longer fit for purpose. In this phase, management teams must balance between expansion-focused strategies while keeping a sharp focus on margin discipline and operational rigor.
From a TSR perspective, the primary drivers in maturity are:
- Gross margin expansion, through supplier re-evaluation and complexity reduction
- Sales, General, and Administrative (“SG&A”) efficiency, through optimizing the service delivery model for both cost and effectiveness
- Free cash flow generation, supported by tighter working capital management
Companies that execute well in maturity can deliver attractive TSR even in low-growth environments — often outperforming peers that remain overly focused on topline metrics.
Primary Value Creation Levers for the Maturity Phase
Gross Margin Expansion – Rethinking the Supply Base
Gross margin improvement is frequently the most powerful lever available to mature companies. Years of organic growth, acquisitions and product proliferation can introduce substantial complexity. Addressing this complexity from first principles is often a key step toward sustainable margin expansion. Organizations must move beyond simple procurement “haggling” and adopt a more strategic approach to the supply chain.
Supplier Renegotiation and Consolidation. Use the company’s established scale to drive volume-based terms. By consolidating spend with fewer, high-performance strategic partners, firms can secure deeper discounts and more favorable service-level agreements.
Complexity Reduction. Over years of growth, mature companies often accumulate “portfolio debt” — a sprawling SKU count or a fragmented component list. Reducing this complexity through part standardization and SKU rationalization not only lowers direct costs but also reduces the overhead required to manage the supply chain.
Strategic Sourcing Discipline. Reassess make vs. buy decisions and shift negotiations from unit price to total cost, including logistics, tariffs and inventory carrying costs. Optimize sourcing for total cost, risk and supply chain resilience.
SG&A Service Delivery: Efficiency Through Evolution
While SG&A expenses are necessary to support a growing business, they can become bloated in a mature organization. To protect profitability, management must optimize the service delivery model to ensure that back-office functions are as effective and agile as possible. Organizations should look to achieve economies of scale on SG&A expenses while simultaneously improving the quality and consistency of support functions.
Centers of Excellence (“CoE”). Centralize high-value, specialized functions (such as financial planning, HR strategy, or data analytics) into CoEs. This eliminates redundant efforts across business units, consolidates expertise for best-practice knowledge sharing and ensures a more consistent, higher standard of output.
Offshoring and Near-shoring. Identify transactional, repeatable, rules-based processes — such as accounts payable, payroll or IT support — that can be moved to lower-cost near-shore or offshore locations. These processes can be performed just as effectively from a lower-cost location.
Automation and Outsourcing. Where internal scale doesn’t justify a dedicated team, outsourcing to third-party providers can convert fixed costs into variable costs. Deploying generative artificial intelligence (“GenAI”) to handle high-volume tasks with greater speed and fewer errors than manual labor simultaneously drives incremental cost efficiencies and improves effectiveness in areas where the company lacks the scale to build expertise internally.
Successful SG&A transformation requires clear process ownership, robust governance and change management to ensure efficiency gains are sustained without disrupting the business.
Optimizing the Cash Conversion Cycle (“CCC”)
In the maturity phase, cash is king. The ability to free up “trapped” cash on the balance sheet allows for debt reduction, dividend payments or funding growth engines, including strategic mergers and acquisitions (“M&A”). Improving the CCC is one of the most effective ways to signal operational discipline to the market.
Payables Management. Renegotiate payment terms with the supplier base. Moving from Net 30 to Net 45, 60, or even 90 days (where commercially viable) provides an immediate boost to free cash flow without impacting profit and loss (“P&L”).
Receivables Discipline. Mature companies often suffer from “leakage” in their collections process. By tightening credit terms and improving the order-to-cash workflow, firms can reduce Days Sales Outstanding (“DSO”) and lower the risk of bad debt.
Inventory Velocity. Adapt lean inventory practices to ensure that capital is not tied up in slow-moving stock. Focus on optimizing for customer availability and the reduction of “lost sales,” rather than maintaining “full shelves.” In a mature phase, inventory should be viewed as a liability to be optimized, not a buffer for growth.
When executed effectively, CCC optimization improves liquidity, reduces reliance on external financing and enhances capital returns — all of which are directly accretive to TSR.
The Discipline of Maturity
The transition to the maturity phase is often the most difficult cultural shift for a leadership team. It requires moving away from the excitement of market capture toward the discipline of operational excellence. The most successful companies treat operational excellence as a continuous capability rather than a one-time program.
Management teams that maintain this discipline can extend the productive life of the maturity phase, generate excess cash for shareholders and position the business for optionality — whether that be reinvestment, portfolio reshaping or strategic transactions.
By aggressively pursuing gross margin expansion, modernizing the SG&A Service Delivery Model and optimizing the CCC, companies can continue to deliver top-tier TSR even when the tailwinds of growth have faded. In the S-Curve of value creation, maturity is the phase where the most durable value is often harvested.
Looking Across the Full TSR S-Curve
The TSR value creation S-Curve underscores a simple but powerful insight: different lifecycle stages require different strategies for value creation. What drives success in growth can destroy value in maturity if not recalibrated. By focusing on the right levers at the right time — gross margin expansion, SG&A optimization and cash conversion efficiency — mature companies can continue to deliver compelling shareholder returns even in challenging environments.
In the next article of our TSR Value Creation S-Curve series, we’ll explore the renewal phase — where companies reinvent for value. In this phase, the CFO and executives change focus from pure operational discipline towards strategic redeployment of capital to open new growth avenues.
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Published
February 10, 2026
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