Customer Reviews

Beyond the Core: Expand Your Market Without Abandoning Your Roots

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2 star:		(1)
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Perhaps you have already read Profit From the Core: Growth Strategy in the Age of Turbulence which Zook co-authored with James Allen. It was based on rigorous research which revealed the key strategic decisions that most often determine growth or stagnation in business. They note: "Central to our findings are three ideas: the concept of the core business and its boundaries; the idea that every business has a level of full-potential performance that usually exceeds what the company imagines; and the idea that performance-yield loss occurs at many levels, from strategy to leadership to organizational capabilities to execution." In the five chapters which follow, Zook (with Allen) examines "the types of strategic business decisions that most often seem to tilt the odds of future success or failure." Zook correctly suggests in this book that many organizations cannot resist the appeal ("the siren's song") of "miracle cures" of their problems. Zook focuses entirely on what has been verified in real-world experience, on what is practical, and on what will reliably achieve the desired results of sound strategic decisions.

In the first chapter of this book, Zook discusses what he calls "the growth crisis" which many (most?) organizations encounter. He observes, "Finding or maintaining a source of sustained and profitable growth has become the number one concern of most CEOs. And moves that push out the boundaries of their core business into 'adjacencies' are where they are most often look these days." I agree with Zook that these strategies have three distinctive features: "First, they are of significant size, or they can lead to a sequence of related adjacency moves that generate substantial growth. Second. they build on., indeed are bolted on, a strong core business. Thus the adjacent area draws from the strength of the core and at the same time may serve to reinforce or defend that core. Third, adjacency strategies are a journey into the unknown, a true extension of the core, a pushing out of the boundaries, a step-up in risk from typical forms of organic growth." Much of the material in this brilliant book is guided and informed by what Zook claims is "the new math of profitable growth." Specifics are best provided by Zook himself.

Zook presumes that those who read this book already know what a core business is, and more specifically, what the core business is of their respective organizations. Given his objectives, that assumption is probably necessary so that he can explore the opportunities which (key word) appropriate adjencies offer. Fair enough. However, my own experience suggests that companies frequently extend the boundaries of a core business without fully understanding what that core business is. Railroads probably offer the best example. Only much too late (if then) did senior-level executives at major railroads realize that their core business was transporting people and cargo, NOT "railroading." Obviously, trains are confined to the tracks as are ships to the water and trucks to the roadways over which they proceed. Early on, what if owners of railroads and their associates had addressed questions such as those Zook poses in his Preface (Page ix)? Had they done so, presumably they would have recognized appropriate adjacencies which include taxi cabs, Super Shuttle, local delivery services, and "overnight" delivery services (e.g. DHL, FedEx, and UPS). While they're at it, why not own or forge strategic partnerships with over-the-road trucking companies and cargo airlines? Given the central locations of railroad stations in major metropolitan areas, it would have been easy enough to combine a full-range of travel services within an upscale retail mall.

The question to ask, therefore, is not what an organization's core business is. Rather, what could AND SHOULD it be? The correct answer to that question is important, of course, because without a proper core, there can be chaos. Also, the correct answer suggests appropriate adjacencies by which to achieve and then sustain increasingly more profitable growth.

In the Afterword, Zook imagines himself engaged in what he calls the proverbial "elevator" conversation during which he reviews the "key messages" contained within his book. It serves no good purpose to list them here because each must be carefully considered within a meticulously formulated context. However, once the book has been read, I strongly recommend that all of these "key messages" be reviewed on a monthly (if not weekly) basis. For decision-makers in at least some companies, this may well prove to be the most valuable book they have read in recent years.

Many people who have been burned by going into new areas will grade this as five-stars for encouraging caution in expanding a company's scope. If that's all you want from a book, this is a five-star book. If you want to learn what the exact lesson is, and why that lesson is true, you'll have to look elsewhere however. If you want to learn how to beat the odds in this area, you will also have to look elsewhere.

I found Profit from the Core to be a directionless mishmash of data without firm definitions that repeatedly espoused the idea of "stick to your knitting." As a result, I took up Beyond the Core with great trepidation. At first blush, Beyond the Core seemed to cure some of the peripheral problems of Profit from the Core . . . until I began to notice how almost all of the important examples of continuing business model innovation had been excluded that seemed to fit all of the criteria (except perhaps being willing to be interviewed by the author). Mr. Zook continues to avoid defining what "the core" is, so that basic problem continues.

The book's message is "stick to your knitting . . . unless you have not choice . . . then don't go away from your cost advantages and knowledge." If you want to know a little more about that message, you can read all of the key points in the book summarized in the Afterword on pages 189-192 in less than five minutes.

The book will mainly be helpful to those who are thinking about making unrelated acquisitions. The advice: Don't do it! The odds are way against you . . . but even the most unrelated acquisitions sometimes work (GE bought NBC and has done well with it, for example). The book lacks clear direction for how some overcome the odds.

The book was also curiously silent about how companies can use small experiments to test their way into new areas. That's the way that most firms expand beyond their core.

