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TSR Value Creation S-Curve: The Growth Phase — Invest for Acceleration

This article is part two in our four-part series on TSR value creation, providing a diagnostic lens through which to assess and align enterprise strategy.

Creating and maintaining total shareholder return (“TSR”) is a key function of leadership in any business enterprise. How that is accomplished depends on where the entity is on the TSR value creation S-curve. An organization’s initial phase, the growth phase, marks the transition from potential to scale — during which quality of capital deployment determines whether growth compounds or consumes value. For senior finance and enterprise leaders managing mid-market and large consumer and retail companies, this stage demands a shift in mindset: every dollar must be treated as strategic capital deployed to expand enterprise value. Failing to embed scalability early risks eroding cash reserves, overextending systems and constraining future performance. By the same token, constraining investment risks stunting growth and damaging the “full potential” of the business in a competitive market.

The Financial Mandate — TSR Driven by Price Appreciation

In the growth phase, price appreciation is often the dominant driver of TSR, signaling investor confidence in sustainable, high-quality expansion. Growth that strengthens valuation is not about speed, it’s about credibility.

Financially, this appreciation reflects growth in earnings per share and expanding price-to-earnings multiples, underpinned by investor belief that reinvested capital will earn returns above the cost of capital. Management’s task is to maintain that belief by engineering high-quality growth that converts capital into durable enterprise advantage.

Every reinvestment must be evaluated through the lens of incremental return on invested capital and liquidity impact. Capital must accelerate value creation without inflating fragility. When managed effectively, the growth phase becomes a compounding engine, not a cash drain.

Primary Value Creation Levers for the Growth Phase

Pricing and Promotions — Securing Market Share

Pricing is the most direct mechanism for market capture. In this phase, leaders should use dynamic pricing analytics to balance acquisition velocity with lifetime value. Promotions should expand brand equity, not dilute it. The objective: to capture share profitably while reinforcing margin credibility in future stages.

This is achieved through value-based pricing strategies, ensuring an “all-in view” of efficacy, underpinned by a bedrock of clear data analytics.

Value-based pricing is anchored in monetizing value delivered to all customers. Leaders should relentlessly investigate how the customer measures the benefit they receive and quantify how the company’s offering improves the customer’s economics compared to alternatives. This customer-centric view should drive pricing strategies.

Pricing efficacy must also be judged retrospectively, based on whether a revenue stream contributes positively to cash flow after accounting for all costs: direct costs, indirect costs, reinvestment requirements, taxes and the cost of capital charge. This comprehensive, “all-in view” analysis should be applied by product, region or operational segment to rigorously determine true profitability.

Leveraging data analysis for insights, forecasting and competitive intelligence is the bedrock of modern pricing management. Businesses should focus on practical use cases deploying automation and analytic discipline around pricing and customer experience.

Working Capital Agility and Gross Margin Discipline

Growth requires cash before it produces it. In this phase, liquidity and margin stability become the signal of financial maturity. Chief financial officers (“CFOs”) must deploy predictive working capital models that flex with demand — adjusting days sales outstanding, days payable outstanding and inventory turns dynamically to preserve agility.

At the same time, gross-margin discipline is the proof point for scalability. Investors reward margin stability during expansion as evidence that growth is structured, not subsidized. Continuous product mix optimization and supplier renegotiation ensure margin accretion funds further growth rather than masks inefficiency.

You can find a deeper dive on value creation through working capital in a recent FTI Consulting perspective, Working Capital Catalyst: Three Steps to Unlock Immediate Value, which outlines practical steps for unlocking working capital value.¹

Scalable SG&A Platforms — The Foundation for Compounding Returns

Sales, general and administrative (“SG&A”) expenses in the growth phase constitute strategic infrastructure, not overhead. Management must build platforms (financial, technical and managerial) that expand capacity faster than cost — treating finance, human resources and data functions as modular systems that scale efficiently.

Three enablers define scalable SG&A:

Automation of Repeatable Tasks. Embed robotic process automation and generative artificial intelligence (“GenAI”) to eliminate manual bottlenecks in reporting, reconciliations and fraud detection — accelerating speed-to-decision.
Strategic Research and Development Focus. Direct GenAI investments toward proprietary capabilities that reinforce competitive advantage and are difficult to imitate.
Harness Human Capital. Design growth-ready roles augmented by automation, ensuring teams focus on strategic work, not transactional tasks.

These levers establish the operating leverage and efficiency required for compounding TSR.

The Strategic Imperative of Discipline

The greatest threat in the growth phase is undisciplined expansion — pursuing volume without structure or capital accountability. Growth that fails to exceed the cost of capital inevitably translates into lower valuation multiples.

Adopting an Investor’s Mindset. CFOs must operate with private-equity discipline — translating strategy into measurable workstreams, each with time-bound return on investment. Time becomes a form of capital: every week of delay erodes internal rate of return. Quarterly “capital sprint” reviews should test the net present value and payback of initiatives, reallocating resources like a portfolio investor.

Architecting the System. Scalability is a function of design. High-performing enterprises institutionalize discipline through system architecture: structured memos that force clarity, compact agile teams empowered by data and automated workflows that maintain control without sacrificing speed. These operating models make scale repeatable and resilient.

The strategic CFO transcends fiduciary oversight to become the chief architect of investment — balancing the “what” of revenue growth with the “how” of scalable execution. This means aligning capital allocation, technology and talent to grow valuation, not complexity.

The growth phase is when financial architecture and execution discipline converge to determine whether scale creates strength or strain. For CFOs, the mandate is to sustain momentum while embedding systems, governance and scalability that convert growth into lasting enterprise value. The organizations that master this balance — treating capital as a scarce asset, technology as a multiplier and discipline as a growth enabler — build the foundation for long-term TSR compounding.

In the next article of our TSR Value Creation S-Curve series, we’ll examine the maturity phase; when an organization’s focus shifts from acceleration to optimization. Here, the CFO’s challenge evolves from driving growth to sustaining performance: maximizing cash generation, fortifying balance sheet efficiency and redefining how a mature enterprise continues to create value in increasingly competitive markets.

Footnote:

1: “Working Capital Catalyst: Three Steps to Unlock Immediate Value,” FTI Consulting (Nov. 10, 2025).