How to Redefine Your Company's Core Strategy
As we wrote on the BNET Intercom last week, sometimes it's important to stay true to your company's strategic core. But sometimes, with technology and globalization changing the business environment at whiplash inducing speeds, fundamental redefinition is a necessity rather than a distraction. In a post on the Harvard Business Review's Conversation Starter blog yesterday, Bain & Company's Chris Zook reports that the company's research reveals that "in the next decade as many as four of five companies may need to redefine their core strategy fundamentally, or find a new core in order to continue to grow or even survive"
Revamping your core strategy is one of the greatest challenges a manager can face, and with all the pressure and uncertainty it can be tempting to reach for something entirely new -- leap into a new market, attempt major transforming acquisitions or push for massive corporate innovation.
But before you take any such bold and risky action, Zook recommends a calm inventory of your company's existing strengths and capabilities. Most likely your company has hidden assets that can be tapped to get you through even the most fundamental business changes. According to Zook, these assets generally fall into three categories:
- undervalued business platforms
- untapped customer insights
- underexploited capabilities
Not so long ago, De Beer's was sitting atop a $5 billion stockpile of rough diamonds, yet profits were sinking. The real gems turned out to be consumer insights that set the company on a profitable new direction. Liquidating 80 percent of its inventory, the firm created a new business model, shifting it focus from supply control to a demand and customer-centered strategy.These days the company's market value is up to around $12 billion from a low of $1 billion in 1999. Another example: Apple. When the company's computer sales flagged, it used its underexploited capability to produce "cool" user interfaces to develop the iPod (and now the iPhone). These new devises now account for 50% of the company's revenues.
So if your current growth strategy is no longer working and you are facing the need for a strategic overhaul , before you go sailing off into uncharted waters, stop a moment to consider if your company has hidden, underutilized assets closer to home.
For further reading, check out Zook's new book "Unstoppable".