Steps to Successful Business Diversification
I am often asked to help organisations to think beyond their current markets into new ones, and here are the key steps that I usually take. The approach shown can be undertaken in depth or quite simply, dependent on time, budget, and the degree of confidence regarding the key issues.
1. Our Competencies. It is really important to understand objectively what it is that you are good at now. So many growth initiatives fail at this crucial step. You can get good feedback through a number of ways including employees that have joined you from competitors, customers, suppliers, and other market data.
3. How to win? Then think about how you would compete against the competition in each area, which geographies, sub-segments, and products and services that you are best fitted to compete in. I usually seek to gather objective data on customer buying factors and competitors relative performance in order to make these choices.
4. Value Proposition. Take the time to evaluate, debate, and agree exactly what it is that would make your offering of value in the market that you are looking at. Is it cost, quality, delivery, responsiveness or what? You can’t usually be great at everything, so you need to focus on the main ones that, according to your research, make all the difference for the chosen customers’ buying choices.
5. Organisation. New markets, products or services will usually require large or small adjustments to be made to your organisation. How will the value in the new market be delivered effectively to those customers? Will they set you apart sufficiently to deliver the growth that you are seeking?
6. Marketing and Selling. Give care to the detail of the messaging required to drive the Value Proposition forward. At the same time, how will sales be delivered, what kind of sales force, sales support, and incentive structure will be required?
If you want to be confident of success in a new business initiative, then you need to do enough homework before you start piling in substantial resources on the ground.
The homework is usually well worth it!