Many business strategists will tell you growth comes from the new. New products. New org charts. New people.
Bain & Co. partner Chris Zook doesn’t dispute the power of new. But his message is to first look to your core for growth and profit. Do what you do best, only better. Leverage what you already know. Most failed companies, he writes in the book Profit from the Core, run off the rails by diversifying away from their root business.
All you need to know about why this concept is true is to look at the recent $4 billion deal that Disney announced to acquire Marvel Entertainment, the creator of such characters as Spider-Man, Iron Man and The Incredible Hulk.
In 1996, Marvel declared bankruptcy. How did it go from bust to boom? Writing on Harvard Business Publishing, Zook says Marvel reinvented itself while still remaining faithful to its core business.
In four key areas Marvel:
- Reinvested in its historic core, which was built on 5,000 characters, fiercely loyal customers, a library of 30,000 stories, and a well known brand brand.
- “Followed the profit pool” from analog to digital and by understanding the power of its proprietary content.
- Created a repeatable formula to take the strongest elements in its core and reapply them to new situations.
- Discovered and used the latent potential of assets hidden in the original core business.
Zook concludes:
“As surprising as it sounds, the ultimate lesson from Marvel, and others like it, is that the most important thing of all is self-awareness of the core. Yet sometimes that is also the most difficult insight of all — even though it can be right in front of us.”
Remember this the next time the Big Guns up on the top floor are pushing for new, new, and newer. Show them the undiscovered power of what already exists.
And please share examples of how you profit from the core.
For more details on Marvel’s transformation, read Zook’s post How Marvel Went from Bankruptcy to $4B Buyout.
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