Damien McLoughlin, Professor of one of the leading schools in Ireland discussed how to grow a business at Alltech's Symposium Monday. His presentation was fascinating because he highlighted an issue that accounts for many business failures. He explained that this is mostly a result of trying to diversify from the core of the business. He described it as “the paradox of growth,” in which business people focus on growth opportunities outside of their core business.
He recommended that businesses follow these four steps:
- Have a well defined and strongly differentiated core and make sure that your team know what it is.
- Follow the customers around your core. Think about your most loyal customers and why they use your product. There is likely a big gap between what you think you are selling and what they think they are buying. Build value for them.
- Grow thoughtfully through adjacencies. Nestlé’s products all have the same consumer and are sold through the same channels. They develop adjacencies that fit with their core and offer a good path for greater efficiency.
- Build repeatable and successful formulas and create a model that you can replicate, the core is what nourishes and maximizes profitability to all businesses and moving away from it can generate great losses.