Growth Potential and Management's Will to Grow
Points 1 and 2 — is there room to grow, and does management actually intend to keep creating more room?
Fisher's fifteen points begin with the most basic qualifying question: does this company sell products or services with enough market potential for a sizable increase in sales for at least several years? A wonderfully-run company in a market that's already saturated or shrinking has a ceiling no amount of good management can fully overcome.
The second point is closely related but distinct: does management have the determination to keep developing new products or processes that will further increase sales potential once current growth avenues mature? A company can have one great growth product today and still stagnate later if management has no real appetite for what comes after it.
Together, these two points separate a company simply having a good current run from a company genuinely built to keep growing — the first asks about the size of today's opportunity, the second asks whether management will keep creating new ones.
| Point | What it actually asks | Why it's not redundant with the other |
|---|---|---|
| 1. Market potential | Is there enough room to grow sales substantially, for years, in what the company sells today? | A company can pass this today and still fail Point 2 if it has no plan beyond today's product |
| 2. Will to keep growing | Does management actively pursue new products or processes once current ones mature? | A company can pass this culturally even in a period when Point 1's current opportunity looks limited |
A company whose R&D spending and new-product pipeline have quietly shrunk even as its current flagship product still sells well is showing an early, easy-to-miss version of failing Point 2.
The current numbers can look fine for a surprisingly long stretch before the lack of a genuine "what's next" becomes visible in slowing growth — by the time it shows up in the reported figures, the underlying complacency has often been building for years.
For a short holding period, a company's current growth runway might be all that matters. For the multi-year holding periods Fisher's whole philosophy is built around, a company's demonstrated appetite for creating new growth avenues becomes just as important as what it's already selling today.
- Point 1 asks whether there's enough room to grow in what the company already sells; Point 2 asks whether management will keep creating new room once that runs out.
- A company can pass one of these two points without passing the other — they're testing genuinely different things.
- A shrinking new-product pipeline is an early, quiet warning sign that can precede slower growth by years.
- The longer your intended holding period, the more Point 2 matters relative to Point 1.