Double-digit returns on equity,similarly stellar returns to shareholders,exponential growth in revenues—thisis not the sort o perormance usuallyassociated with Latin Americancompanies. These days, however, theregion’s best players are on a roll.Take Chile’s Falabella. In the pasttwo decades, the Santiago-basedmultiormat retailer has expandedaggressively beyond its relativelysmall home market, replicating ahighly successul domestic businessmodel in Peru, Colombia and Argentina. And with annual revenue in excesso $10 billion, Falabella has returneda whopping 27 percent to shareholdersover 10 years. Yet such success stories are still rarein Latin America. Despite enviableexpansion—the region has managed tomaintain an average annual growthrate o 5.3 percent since the nancialcrisis o 2008–09, considerably better than the United States, with 2.4 percent,or Europe, with just 1.7 percent—mostdomestic companies have ailed to protconsistently rom the boom.In a recent study o more than 500businesses across multiple industriesand six Latin American countries(see sidebar, page 7), Accenture oundthat only 1 in 20 managed to growrevenues consistently year on year between 2000 and 2010 (see chart,page 3).So what, exactly, makes companiessuch as Falabella dierent?Our research suggests that the region’swinners—those that post high protsand revenue growth year ater year—are not necessarily the biggest intheir industry; nor are they alwaysmarket leaders. You won’t nd themconcentrated in a particular countryor industry, or among the elite rstmovers in a market. What our research shows insteadis that management perormance(rather than more common driverso protability, such as industrystructure or public policy in their home countries) has by ar the mostsignicant impact on revenue growthor Latin America’s most successulcompanies (see chart, page 5). Andthese companies not only have a keendesire to become No. 1, they also inspirethe condence in their organizationsand partners to pull it o.Top players have ar bolder and moreambitious growth objectives thantheir competitors. Revenue growth,or example, is our times moreimportant to them than cost reduction,according to our research. They arealso much more proactive in realizingtheir ambitions, aggressively acquiringcompanies elsewhere in the region thatcan help them grow.Their businesses perorm outstandinglywell—witness, or instance, the averageROIC o 24.4 percent that the top 5percent o companies have generatedover 10 years, signicantly higher thanthe rest. Their operating models, too, arestreamlined and ecient thanks largelyto their willingness to embrace processautomation and new technologies.
These companies grow by taking thesuccessul ormula that has put themin the pole position in their homemarkets and replicating it across newormats, products and geographies.That relatively simple strategy maynot make them outstanding innovatorsby global standards, but it does putthem well ahead o the pack.There are, to be sure, internationallyrecognized innovators in Latin America.Take the Brazilian aircrat maker Embraer, whose strategy o sharingdevelopment risk with overseas partnersrom more mature markets in returnor a share o revenues has become theglobal standard in aeronautics.Even so, our research suggests thatmost Latin American players remain