Finding your next core business

1. Finding your next core business Chris zook HBR / 2007.04

2. 목차 1 Finding your next core business 2 When It’s time for deep strategic change 3 Recognizing the makings of a new core 4 Where assets hide 5 A growing imperative for management

3. Finding your next core business It is a wonder how many management teams fail to exploit, or even perceive, the full potential of the basic businesses they are in. Company after company prematurely abandons its core to see the error if its ways-often when it’s too late to reverse course. Sticking with an eroding core for too long, as Polaroid did, can be just as devastating. The misjudged the point their core business had reached in its life cycle and whether it was time to stay focused, expand, or move on.

4. 2. When It’s time for deep strategic change First has to do with profit pools Inherently inferior economics. Rethink a core strategy is a growth formula that cannot be sustained.

5. 3. Recognizing the makings of a new core Management teams react in different ways when they reach the conclusion that a core business is under severe threat. Strategies ate inordinately risky. Ex> Dometic– Dometic to pull off a move that enhanced its cost structure dramatically. Dometic’s story of growth and redefinition is especially instructive Successful core-redefining companies Gradualism during transformation The discovery and use of hidden assets Underlying leadership economics central to the strategy A move from one repeatable formula that is unique to the company to another Redefined its core business by shifting its center of gravity along an existing vector of growth.

6. 3. Recognizing the makings of a new core Usually more than 75% of the profit pool is captured by the top two. The own with the greatest market power typically captures 70% of total profit and 75% of profits above the cost of capital. The new formula angled off into a sequence of interior components for the RV customer base.

7. 4. Where assets hide The importance of a company’s overlooked, undervalued, or underutilized assets to its strategic regeneration cannot be overstated. Large, complex organizations always acquire more skills, capabilities, and business platforms than they can focus on at any time. Suggests that hidden assets tend to fall into three categories. Undervalued business platforms, untapped insights into customers, and underexploited capabilities.

8. 4. Where assets hide Undervalued business platforms Ex>ParkinElmer Renew the company’s strategy and performance and, if necessary, to completely redefine its core business. Began to conceive of a redefined core built around analytical instruments for the fast-growing segment of life-sciences labs. The gold standard in the sequencing instrument business, with the leading market share.

9. 4. Where assets hide The PerkinElmer to Applera transformation offers transformation offers several lesson. Hidden asset may be a collection of products and customer relationship The power of market leadership Lies in the concept of shrinking to grow.

10. 4. Where assets hide Untapped insights into customers Not always clear how much they actually know about those customers Capabilities to understand our core customers more deeply Insight into and relationship with customers are often hidden asset

11. 4. Where assets hide Underexploited capabilities Hidden business platforms and hidden customer insights are assets that companies already possess How individual companies combine multiple capabilities into “activity systems” as Micheal Porter call them, meaning combinations of business processes that create hard-to-replicate competitive advantage. The highest form of capability development is to create a unique set of capabilities-no longer hidden- that can build on growth platform after another, repeatedly giving a company competitive advantage in multiple markets.

12. 5. A growing imperative for management Nearly six out of ten faced serious threats to their survival or independence during the decade, and only about half of this group were able to meet the threat successfully by redefining their core business