The methodology looks very much like those employed in Build to Last and Good to Great . . . but don't believe it. Cases were selected in part based on whether Mr. Zook could interview the companies. So it's really a subjective sample. So take the conclusions with a selective grain of salt. Here are some of the cases of those who have prospered with expanding into new areas that seem to fit the Zook criteria but don't appear in the book: Beckman Coulter; Berkshire Hathaway; Clear Channel Communications; Education Management; GE; Iron Mountain; Nucor; Paychex; Sony; Virgin Group; Xilinx; and Zebra Technologies. It's not surprising that the book fails to describe the discipline of continual business model improvement as a best practice . . . a serious omission for this subject.

Ultimately, I think the flaw behind the book is to look at moving "beyond the core" separately from looking "at the core." If the two books had been combined into one that looked at how to outperform the competition, there would have been the basis of helpful insights. Or, this book could have been scoped down into how to grow into new areas with internal development activities versus acquisitions. That would have been helpful. But with the focus of "beyond the core," you are left in a never-never land that you may not want to be in. The other interesting question that could have been addressed is how companies prospered by eliminating the old core and replacing it with a new one through acquisition as a number of companies have.

As I thought about why the author might have chosen this direction, I realized that it may be an unconscious use of the older ways of strategic thinking. Those analytical schemes separated thinking about existing business areas from entering new ones. For some time though, most strategic thinkers have emphasized seeing the questions as connected. You should, for example, be pursuing your best opportunities. That means comparing all choices in some manner at the same time.

The other problem with data-heavy studies like this one is that you are relying on backward impressions (with 20-20 hindsight). Studies of best practices are best done by looking at the decisions and actions when they are made . . . and then measuring the results to see what happens. Interviews taken at such times reveal much different information than the neat success stories spun after the fact. Clayton Christensen does a good job of explaining this issue in chapter one of his new book, The Innovator's Solution.

As I finished the book, I began to think about the many unsuccessful unrelated acquisitions that I have run into among companies. In almost every case, I remember reading a thick book by a name consulting firm that had explained at the time of the purchase why the acquisition could not miss. Perhaps a follow on for this book would be how to avoid bad advice in evaluating acquisitions.

I read Mr. Zook's first book, "Profit From The Core" and really enjoyed it. The interpretation of the data was very compelling and it was a great call-to-arms for companies to re-focus on top-line growth. But as much as I liked the first book, I thought it lacked enough "how to" for my tastes. Well, I found lots of practical guidance in Mr. Zook's latest treatise on adjacency growth, "Beyond The Core". And if you're one of those "practical people" like me, I think you'll like it too.

I found the aspects I liked from the first book in this book as well - lots of data (more importantly, lots of good analysis and interpretation of the data) and lots of company examples (both successes and failures). Say what you will about strategy consultants like Mr. Zook and his project teams at Bain & Company but at least the information provided in "Beyond The Core" is from his first-hand experience with these companies and not a compilation of assorted academic musings or second-hand interpretations of publicly-available data. I find these assertion-heavy, point of view-based books pretty ho-hum.

But what I really enjoyed about "Beyond The Core" was, first, the treatment of different types of adjacencies (e.g., moves into new markets, customers, channels, business models, "white spaces", etc.) and the specific guidance of what makes sense in each situation, and second, the five most common adjacency mistakes that companies make. I found the latter discussion particularly useful. Remember - I'm the "practical guy".

As far as business books go, this is good stuff.

Chris Zook has produced his second excellent resource that is of great value to anyone who has a genuine interest in the workings of business. As a small business owner, I found this work both relevant and thought provoking.

Unlike so many business books, which are heavy on anecdotes and light on research, Zook draws his conclusions based upon in-depth studies of 100 businesses and numerous interviews with CEOs. The data is concisely brought to life with understandable and practical illustrations and conclusions, of all which are aided by some very compelling charts and graphs.

Beyond the Core offers a very useful framework for carefully thinking about how growth may be found and cultivated in areas outside of the core business - a virtual roadmap of business in the 21st century!

Beyond the Core is Chris Zook's follow up to Profit From the Core, the crux of which is that for a company to achieve successful growth it must fully develop it's core business.

Beyond the Core focuses on finding the next wave of growth through "adjacent" moves, and illustrates its thesis with a series of colorful and engaging examples. Beyond the Core is down to earth business thinking without unnecessary pomp and circumstance, and ultimately delivers a satisfying business growth philosophy.

What is especially useful about this book is that it is practical. It gives advice for every stage of an adjacency expansion, from strategy development to execution, on how to increase the likelihood that it will be successful. The case studies are interesting and the analysis is insightful.

For people like me who do not have a business background or management consulting experience, this book is an excellent read and, at the very least, should get you by at parties where you would run into such people.

I enjoyed Chris Zook's first book, "Profit from the Core", and believe that his new book, "Beyond the Core", is also a must-read. While "Profit from the Core" eloquently described how a company could make the most of its current strengths, "Beyond the Core" may be even more relevant for a company trying to succeed in today's economy by explaining how to find new growth opportunities around a core business.

