Diversifying into New Services Can Help Your Business Thrive
Last week, Numo, Fire Enterprises (FEI) Head Accountant, showed the FEI tribe how strategic acquisitions, a key “inorganic” growth strategy, can help their fire business grow. This week, Numo tells the tribe how FEI can grow by diversifying into new services in response to changing demand, another inorganic growth strategy. Remember, fire = print.
One Thursday afternoon in the main conference room, Numo stood in front of FEI tribe leader Org, sales leader Zoot, and marketing leader Marka to continue their earlier discussions about inorganic growth strategies.
“One of my favorite animals is the octopus,” Numo said.
Zoot was confused. “I thought we were talking about inorganic growth?”
“We are. Just follow me here. The octopus changes the color and pattern of its skin to match its environment,” Numo explained. “Predators pass the octopus by, and it goes on to spawn many more little octopus babies.”
“So?” Zoot didn’t quite grasp the metaphor.
“FEI should learn from the octopus,” Numo said. “The fire market has changed. Demand for our core torch-lighting service is steadily declining. FEI should consider ‘changing its skin’ by diversifying into fire-related services that may be more profitable.”
“I get it,” Zoot said. “For instance, the Matches market has exploded recently. Today’s on-the-go Olympian likes having quick, easy access to fire whenever they want it. By diversifying into Matches, we can capture our share of this growing market and help make up for the steady decline of our torch service. Who knows? Maybe some day Matches will be our core offering.”
“Exactly,” Numo said. “You know Carlton’s Chariots? Years ago Helios, a competing chariot business, listened to customer complaints that chariots were too slow, clunky, and expensive. Helios developed and released the Chariot Mini, which featured a faster speed, sleeker design, and lower price than the ‘classic’ chariots that were Carlton’s specialty. Consumers loved the new Minis, and classic Chariot sales plummeted. Helios thrived, growing their year-over-year sales every year for the past ten years, including by 44 percent last year. Meanwhile, Carlton’s is struggling to break even—all because, unlike Helios, they failed to evolve to meet changing customer needs.
“Let’s learn from their mistakes,” Org said. “Our market is changing—let’s change with it!”