Value Creation S-Curve: A Framework for Sustainable TSR
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December 08, 2025
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This article is the first in a four-part series on TSR value creation, providing a diagnostic lens through which to assess and align enterprise strategy. The subsequent articles in the series will dive deeper into each phase of TSR value creation.
The strategic imperative for senior leadership in a business — particularly the Chief Financial Officer (“CFO”), Chief Executive Officer (“CEO”) and private equity operating partners — is the disciplined orchestration of total shareholder return (“TSR”). In today's volatile consumer and retail landscape, businesses have to operate in an increasingly secular, higher cost environment. Long-term success is driven not only by maximizing growth, but also by understanding where the business resides within its natural lifecycle and applying appropriate value creation levers.
The Value Creation S-Curve (the “S-Curve”)
At FTI Consulting, we posit that every business, regardless of industry or scale, progresses through three definitive phases — growth, maturity and renewal — each demanding a fundamentally distinct approach to value creation. The art of long-term value creation lies in knowing when to pivot focus and deploy a new mix of levers. Misalignment between the phase of the business and its strategic priorities inevitably erodes enterprise value.
The CFO is uniquely positioned to be the architect of this evolution, translating macro-strategic shifts into executable financial mandates, managing capital allocation and leading core transformation activities.
Phase 1: Growth — Invest for Growth
Objective: Establishment of Economic Moats and Market Share. Primary Strategy: Aggressive Reinvestment and Optionality.
In the initial, rapid growth phase of a business, the primary drivers of TSR are top-line revenue growth, acquisition of market share, establishing a strategic “moat” and scaling operations. SG&A spending during this time is viewed primarily as a strategic investment to strengthen strategic moats (such as brand equity) and capture scale, rather than as a cost center for immediate minimization.
The key value creation levers deployed during the growth phase include pricing leadership, developing optionality via scalable SG&A platforms and reinvestments to strengthen the overall economic “moat.”
In the growth phase, the gap between an entity’s return on invested capital and its weighted average cost of capital is usually at its highest, but the base of capital is typically small.
During this phase, because speed to market and revenue expansion are primary levers, the leadership mindset is typically one of investment and calculated risk to drive market share gains.
Phase 2: Maturity — Operate for Efficiency
Objective: Efficiency Maximization and Capital Structure Optimization. Primary Strategy: Disciplined Capital Return and Margin Sustainability.
As a business enters its maturity phase, growth inherently slows, often compounded by increased competition or regulatory pressures. The driving force for TSR pivots from top-line expansion toward profitability and operational excellence. Investors in mature companies seek disciplined cost management as a key indicator of sustainable profitability.
The primary value creation levers for this phase are focused on driving an optimal cost structure that is sustainable and include gross margin and promotion optimization, SG&A cost reduction and working capital reinvestment.
The discipline required in this phase often mirrors the high-performance culture observed in firms adopting the principle of relentless continuous improvement, encapsulated by the mantra, "[B]etter, faster, cheaper — every year, forever."
Phase 3: Renewal — Reinvent for Value
Objective: Asset Value Realization. Primary Strategy: De-leveraging and Cost Resetting.
The renewal phase of a business presents the most complex strategic challenge: finding new avenues for growth while managing the decline of legacy core markets. TSR in this phase can be heavily dependent on bold restructuring and the successful strategic redeployment of capital.
Value creation levers in this phase differ based on intent: maximizing returns from declining assets versus investing in future growth platforms. Possible levers include strategic reinvestment, radical cost restructuring, gross margin optimization and maximizing cash flow (in decline scenarios).
A modern strategic tool relevant to the renewal phase is strategic subtraction. This involves deliberately removing components, processes or even services that no longer serve essential functions, thereby improving efficiency, strengthening organizational resilience and enhancing prominence. These bold, subtractive actions can free up crucial resources — cash, budget and human capital — required to fund necessary reinvention.
Why It Matters: Be the Architect of Continuous Value
In an economy characterized by volatility and lower baseline growth expectations, relying solely on linear revenue expansion is an unacceptable risk. Understanding the S-Curve is the foundation for resilient financial leadership:
- Orchestrating Strategic Alignment: Senior management must continuously assess the organization’s phase and enforce alignment. Misapplying a growth-level investment in maturity or failing to restructure in renewal can destroy value.
- Capital Allocation Discipline: Time and execution are scarce capital. The value-creation thesis must translate into precise, time-bound workstreams that are executed and tracked relentlessly. Investments should be prioritized — favoring targeted internal research and development (“R&D”) and generative artificial intelligence technology budgets over broad pilots to build durable advantage.
- Navigating Low-Growth Realities: When growth slows, value shifts to stability and margin expansion. Senior management can employ the asset-light play (high-margin services), gross margin play (quality and pricing power) or dividend play (predictable cash returns enhancing valuation).
- Managing Short-Term Pressures: Quarterly targets often drive value-destructive choices — cutting R&D, marketing or projects to hit earnings. The S-Curve model helps CFOs justify long-term investments, reframing accountability toward measurable outcomes consistent with the firm’s lifecycle phase.
The Value Creation S-Curve offers CFOs, CEOs and investors a practical roadmap for sustaining TSR across the business lifecycle. By recognizing whether an enterprise is in a growth, maturity or renewal phase, leaders can deploy the right mix of value levers — shifting focus from expansion to efficiency to reinvention with precision and discipline.
In the articles ahead, we’ll explore each phase in depth — how to invest for growth, operate for efficiency and reinvent for value — offering leadership teams a practical playbook for sustaining competitive advantage and unlocking the next horizon of TSR.
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Published
December 08, 2025
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