Join Anil Gupta for an in-depth discussion in this video Creating new offerings for new customers, part of Designing Growth Strategies.
- Pursuing growth by radical diversification,…that is creating or acquiring a business…where you offer entirely new products and services…to entirely new target customers,…can be a high-risk strategy.…How large the risks are depends on the extent to which…the new business leverages the core capabilities…of the company's existing operations.…The oil giant Exxon's failed attempt…to diversify into the computer business…illustrates well the hazards of entering…an entirely new business…that requires a very different set of core capabilities…than the company's existing operations.…
The story goes back to the late 1970s,…when after the Egypt-Israel War,…Exxon faced an environment…of very high oil prices and sharp contraction…in the demand for oil.…Exxon looked around for growth opportunities…in new industries that were large in size,…likely to keep growing at a double-digit pace,…and acquired lots of capital.…
It honed in on computing and decided…to go head-to-head with IBM, HP, and other players…by creating a new division called Exxon Office Systems…
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- Recognize the problems a company may encounter if it does not achieve growth.
- Identify high-potential opportunities for growth.
- Identify new customers for existing products.
- Use assessment screens to choose the best opportunity.
- Evaluate partnerships and acquisitions as mechanisms to fuel growth.
- Break down the components of an effective and growth-minded leadership team.