How can a company sustain profitable growth?
Growth is the most important issue faced by all management teams: 65% of growth initiatives fail (Chris Zook and James Allen - HBR 2003). So how do the few firms that generate sustained, profitable growth succeed? They expend their strong, core business - in predictable, repeatable ways - into related market where they can excel.
Some companies, such as IKEA, have grown by offering new products, targeting more (and more precise) customer segments and adding services, all while maintaining their fundamental focus. Other, such as Nike, have grown by entering new markets with an adapted version of their core model. And some multicore business, such as Procter & Gamble, have developed a coherent management system that they apply to every business they are in.
A company that develops a method for repeatable adjacency moves has many advantages in terms of speed and transparency, organizational efficiency, mastery of hidden detail, and reduced complexity. The result is often a breakthrough in performance.
