Profit from the Core

Strategy Training Profit from the Core

4 comments

This is the seventh podcast for the power sector corporate strategy study we will soon release as part of our Executive Program.

In this study we are hypothesizing that the core of the company has shifted and the company therefore needs to change to profit from the core business. This is common problem for many companies. Yet, dealing with it is very difficult.

When a company is built for a core that has changed, history teaches us that they will suffer and likely fail. Think of Yahoo, HP etc. Think of Google right now as the internet shifts from desktops to mobile and from mobile to apps. All businesses perfectly designed for a core business that no longer exists fail if they don’t pivot to a new model. We are basically trying to help this client undertake a change which is very difficult to execute.

That makes the study both exciting and daunting.

If you want to understand this concept of profiting from the core in more detail, we recommend one seminal book and HBR article to read.

We discuss the challenges of helping the client shift to find profit from the core business, grow in that core and find logical adjacencies. Fundamentally, this comes down to understanding their main clients, competitive advantage, capabilities and core offerings.

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4 responses to Profit from the Core

  1. Hi Scott,

    Good suggestion. We will definitely look at that. We will soon fix the glitch in iTunes and you will be able to see the podcasts on iTunes as well, and in real time.

    Hope that will help in the meantime.

    Michael

  2. Great podcasts! Any chance you guys can add a feature that allows you to go directly to the next podcast without reloading the entire list?

  3. Thanks William,

    Here are the responses to you three questions:

    1 – “Do differently” implies they did something wrong before. They did not. Their customer focus and needs simply shifted hence they bundled out the construction capability. That was the right decision.

    However, they will need to make sure EI is now perfectly attuned to the needs of the new market. That is something this phase will partly answer and the implementation planning phase will answer in much more detail.

    2 – In electricity there is a general move towards liberal markets which is impacting them worldwide. In emerging markets growth has spiked in the last decade or so forcing government planners to rethink their assumptions. These are the main drivers forcing a rethink of the core.

    3 – It will be entirely based on the build needs and not the current situation. If a business unit does not have a skill needed, it will be fixed and sold.

    Hope that helps. Note, we are in week two so some of the above may change a little as we think them through more carefully later in the study.

    Michael

  4. These podcasts are an outstanding way to follow this fascinating study. Both of the suggested reads are absolutely relevant in this case and I can see where this transformation study is tremendously complex. I have a few looming questions that I hope the study and analysis answers. First, Empire Energy shed Empire International years ago because it was considered non-core. Because of the market environment and perhaps its own deficiencies, some of the capabilities of Empire International might now be considered core to the success of Empire Energy. What does the parent company need to do differently post-divisionalization to nurture these capabilities (and this new division) into a true differentiator? Second, is there something happening in the market that are driving these energy conglomerates to rethink what’s core to their success? Finally, how will the team make decisions about the functions to keep and the functions to divest of prior to divisionalization? Is the decision largely based on today’s capabilities or future-oriented in order to build something sustainable?

    Again, great podcast and a great way to follow this study.

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