“If you think of [opportunity] in terms of the Gold Rush, then you’d be pretty depressed right now because the last nugget of gold would be gone. But the good thing is, with innovation, there isn’t a last nugget. Every new thing creates two new questions and two new opportunities.”
—Jeff Bezos, founder of Amazon
All businesses, even the most successful ones, at a point will run out of room to grow. The options aren’t too many—reinvent the business periodically or simply stagnate and perish. But, committing to reinvention doesn’t come naturally to most companies, specially when the existing line of business is strong.
The alternative is to make the leap to a new, growing business from an existing, slowing one before revenues from that core market have stalled.
Not by any means easy given how change doesn’t come easy. For it is in the nature of humans to resist transformation.
While I’ve seen myriad organizations struggle to make this leap, a few distinctly stand out. My favorite has to be Japan’s Sumitomo Group. One of the largest of Japanese kieretsu, its roots lie in a 17th century book and medicine store in Kyoto founded by Masatomo Sumitomo.
Over four centuries, the Group has thrived, getting into new markets and actively seeking new opportunities (copper smelting, trading in textiles, mining, forestry and banking, to name just a few). Each time the Group has translated its dominance in one sector to growth in another, before the earlier cash cow ran dry, while staying true to its founder’s principles of not pursuing “easy gains”.
I truly believe that for to sustain profitable growth in these challenging times businesses will have to identify value-added lines of business that have the growth potential to allow them to transition out of current core areas.
How many organizations I wonder would be willing to risk killing a solid line of business in order to build a potentially more profitable future?
However, to not do so is likely to be hazardous to the health of that business.
Vijay Ramachandran is Editor-in-chief, IDG Media. Follow him on