This is a great article I ran across to today on HBR Blog by Chris Zook that I wanted to share.
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Chris Zook is a partner at Bain & Company and is co-leader of the firm’s Global Strategy Practice. He is the author of Unstoppable: Finding Hidden Assets to Renew the Core and Fuel Profitable Growth. This is the tenth in a series of ten weekly posts he is contributing to the Conversation Starter. You can read more of his posts here.
If I had to reduce the essence of my years of research down to one word, it would be focus. Successful companies maintain it to sustain profitable growth, while others get lost in a diffusion of possibilities. At first blush, narrowing the focus to grow sounds almost counterintuitive. But just as plants often must be cut back to concentrate their energy on fewer, stronger branches, so too, businesses must be pruned to counter their tendency to branch out more than they should. I’m constantly amazed by how often the correct first step to growth and expansion is to tighten the perspective and sometimes even to shrink. This boring in on the essential has been the dominanttheme of my books.
Profit from the Core is about strategic focus of a core business. It is based on hundreds of examples we found of businesses that lost their opportunities by becoming unfocused and losing track of what those few things at the center of their core really were.
Beyond the Core is also about focus, but in a different way. It shows that following a repeatable formula is the best way to reduce risk as well as a powerful organizing principle behind profitable growth. The pursuit of repeatability based on a strong core is a formula for focusing and concentrating resources.
Unstoppable is about transformation and renewal, but it conveys a central message that is about focus in yet another sense: focus to understand and build on the hidden assets you already have. If you can do that, you have a better chance of success and differentiation than if you leap into something completely new. For companies struggling to reignite growth, one of the most underused and most reliable ways to create economic value is to consider narrowing focus and even shrinking in order to grow.
The world serves up a never-ending series of temptations, distractions, doubts, and uncertainties. It is possible for management teams to bounce like ping-pong balls from one topic or issue to another, never digging in and understanding their core and what it means.
The real focus of businesses should be external—on competitors, shifts in technology, and customer dynamics. Yet my overwhelming feeling from seven years of studying success and failure among companies searching for profitable growth is that, ironically, many of the most challenging demons are internal, and our most difficult foes are ourselves. And so, the following rings true:
If you do not know yourself, it is difficult to judge what you should become.
If you do not know where you are, it is difficult to decide where to go and how.
If you do not know what you are really good at, it is tough to know what to do.
The starting place in each of the three phases of the focus-expand-redefine (FER) cycle of business growth is to make sure that you understand and are profiting from your core.
Do you? Are you?