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Profit From the Core

Too many companies fail because they overextend themselves beyond their core business. This is why so many companies raise money, expand (e.g. hiring spree) and then contract (e.g. layoffs).

Here's how to expand instead:
1) Define your core business, competitive advantage and differentiators.
2) Strengthen your core business and maximize returns here
3) Expand to one adjacency away (new products, new business, new supply chain steps, new geographies etc.). Ensure the adjacency you bet on leverages your core business strengths and advantages
4) Reset and redefine your new business in light of the adjacency.
5) Repeat

Avoid jumping 2 steps away with the delusion of trying to conquer the world. If you're jumping 2 steps away, you're likely entering an adjacency that is 1-step away or the core business for someone else, which is a recipe for disaster.

From the book: Profit from the Core by Chris Zook (a must-read for all business leaders)

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