LBO & VC trends: creating value – When your business needs a second growth engine
The success pattern of classic adjacency strategies such as moving into new geographies, products or customer segments is shifting. But why? Because disrupting technologies are upending industries. Such market turbulence gives birth to new business models, redraws market boundaries and shifts profit pools.
Despite a burst of opportunities, the turbulence creates an unstable landscape of external threats for leaders.
So, how do you navigate? Top value-creating businesses like Amazon, Google and Apple learned to build large new cores, so named engine twos. A second growth engine is built on successfully combining four elements:
- Finding markets where the profit pool is sizable, expanding or shifting;
- A differentiated competitive advantage that is often built through acquisitions;
- Overcoming bureaucracy and adopting entrepreneurial approaches by for example setting up stand-alone entities;
- Leveraging the scale and assets by using the capabilities, channels, sales force or customers of the existing core.