1. Focus on the Core
In the first phase a company focuses on its core business in defining and maximising the return from its primary strengths. Questions to ask in this phase include:
- What do we sell?
- Who is the core customer for what we sell?
- How can we develop the product to better meet the customer opportunity?
- How can we do what we do better?
- How can we do it more cost efficiently?
2. Expand the Core
In this phase a business begins to leverage its core competencies to grow beyond its core. This is the phase of line extensions, new geographic markets and new channels to market. The progression is evolutionary, not revolutionary moving a business into new but “neighbouring” opportunities for growth. Questions in this phase include:
- Where can we “stretch” the brand? EG Can our juice bar product be pre-packaged?
- How would this work overseas / interstate? (and where?).
- What distribution channels are we not leveraging? EG Can our juice bar juice be distributed in supermarkets?
3. Beyond the Core
Sooner or later the core cannot be stretched further, in fact, it may well be shrinking. This could be for a host of reasons – the market is close to saturation (mobile phones), a competitor with a better cost structure or new innovation has entered the market (air travel significantly disrupted the railway market in the US) or maybe a fundamental shift in the market environment has changed the very basis of your business (I suspect many Hedge Fund managers are asking themselves this question today).
It is in this phase that business must reinvent themselves or die. Questions to ask in this phase include:
- What business are we really competing in? EG Railroads or Transport?
- What are our hidden assets? EG Marvel Entertainment have identified their characters (rather than their illustrations) as their true assets and have introduced these to a new generation via film and merchandise licenses.
- What are the related opportunities that we should focus on? eg Apple’s decision to focus on digital music via the emerging MP3 market saved the company.
- What competitors could threaten our core? How do we defend?
Source: Unstoppable, Chris Zook. Harvard Business School Press, 2007.
The world is moving quickly and is so interconnected that change is happening at an exponential rate. The average lifespan of a company is 10 years - in the 1980s it was 14 years. Back then the average tenure of a CEO was around 8 years today it is less than 5.
Marketers are ideally placed to lead their companies through these changes. We know (or should know) about our customers needs, we are constantly on the look out for opportunities and threats in the market and we are generally adept at moving quickly to exploit them.
Marketers, rise up beyond your current campaigns and move beyond the core!
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