Compete Smarter, Not Harder: A Process for Developing the Right Priorities Through Strategic Thinking

CHAPTER 3

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, ...