This week’s podcast is about combining two previously covered topics: growth and the digital operating basics. This can be surprisingly powerful.
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Most of the growth thinking is a summary of work by Chris Zook at Bain’s strategy practice. I am citing the books:
He argues most all sustainable growth is based on 1-2 strong cores that continually adapt.
- A profitable core is centered on the strongest position in terms of loyal customers, competitive advantage, unique skills, and ability to earn profits.
- Adapting the core can be:
- New products / services
- New customers – microsegments
- New geographies
- New businesses.
Then add growth adjacencies. To assess an adjacency move:
- Factor 1: Adjacency is tightly tied to a strong core.
- Factor 2: An attractive adjacency market in terms of profit pools
- Factor 3: The ability to capture economic leadership in that market. Competitive advantage as an attacker and then an incumbent.
Growth + DOB can sometimes get you the dream scenario:
- Grow the revenue line.
- Increase gross profits. An expanding margin with size.
- Increase operating leverage with increasing scale. This is more about going for scale.
- Invest in R&D, tech and infrastructure. This will result in a better user experience and improve operating efficiency.
- Drive efficiencies and increase monetization.
- Improve the user experience.
- Expand the products and services in high growth areas.
- Do targeted M&A. To increase innovation and protect against disruption.
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Related articles:
From the Concept Library, concepts for this article are:
- Growth: Core vs. Adjacency
- Digital Operating Basics
- DOB7: Sustainable Cash Engine that Scales
From the Company Library, companies for this article are:
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