Profit from the Core: Growth Strategy in an Era of Turbulence

by James Allen, Chris Zook, Zook Chris [Christopher] with James Allen

Book Overview

Clear-headed advice on strategy from the international consulting firm Bain & Company restores a timely and refreshing "back-to-basics" approach to growth. This description may be from another edition of this product.

• Format: Hardcover
• Language: English
• ISBN: 1578512301
• ISBN13: 9781578512300
• Release Date: February 2001
• Publisher: Harvard Business Review Press
• Length: 186 Pages
• Weight: 0.90 lbs.
• Dimensions: 0.8" x 6.4" x 9.5"

Customer Reviews

Focus on your core

In a time of mega mergers and consolidation this book has an intriguing perspective. The authors (Bain consultants) argue that embracing non core businesses is probably trouble. Drawing on a huge multi-year study and Bain database the authors show that growing companies with unfocused acquisitions in non core businesses are typically under performers. The book shows several examples of how Bain purchased under performing companies (divisions) from conglomerates and by investing and focusing on their core business ignited explosive growth. You might be asking how then does a business grow. The authors would say first by defining the core business. What business are we really in and good at. Once the core business has been defined and focused on growth opportunities come from opportunities adjacent to the core business. A few example adjacencies could be new customer segments, new channels, new geographies, new value chain steps (forward, backward...), new business, and new products. If you are trying to define a sustainable growth strategy then this book is worth the read. If you have many non core business that are under performing then this book is worth the read. If you have a successful business and are looking for the next growth vehicle you will want to read this book.

Without a Core, Chaos

NOTE: The review that follows was posted in 2001 and is of the earlier edition. Why is it featured here? After a two-year study of the key strategic decisions that most often determine growth or stagnation in business, Zook (with Allen) realized that clients of Bain & Company were eager to share the results of that study. Only later did he decide to write this book, one in which he presents and then develops "a useful framework for understanding and addressing the key decision points encountered in growing a business." He concluded that this framework is practical and could be applied (with appropriate modification) within almost any organization. In the Preface, Zook acknowledges that he was surprised by some of the findings which he briefly identifies. He then observes: "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. He and his associates learned a great deal from the study, confiding that "some of the results were quite counterintuitive to us." Several of the findings caught my eye and caused me to challenge a few of my own cherished assumptions. For example, that "the choice of the next hot industry was much less important in driving growth and profitability over the long term than were strategy, competitive position, reinvesting rates, and execution." They also learned that many of the most successful sustained growth companies are actually in lower growth businesses (e.g. Enron in energy, ServiceMaster in basic services, and Bechtel in engineering). Why? Zook suggests that "it might be precisely the difficulty of of these market environments that elicits superior business creativity in the search for new growth out of their core businesses." In other words, these companies ignored "the siren's song" and stuck to the aforementioned "basics": strategy, competitive position, reinvesting rates, and execution. In the last chapter, Zook quotes Sun Tzu: "The more opportunities that I seize, the more opportunities that multiply before me." He then asserts that this phenomenon "is at the heart of growth strategy and embodies the fundamental tension between protecting the core [i.e. `the basics'] and driving into more and better adjacencies, propelled by gr

Competitive Advantage - stick to your knitting... plus...

First, this is an excellent book to read. Well researched, edited, and from experts active in the field.Second, the author makes many important recommendations about how you should manage your company... strategically. Again, these recommendations are based largely on research done by the author or his peers mostly at Bain & Co. regarding maintaining competitive advantage.With the exception of Jack Welch (and previously Geneen at IT & T, I'm sure), large conglomerates can not maintain growth rates over long periods of time (ten years was the period used in the book).So, the recommendations that your company stick to its knitting ("the core") is the foundation of the book. But many people already know this. So, most interesting, are the recommendations and research that show the nuances.For example, the author shows how the areas around your core business offer the most profitable opportunities for fast growth... yet also contain the most dangers from encroaching competitors, or bad fitting investments. He calls this area your adjacency.The author suggests that how you manage your adjacency largely determines your success at long term business growth.There are too many concepts and details to summarize here. There is a lot of meat to the book (although it is not a huge book). Still it is fairly easy to read. You will not whiz through the book because you will often pause to consider the ramifications of the author's points. But it is not a difficult read.The books major points are well illustrated with many examples (Dell, Microsoft, Starbucks, W.W. Grainger, etc.).This book is most appropriate for management involved in strategy, and investors trying to figure out the appropriateness of acquisitions by companies.Most of the pages in my book are underlined. The stories fit the observations and recommedations well. The research presented was most interesting, and was often summarized into easily read charts and tables.I highly recommend this book. There are lots of implementable ideas in this book. As an investor you will be able to spot an inappropriate acquisition much more easily. ...

The voice of reason in a time of turbulence.

Chris Zook's, Profit From The Core couldn't have come at a better time. With the recent dot-com implosion, it seems almost perfect to say "I told you so," but that is not what these authors had in mind. This book presents a clear case for focus and mining a business' true core to establish long-term growth. The authors illustrate how, time and again, sustained value and long-term growth come from steadfast focus, rather than a wide-net approach to business strategy. It's pretty clear to me that any survivors over the past year will have adhered to this axiom.Profit from the Core's common-sense approach to building a business is backed with meaningful, quantitative data. One idea, originally stated in Sun Tzu's Art of War, struck a particular cord with me: "The more opportunities that I seize, the more opportunities that multiply before me."Zook and Allen have added the following insight: "Success multiplies opportunities. Proliferating opportunities complicate decision making and prioritization (a good problem to have) and therefore risk."This challenge was clearly exhibited in the Internet consultancy market when many new startups and market leaders "lost their heads" in the crazy days of 1998 and 1999. While the opportunities were seemingly endless, companies that did not pursue a focused and logical path toward growth decreased their shareholder value, or, even worse, risked bankruptcy.Profit From The Core presents an encouraging outlook on developing business strategy. Presented in a no-nonsense manner with solid data, the main concepts are based on common sense and easily applicable to business situations. I think most people will execute an adjacency mapping (which graphs how a company expands from its core) of their own business after they complete the book. This empirical approach will certainly prove helpful to an untold number of businesses.Michael Knowlton CEO / Nascent State

Corporate leaders need a reality check!

Chris Zook thinks it's time for corporate leaders to get a big fat reality check on their dreams of continual, double-digit growth. He argues that the mindset that has developed around growth projections is totally unrealistic for most companies -- even considering the past decade of strong, economic expansion -- and he has numbers to prove it.After examining the performance of close to 2,000 companies betweem 1988 and 1998, Mr. Zook found that only one in eight, or 13 per cent, managed to meet even modest growth targets. If you don't understand and protect your core, you can't possibly select the right growth initiatives. If you select wrong, you face a double-whammy of wasting resources and leaving the true core undefended. This happens to start-ups and large corporations, to the weak and even more to the strong. Looking at the odds, it is probably happening to your business.An excellent book!