Managing the Risk of Growth

The importance of growing from the core—expansion into adjacent markets.

—The Story of Captain Jepp and Jeppesen's Expansion into the Marine Environment1

We begin this chapter by discussing a key issue for managing the risk of growth—growing from the core:

Core defined: The set of products, capabilities, customers, channels, and geographies that defines the essence of the company and fulfills its vision statement and mission.

In short, the core is what a company does today—the essence of its business. Growth and expansion away from this core can take place across multiple potential avenues or steps by doing such things as:

  • Expanding into new products and/or services to existing customers
  • Entering new geographies with existing offerings
  • Addressing new customer segments
  • Expanding along the industry supply chain
  • Using new distribution channels

As you move ever further away from your current core business, you are less and less likely to succeed. To illustrate, a study conducted a few years ago demonstrates how difficult it is to expand in multiple directions away from the core (see Figure 3.1).2 The researchers counted the absence of five items to define how far a move is away from the core—shared customers, shared costs, shared channels, ...

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