Author: Georgina Barrick
Have you ever been presented with an opportunity that, on the surface, looks like a really good idea? The concept is fresh. The numbers are solid. It could open up new growth streams. The only issue is that it would require a shift off your company’s core focus. Do you, as Richard Branson would say, ‘screw it, let’s do it’? Or, do you walk away?
Single malt whisky. Single origin coffee and chocolate. Accountants and Recruiters who understand the intricate rules and workings of their specialist niches. Orthopaedic surgeons who only operate on hips or shoulders. Gone are the days when to be a ‘jack of all trades’ was prized.
Today, we live in the age of hyper-specialisation.
It’s said that the further you venture away from your core focus, the greater the risk.
Get it right – like Apple or Netflix – and you can create new revenue streams that may, with time, overtake your current core business. Apple did this with the launch of iTunes, shifting focus from hardware to services and spawning the legal music download industry. Today, the company makes more from Services ($10.9 billion last quarter alone) than many of its other business segments. Netflix’s move from streaming to content creation (think ‘Stranger Things’ and the ‘Queer Eye’ revival) reduced the company’s risk exposure by giving it complete control over (some) of the content on its platform.
But, get it wrong and you risk becoming distracted by the new initiative, leading to brand dilution, customer confusion, a drop in management focus and quality of offering, loss of target market share and, ultimately, lost revenue. Richard Branson’s Virgin brand has launched over 400 companies over the past 50 years (including music stores, airlines, alcohol and underwear businesses). Today, the privately-owned brand owns 60 around the world.
So, in a world captivated by novelty, how do you balance your need for growth and innovation with your tolerance for risk? Or, put more simply, how do you identify the ideas that would mean real change for your business from those that are really just shiny new objects?
Explore your core…
Start by fully understanding the opportunities available in your core business.
Is there potential for further growth in any of your business segments? Are there any ‘adjacencies’ (related business segments) that, if developed, could reinforce the strength of your core? Can you create new needs among your core customer base? Are there any internal functions – like talent acquisition – that you could outsource to free up time to focus on core issues? Make sure that you’ve wrung all that you can out of your core, before you make a move away from it.
Have a good reason…
Is your core business reaching saturation point, with limited growth opportunities? Is there a disruptive technology breaking into your space that’s forcing you to rethink strategy? Would you be ‘early to market’ with a non-core concept and have the chance to snap up market share?
Whatever is making you consider a break from core, ensure that your reasons are sound – and grounded in fact, not emotion.
‘Screw it, let’s do it’ might work for Richard Branson, but it certainly doesn’t cut the mustard with shareholders. Take time to educate yourself about the new initiative and its impact on your core business. Assess the risks, potential outcomes and competencies you’ll need to manage both.
Before taking the leap, it’s important to ask the hard questions and gather all of the data.
Test the idea to minimise risk…
Is there a way to test the new concept, with minimal risk? Form a new business, with separate branding, resources and office space, to try out the idea. Steer clear of areas where you lack expertise or where the market is flooded with players who have the specialised skills that you’re missing. Do everything that you can to prevent diluting your focus, energy and accountability.
That way, if the idea fails, your core business is protected.
Set clear goals and accountabilities…
Before you start, set realistic goals (including measures of success) for the new venture.
Make sure that your staff is clear about what needs to be achieved in your core business – and who is minding the store. Someone needs to be accountable for keeping everyone’s eye on the ball.
Business growth involves taking calculated risk.
The choice whether to drive growth from within your core business or stray outside of it sits with you – which is both a burden and blessing. Whatever you decide, choose wisely.
Georgina Barrick, MD of Cassel&Co and The Working Earth, all divisions of ADvTECH Resourcing (Pty) Ltd. Georgina has over 25 years of recruitment and executive search experience.