This week’s podcast is about combining two previously covered topics: growth and the digital operating basics. This can be surprisingly powerful.

You can listen to this podcast here or at iTunes and Google Podcasts.

Most of the growth thinking is a summary of work by Chris Zook at Bain’s strategy practice. I am citing the books:

• Profit from the Core
• Beyond the Core

He argues most all sustainable growth is based on 1-2 strong cores that continually adapt.

• A profitable core is centered on the strongest position in terms of loyal customers, competitive advantage, unique skills, and ability to earn profits.
  • My list for strong cores are growth / market, competitive advantage and attractive unit economics.
• Adapting the core can be:
  • New products / services
  • New customers – microsegments
  • New geographies
  • New businesses.

Then add growth adjacencies. To assess an adjacency move:

• Factor 1: Adjacency is tightly tied to a strong core.
  • Economic distance is short. How much does it overlap?
  • Need a strong core or a strong position in a channel, customer segment or product line in weaker core.
  • Usually the linkage is considered superficially. Snapple is close to Gatorade? Production is totally different. So are customers and advertising. And points of purchase and distribution.
• Factor 2: An attractive adjacency market in terms of profit pools
• Factor 3: The ability to capture economic leadership in that market. Competitive advantage as an attacker and then an incumbent.

Growth + DOB can sometimes get you the dream scenario:

1. Grow the revenue line.
   • Add to monthly transacting users (MTUs), services and per user spending. Become a bigger business.
2. Increase gross profits. An expanding margin with size.
3. Increase operating leverage with increasing scale. This is more about going for scale.
4. Invest in R&D, tech and infrastructure. This will result in a better user experience and improve operating efficiency.
   1. Drive efficiencies and increase monetization.
   2. Improve the user experience.
   3. Expand the products and services in high growth areas.

I write, speak and consult about how to win (and not lose) in digital strategy and transformation.

I am the founder of TechMoat Consulting, a boutique consulting firm that helps retailers, brands, and technology companies exploit digital change to grow faster, innovate better and build digital moats. Get in touch here.

My book series Moats and Marathons is one-of-a-kind framework for building and measuring competitive advantages in digital businesses.

Note: This content (articles, podcasts, website info) is not investment advice. The information and opinions from me and any guests may be incorrect. The numbers and information may be wrong. The views expressed may no longer be relevant or accurate. Investing is risky. Do your own research.