Zook clearly demonstrates, through well-reasoned analysis and CEO interviews, how a company can take a core capability and apply it to new customers, geographies, products and channels. He also shows how some of the most successful companies have a repeatable formula that they apply to their adjacency expansions. The Nike, Dell, UPS and Lloyds Bank examples are particularly compelling.

Zook's "Beyond the Core" provides a practical framework for identifying growth opportunities and structuring the organization for success. The book explains how the connection to a strong core business, the measurement of the profit pool, and the potential to become a leader should all play a role in deciding which adjacencies a company should pursue. I think anyone involved with helping a company create profitable growth would want to read this book. It is not surprising that THE ECONOMIST recently rated "Beyond the Core" as one of the top Economics and Business books of 2003.

If you aspire to be a CEO with dreams of expanding your company's business, or if your job involves advising your company management on M&A or expansion into adjacencies, you need to read this book. If you are already a CEO looking for insights into what makes up the core of your business strategy and how you might expand around that core while minimizing the risk to both the core and to the new venture, perhaps you should read the book and hire Zook as your consultant.

Beyond the Core is written in an almost conversational style as Zook regales the reader with corporate histories of success and failure and comparisons of companies that started with similar baseline starting points. The different paths they took make intriguing reading, but this is not just some gossipy story telling. Underlying Zook's analysis of the recounting and the conclusions he draws, is some heavy-duty empirical and statistical study. Here you will find tales of Wal-Mart/Kmart and Nike/Reebok as well as of Swissair, UPS, Loral, and the obligatory dragging-in of Enron. IBM, Dell, Muzak, Gillette, and more are in Zook's compass.

The book explores how companies that move into businesses related to their core operations and adjacent to that core -- hence, "adjacencies" -- can and should make decisions as to whether there is really a synergistic relationship to the core and how to assess the likelihood of success: Is the core sound? Can it support the new venture? Will the new venture drain resources and capital? What is the prospect of reaching a leadership position in the target area? Is there a relentlessly repeatable approach to replicate success?

Zook focuses on expansion into adjacencies in this book but is quick to recognize that there are other growth strategies, the subject of future books, perhaps?

This book is interesting not just for the sophisticated distillation of mounds of data that Zook provides, but also because of the insights into business strategy that he sprinkles throughout. It is a veritable checklist of the right questions that a CEO or advisor should ask not only before undertaking expansion but also in order to understand where things stand now.

Zook's insights into how value is created for shareholders are intriguing. From the general observation that profitable growth is the wellspring of most value creation in business, he takes the reader to specific examples of how minor changes in the rate of growth or in the speed of execution, can make major changes in the rate of return. For those interested in investing in companies based on growth, a careful reading of Zook's work will provide insights for figuring out when companies are venturing too far outside their core competencies. He explains with aplomb how Muzak's attempt to use its network of transmitters and signal distribution to sell educational products and business updates was not an adjacency built on Muzak's expertise, the management of customized music. Rather, it erroneously used an incident of the core business, one easily replicated by competitors and in which Muzak had no particular expertise. It will be interesting to see how Zook will write in the future of IBM's expansion into consulting and Gillette's expansion into the battery business. He is positive on the adjacency moves by the management of those companies.

For a business book, this one is fun and I think I'll read it again. For example, one might miss on the first pass, Zook's observation as to why most companies die or tumble into extended periods of value destruction. This is not an idle issue since virtually all the companies he studies had gone through such periods including IBM and Dell. The answer? Well, read it for yourself -- page 176.

To the CEO, nothing is (or should be) more important than business growth. Chris Zook, an expert on corporate growth strategies, explains why you should focus your expansion and growth efforts on "adjacencies" that closely align with your current core activities. Zook bases his observations and recommendations on extensive research: He profiles 25 corporate growth leaders; analyzes 12 pairs of companies that were comparable in the 1990s but are no longer in the same league, as one company has outpaced its match in terms of growth and profits; reviews 181 initiatives for corporate growth; and covers a trio of in-depth surveys of executive attitudes and insights on growth. Zook makes numerous recommendations, backed by research, on how your company can achieve sustainable growth through adjacency expansion. He also warns against mistakes such as ill-advised mergers and acquisitions, poorly planned product introductions and unwise market expansions. Indeed, with certain growth plans, sometimes the smartest move is "just say no." We are impressed with this book, which is an ideal resource for senior corporate executives, boards of directors and investors who must assess the risks and benefits of growth proposals.

Standing Tall among Business Books, Chris Zook has indepth research examples of Companies portraying picture of today's business times. Numerous CEO reports, charts and graphs with real practical illustrations are varied. Outside a core business, the expansion is detailed in this book - on how to go ahead framing and practically applying the ways and means so as not to harness the existence levels. The books offers nurturing roots of business, examples on adjacency expansions with pros and cons of success and failure measures. The name itself speaks big 'Expand market without abandoning Roots' and the rule of the game lies in effective management. The author pin points steps to leverage best avenues and the possible adjacent moves so as to reach competitive edge and pooling profit without harnessing the roots of main frame business. In today's time, with diversifications, 'Beyond the Core'- the book serves a Good Reference and as I read on Chris zook's comments, I feel this is a 'Grab Pick' and Must for all Big Company Executives.