A renowned business expert breaks down what 400 of the fastest growing companies in America have in common.

In a recent BusinessWeek interview, business expert David G. Thompson cited these seven traits as common practices among the top 5% of today’s high-growth companies:

1. The ability to deliver unique and exceptional value to customers: Top companies know how to differentiate themselves from the competition in such a way that customers associate the brand with superior value and service.
2. The foresight to target a high-growth market: Netflix revolutionized the video rental industry by identifying a need other major rental companies weren’t capitalizing on. The company expanded its reach by allowing members to stream movies online, and eventually, stream them directly to their TV. PriceLine has pinpointed a similar need in the travel industry, and its profits continue to soar as a result.
3. Having customers not only buy, but also sell for them: More than 70% of Amazon’s rising profits last year came from product suggestions — recommendations made based on either past buying history or customers suggesting products for one another based on common interest. The best companies are set up in such a way that customers become advocates, sometimes even earning incentives for recommending the business to
   friends and colleagues.
4. Leveraging alliances to break into new markets: Fast-growing companies forge strategic partnerships with other companies that can help them target new demographics, regions, or industries. Smart partnerships also allow companies to offer more products and services to their customers. Consider, for example, the partnership between Apple and AT&T to market the iPhone. It created a win-win for both companies, where exclusive demand drove subscription rates and profits sky high.
5. A business plan based on reinvesting profits and paying off debt: The most successful companies pay off their long-term debt as quickly as possible. This keeps their credit in line, while allowing them to reinvest profits and perhaps even borrow more, if there’s a plan for rapid expansion. The company may grow incrementally at first, but if there’s a solid business plan in place, there’s a potential for profits to boom and remain consistent.
6. Inside/Outside management teams: These companies split management focus and responsibilities based on internal operations and external factors. Specific managers focus on customer needs, industry trends, market changes, and business growth, while others keep their eye on improving internal operations, production, and morale.
7. Create a diverse group of top-level managers with different backgrounds and perspectives: Successful corporations fill their boards with business leaders, customers, industry experts, and others who have a vested interest in the company, but different perspectives on how (and why) to achieve success.

What do you think? Is Thomson’s assessment on the mark? Are there any keys that he missed?

Feel free to share your thoughts in the comments section below.

Source: “The 7 Essentials of High-Growth Companies,” by David Thomson, BusinessWeek.com