Have you had good success and are now considering diversifying your business to protect it? You might want to think again.
Profit from the Core, by Chris Zook with James Allen, quickly became an international best seller when it was published in 2001 just after the dot-com bust. Profit from the Core: A Return to Growth in Turbulent Times, is the latest version, released in 2010.
It provides guidance for managers to improve growth by focusing on their core business, rather than weakening their business by branching out into new unrelated areas.
The book is based on more than ten years of Bain & Company research and analysis and is still relevant and useful today.
It argues that most companies diversify well before tapping into the full growth and profitability potential of their core business – that mix of target market, product offering, distribution channels, unique capabilities and other critical strategic assets that can establish a market leader position.
Investing in that core business offers the most growth and profit potential. Paradoxically, our core business is often already our most profitable business line.
When growth in the core is fully maximized, carefully adding “adjacencies” that reinforce it can further its growth. Otherwise, diversifying usually distracts from and weakens the core business, and the company’s growth and profitability.
While the research seems strong, expect a bit of a technical read.
Book: 192 pages. Ebook with Read-Aloud available on Google Play Books. Book summary on Soundview: 8 pages, 22 minutes audio.
How can you improve your profitability?
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