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Growing Beyond the Core of Your Business

Most business growth initiatives fail. Research from Chris Zook, a Bain & Company consultant, indicates only 25% of growth initiatives succeed.

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My wife is an account director at a company that supplies branded tools to automotive toolmakers. Once-a-quarter she and a few other company leaders meet to discuss ideas and strategies that can help them improve as a team and grow their business. Someone suggested they start a book club. Great idea… EXCEPT, they needed a business book to read for this club.

(This is where I, husband and business book junkie, enter the scene.)

My wife asked for my recommendation of a business strategy book that can help them think smarter about ways to grow their business into different markets and channels.

I immediately thought of Chris Zook’s brilliant book, BEYOND THE CORE: Expand Your Market Without Abandoning Your Roots.

Recommendation was made. Books were ordered. The book club now had a business book to read. And that’s where a problem surfaced—these people don’t enjoy reading business books.

(This is where I, the business book junkie, had a small conniption fit.)

Instead of letting my annoyance get out of control, I channeled my energy into writing a super short summary of BEYOND THE CORE for the book club.

And now, I’ve put together an even shorter super short summary of BEYOND THE CORE for you to gain new knowledge from. Enjoy.

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Most business growth initiatives fail. Research from Chris Zook, a Bain & Company consultant, indicates only 25% of growth initiatives succeed. The analysis reveals too many companies fail to grow because their growth strategies are not connected enough to their core business.

According to Zook, businesses can greatly improve their growth initiatives when they focus their efforts on one of six adjacencies:

PRODUCT – selling new products/services to current customers.

Apple has profited greatly by creating and selling new products (iPhone, iPad, etc.) to its core computer customers. Enterprise Rent-A-Car parlayed their core business of renting cars to people after having a car accident into the adjacent business/leisure rental market.

According to Zook’s research, this is the most commonly pursued and highest potential growth initiative.

GEOGRAPHY – selling current offerings in new domestic and international markets.

Uber started in 2009 by serving only the San Francisco market. It quickly applied its technology core competency to enter new cities in the US. Today, Uber operates in 60+ counties and 500+ cities around the world. Vodafone began as a UK-based cellphone business. It long ago expanded its core business outside of the UK and into Japan, Germany and many other international markets.

Zook warns that companies pursing growth this way have a lower than average success rate due to underestimating the complexities of entering domestic and international markets.

VALUE CHAIN – developing offerings up and down the value chain.

Apple used to sell its products solely through retailers. In 2001, Apple applied its user-friendly and design-rich approach to opening its own retail stores and today there are nearly 500 Apple stores in 20 countries around the world. Zingerman’s is a beloved deli in Ann Arbor, MI that opened in 1982. There is still only one Zingerman’s deli but the company operates 10 businesses up and down its value chain from a Bakehouse to a Coffee Roastery to a Creamery to ZingTrain, a consulting and customer training business.

Finding lasting business growth down this path is extremely difficult. Enter with caution.

CHANNEL – entering a new distribution channel.

Cranium, the family-friendly board game, found modest success when the game was sold in independent mom and pop stores. Cranium became a wild success when in 1999 it entered a new distribution channel, Starbucks stores. EAS, a sport-supplement company, used to only sell its Myoplex bars in nutrition stores. Sales of Myoplex bars really took off when EAS began selling the product in the Walmart distribution channel.

Zook says this adjacency can either bring massive results or become a significant burden to a company’s resources.

CUSTOMER – altering proven products/services to reach new customer segments.

J.Crew began as a men’s and women’s clothing catalog retailer and then opened J.Crew retail stores. The company has since modified its products and services to enter a variety of new customer markets: children’s apparel (crewcuts), trendy/artsy women’s wear (Madewell) and cost-conscious shoppers (J.Crew Factory). Dell famously began as a direct-to-consumer computer maker in 1984. Dell found greater success when it entered the corporate sales market. From there, Dell began to develop its IT services business to serve new customers in new ways. Today, Dell generates a significant amount of its total revenue from its IT services business.

The customer adjacency path is a very common way for businesses to find new growth.

BUSINESS – building an entirely new business from the core.

Amazon is an online retail behemoth. In the process, Amazon realized they had become uniquely skilled at running reliable, scalable and cost effective cloud storage centers. In 2006 Amazon started selling cloud storage to other businesses under the name of Amazon Web Services and today this new business contributes about 30% of Amazon’s total revenue. American Airlines created a major competitive advantage when the airlines developed its proprietary SABRE reservation system. SABRE was eventually spun-off into an entirely new business and interestingly, SABRE created a business adjacency of its own by developing Travelocity.

Zook’s research findings reveal this is the most difficult growth initiative to undertake.


So there you have it. A way too short of a summary to BEYOND THE CORE. My wife’s book club at work has a slightly longer summary. I hope she and her co-workers will read and discuss the 1,000-word summary.

I also hope that you found this summary thought-provoking enough to share it and discuss it within your company.