Beyond the Core - Review



Highlights From
Beyond the Core - Review
by Chris Zook

Efforts to Grow Businesses Typically Fail

Efforts to grow a business typically fail. In looking at the company records of 1,870 public companies, the author found that only 13% of those companies were minimally profitable, and that most of their growth initiatives (e.g., venture capital investments, new market investments, new product investments, productivity improvement, globalization) failed. Beyond the Core - Review

Adjacency Strategies Help

The author's research indicates that the best way to expand your business is through "adjacency strategies." Even this is risky, but the odds are most favorable of the different options. ("Pushing out the boundaries of a core business is one of the most difficult management challenges.")

Author's Research
  • 100 company profiles and executive interview, 25 were with companies with the best growth records
  • Database of 181 major growth initiatives
  • 14 years of financial information for more than 8,000 public companies
  • 3 global surveys of executive perceptions and intentions about growth
  • Full examination of secondary source data
  • Discussions at nearly two hundred business forums and events

Six Core Questions the Book Addresses

  1. What are Adjacencies, and how often do they succeed?
  2. What is the best way to decide which adjacencies to purse?
  3. What are the characteristics and sources of the most lasting adjacency strategies?
  4. When do adjacencies make the most sense, and when are they a last resort?
  5. What are the most important organization enablers and inhibitors to the success of new adjacency initiatives?
  6. How often do these types of strategies not only grow, but also transform, a company's core over time?

Review of successful adjacency growth initiatives

  • American Airlines using system to create a new new commercial service
  • Nike - Expanded into new sport lines
  • Vodafone -Expanded geographically through a successful acquisition
  • Lloyd's Bank - Added new financial products
  • IBM Global Services - Create a new successful service line

Types of Adjacencies

  • Product: Sell new services and products to your current customers
  • Geographic : Growing into new geographic areas
  • Value chain: Developing products or services that are integral to your existing value chain.
  • Channel: Moving into new marketing or distribution channels
  • Customer : Selling your existing products or services to new customers
  • New business: Promoting a distinct capability into a new business

Example focus areas to keep in mind when looking at adjacency possibilities:

  • Level of adjacency to the core business
  • They build profitable new growth
  • They make the core business stronger
  • Opportunity to assume a leadership position within the market

Your Thoughts?

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Beyond the Core - Review