Finding Core Business

What if you’ve taken your

core as far as it can go?

Finding

Your Next

C RE

BY

CHRIS

ZOOK

Business

66 Harvard Business Review

|

April 2007

|

hbr.org

Christoph Niemann

I

T IS A WONDER HOW MANY MANAGEMENT TEAMS fail

to exploit, or even perceive, the full potential of the basic

businesses they are in. Company after company

prematurely abandons its core in the pursuit of some

hot market or sexy new idea, only to see the error of its

ways – often when it’s too late to reverse course. Bausch &

Lomb is a classic example. Its eagerness to move beyond contact lenses took it into dental products, skin care, and even

hearing aids in the 1990s. Today B&L has divested itself of all

those businesses at a loss, and is scrambling in the category

it once dominated (where Johnson & Johnson now leads).

And yet it’s also true that no core endures forever. Sticking

with an eroding core for too long, as Polaroid did, can be just

as devastating. Both these companies were once darlings of

YEL MAG CYAN BLACK

Finding Your Next Core Business

Wall Street, each with an intelligent management team and

a formerly dominant core. And in a sense, they made the

same mistake: They misjudged the point their core business

had reached in its life cycle and whether it was time to stay

focused, expand, or move on.

How do you know when your core needs to change in

some fundamental way? And how do you determine what

the new core should be? These are the questions that have

driven my conversations with senior managers and the efforts of my research team over the past three years. What

we’ve discovered is that it is possible to measure the vitality

remaining in a business’s core – to see whether that core is

truly exhausted or still has legs. We’ve also concluded from

an in-depth study of companies that have redefined their

cores (including Apple, IBM, De Beers, PerkinElmer, and 21

others) that there is a right way to go about...