Profit from the Core: A Return to Growth in Turbulent Times. Chris Zook, James Allen. Harvard Business Review Press.

Profit from the Core: A Return to Growth in Turbulent Times Book Cover Profit from the Core: A Return to Growth in Turbulent Times
Chris Zook, James Allen
Harvard Business Review Press
January 26, 2010

Ninety percent of companies worldwide failed to achieve sustained, profitable growth over the past decade. While current business wisdom calls for “new rules” for strategy and organization, a breakthrough book reveals that the answer to the growth dilemma actually lies in basic, enduring economic principles.

Based on a sweeping ten-year study of more than two thousand technology, service, and product companies in a variety of industries, Profit from the Core argues that most growth strategies fail to deliver value – or even destroy it – primarily because they wrongly diversify from the core business. The authors contend that this timeless strategic precept – building market power in a well-defined core – remains the key source of competitive advantage in the most viable platform for successful expansion.

Drawing from hundreds of in-depth case studies, interviews with more than one hundred CEOs, and the authors’ broad consulting and business experience, the book identifies and explains the three key factors that differentiate growth strategies that succeed from those that fail: (1) reaching full potential in the core business; (2) expanding into logical adjacent businesses surrounding the core; and (3) preemptively redefining the core business in response to market turbulence.

The authors identify the classic problems that incumbents encounter in each of these areas and – borrowing lessons from private equity and start-up ventures – explain how to resolve them in today’s rapidly changing business environment. The book concludes with guidelines for how companies can become sustained value creators – capable of successfully refining and revamping the core business over time.

Identifying enduring, often counterintuitive principles that fly in the face of new economy hype, Profit from the Core is an indispensable strategic guide to achieving long-term, profitable growth in any business.

Christopher Zook is a director of Bain & Company and Head of its Worldwide Strategy Practice.

James Allen is CEO of eVolution Global Partners, a venture capital firm that helps launch new, Internet-enabled businesses.