0 of 0 people found the following review helpful:
An insightful, data-based treatise on why profitable growth seldom strays far from the core business , 2007-12-18
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.
1 of 1 people found the following review helpful:
Practical and Insightful , 2005-03-28
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.
5 of 8 people found the following review helpful:
An Outstanding Growth Guide for Global Business Leaders, 2004-05-13
As a second year MBA student at the Kellogg School of Management and a future corporate strategist for a global financial services firm, I found reading Beyond the Core to be one of the best time investments that I've made over the last few years. Chris Zook seems to have a knack for writing great books that not only stand the test of time but that are also highly relevant to the current business and economic environments. Specifically, his first book, Profits from the Core, which focused on maximizing the value of the core business, was launched when businesses needed it most - during the economic downturn. Now, Beyond the Core is perfectly timed since, from what I and other MBA's are observing in the market, most businesses are remobilizing for growth.Overall, I greatly enjoyed Beyond the Core - it's a relatively quick read that is focused, insightful and well structured. More specifically, I think there are three key things that make this book stand out in comparison to many other business books I've read: 1) it takes a global perspective 2) it is highly data driven and has great examples and 3) its very actionable and offers lots of insights on implementation.
To elaborate, the first thing I really liked about Beyond the Core is that it takes a truly global perspective with examples from Europe, Asia and Latin America. As an MBA student majoring in International Business Strategy who will be working in a global firm after graduation, it was great to read about the strategies that firms such as Li & Fung (HK), Ambev (Brazil), Lloyd's Bank and Vodephone (UK) and STMicroelectronics (Italy). Overall, I also liked that the book mixes an array of fresh case studies (Tesco, Biogen, Ambev) with more traditional ones (Dell, Nike, American Express).
Secondly, Beyond the Core is highly data driven and the recommendations are based on empirical evidence, not conjectures. As a student of business strategy, I too often come across books or theories that are supported by nothing other than a few select examples that prop up the author's hypotheses. Beyond the Core, in contrast, is supported by an enormous amount of financial, competitive and market research and by many CEO interviews and studies by Bain & Company. This is extremely insightful as it helps the reader understand the odds of success and failure across the business world and thus leads to much more informed strategies.
Finally, Mr. Zook has focused nearly a third of the book on implementation and execution strategy. This makes the book and its recommendations highly actionable instead of leaving the author asking "so what?" The book sets out a systematic and understandable road map for adjacency expansion. More importantly, it discusses issues that are critical to growth initiatives such as: organizational structure, decision making processes, staffing, accountability and reporting, etc.
In sum, I highly recommend Beyond the Core, especially to global business leaders looking for a practical guide for profitably growing their businesses. Enjoy!!
29 of 36 people found the following review helpful:
Questionable Choice of Examples and Lack of Definitions!, 2004-03-15
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.
22 of 23 people found the following review helpful:
Not All Adjacencies Are Appropriate, 2004-02-12
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.