Profit from the Core - A growth theory is put to something of an empirical test and OUCH!
One of the more popular books on growth in recent years has been Profit From the Core, a book that suggests firms should focus their efforts on core and adjacent markets to find growth opportunities. I've found it to be thought provoking and intelligently written. I've never taken the trouble to double-check the research, however. Blogger Thomas Thurston, however, did. In an interesting blog post he describes a small empirical test he did using business units to try to replicate the results reported in the book.
His conclusions?
Firstly, that the categorization of businesses into various types of adjacencies was highly subjective and dependent on the rater doing the classification. About as robust as one could get was "core" or "not core".
Secondly, that the prediction that adjacent ventures would do better than non-adjacent ventures did not hold up. About the only predictable result was that core initiatives did better than either adjacencies or non adjacencies in terms of survival. There was no difference in his sample between the other two types of venture.
I found that interesting!
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- Posted: Friday, January 07, 2011
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