Beyond the Core: Expand Your Market without Abandoning Your Roots

FROM THE PUBLISHER

All companies must grow to survive-but only one in five growth strategies succeeds. In Profit from the Core, strategy expert Chris Zook revealed how to grow profitably by focusing on and achieving full potential in the core business. But what happens when your core business provides insufficient new growth, or even hits the wall?

In Beyond the Core, Zook outlines an expansion strategy based on putting together combinations of adjacency moves into areas away from, but related to, the core business, such as new product lines or new channels of distribution. These sequences of moves carry less risk than diversification, yet they can create enormous competitive advantage, because they stem directly from what the company already knows and does best.

Based on extensive research on the growth patterns of thousands of companies worldwide, including CEO interviews with twenty-five top performers in adjacency growth, Beyond the Core (1) identifies the adjacency pattern that most dramatically increases the odds of success: "relentless repeatability;" (2) offers a systematic approach for choosing among a range of possible adjacency moves; and 3) shows how to time adjacency moves during a variety of typical business situations.

Beyond the Core shows how to find and leverage the best avenues for growth-without damaging the heart of the firm.

About the Author:

Chris Zook is a Director of Bain & Company and leads the company's Global Strategy Practice. He resides in Boston, Massachusetts.

SYNOPSIS

In his book Profit from the Core, the author, a strategy expert, revealed the importance of building corporate growth around one or two dominant cores. Drawing on research on the growth patterns of thousands of companies around the world, he argues that in order to continue to grow, companies must eventually expand beyond the core, and describes ways to decrease risk and improve the odds for success when expanding a business into adjacent areas. Zook leads the global strategy practice of a private company. Annotation ©2004 Book News, Inc., Portland, OR

FROM THE CRITICS

Soundview Executive Book Summaries

Growth is not a choice: It's an imperative. But the risks are substantial. Only a quarter of all growth initiatives succeed, and three-quarters of the top business disasters of the past five years involved growth initiatives gone terribly wrong. Yet in spite of these dismal odds, some companies experience growth rates that are three times as high as the average over extended periods.

In his previous book, Profit from the Core, strategy expert Chris Zook revealed how the most enduring growth performers succeeded by focusing and building around one or two well-defined, dominant cores - and how otherwise well-positioned firms sabotaged their growth by prematurely abandoning their core in pursuit of the next "hot" topic. Now, based on extensive research on the growth patterns of thousands of companies worldwide - including CEO interviews with the top 25 growth performers - Zook argues that in order to continue to grow, companies must eventually expand beyond the core.

A Primal Urge
If businesses have a primal urge, it is the need for profitable growth. That growth is the source of value creation to shareholders. Beyond the Core focuses on the question of how to expand a core business into adjacent areas in a way that is profitable and contributes to the strategic objective of expanding, defending or redefining the core business. Zook identifies the most universal success factors and provides some ideas that management teams might find useful in improving the odds of an inherently risky undertaking.

Pushing out the boundaries of a core business is one of the most difficult management challenges. The typical odds of success are low. Managers have a built-in bias to underestimate and under-prepare for the ultimate complexity of these moves. Stock price swings and volatility are driven strongly by perceptions about adjacency expansion. And a large proportion of CEO departures occur in the presence of adjacency expansions gone wrong. Yet, in spite of these risks and penalties, the movement into adjacencies is the way that businesses ultimately find their next wave of profitable growth, without which they eventually stagnate and may even decline.

The Decision for Today's CEO
In his interviews of CEOs for this book, Zook started by asking what they believed were the key events in the development, shaping and growth trajectory of their company. Invariably, they listed key adjacency moves among the most defining events. Andy Taylor of Enterprise Rent-A-Car pointed to the decision to move from leasing cars into renting cars to dealerships, which triggered the business Enterprise has today. Tom Stemberg, founder and chairman of Staples, the lead office products retailer, talked about the movement from retail stores into distribution to small businesses, which spurred a sequence of adjacency moves that reshaped the company. Bob Norton of FTD florists emphasized how critical it was to make an adjacency move with the introduction of FTD.com, which allowed the company to link directly to customers to supplement its network of links between florists and defend its core against new competitors. These types of difficult, sometimes even agonizing growth moves punctuated the historical timelines in the minds of each CEO.