Finding Your Next CORE Business

Contents

• Introduction

• Reason for changing core business

• How to evaluate your core business?

• Hidden assets– Undervalued business platform– Untapped insights into customers– Underexploited capability

• Seven steps to a new core business

Introduction

Reasons for changing core business

• Profit pools

• Inherently inferior economics

• Growth formula that cannot be sustained

Evaluate your core business

1. What is the state of our core customers? Profitability Market share Retention rate Measure of customer loyalty

1. What is the state of our core differentiation?

Definition and metrics of differentiation Relative cost position Business models of emerging

competitors Increasing or decreasing differentiation

1. What is the state of our industry’s profit pools?

Size, growth, and stability Share of profit pools captured Shifts and projections High costs and prices

1. What is the state of our core capabilities? Inventory of key capabilities Relative importance Gaps vis-à-vis competitors and future

core needs

1. What is the state of our culture and organization?

Loyalty and undesired attrition Capacity and stress point Energy and motivation Alignment and agreement with objectives

Hidden Assets

In 21 of the 25 companies, a hidden asset was the centerpiece of the new strategy.

Hidden assets fall into three categories:– Undervalued business platform– Untapped insights into customers– Underexploited capability

Undervalued business platform

• Undeveloped adjacencies

• Organization that support the core

• Noncore business

Untapped insights into customers

• Unrecognized segments

• Privileged access or trust

• Underutilized data and information

Underexploited capability

• Hidden corporate capabilities

• Noncore capabilities in different divisions

• Underleveraged core capabilities in different divisions

Seven steps to a new core business

1. Define the core of your business.

2. Assess the core’s full potential and the durability of its key differentiation.

3. Develop a point of view about the future and define the status quo.

Seven steps to a new core business

4. Identify the full range of options for redefining the core from the inside and from the outside.

5. Identify your hidden assets and ask whether they create new options or enable others.

Seven steps to a new core business

6. Use key criteria (leadership, profit pool, repeatability, chances of implementation) in deciding which assets to employ in redefining your core.

7.Set up a program office to help initiate, track, and manage course corrections.