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Soaring With Your Core

Your business's growth potential lies not in its margins, but in its foundation.

This story appears in the June 2001 issue of Entrepreneur. Subscribe »

The familiar cliché "stick to your knitting" is one of the oldest business bromides around, but it's never been explored as Bain & Co. consultants Chris Zook and James Allen do in Profit From the Core (Harvard Business School Press, $27.50), a concise, compelling report on why and how to figure out exactly what your company does best-and then do it. The two boil down the findings of a 10-year, 2,000-company study into three key traits that differentiate companies that grow from those that stagnate. First, they say, growth companies reach full potential in their core businesses before trying anything new. Second, when they expand, growth companies look toward adjacent businesses rather than hot industries that are far afield. Third, growth companies can, and do, radically redefine their core operations when dealing with quickly changing markets.

These simple and yet powerful ideas emerge smoothly and convincingly from the mass of data and techniques Zook and Allen have compiled, but there are paradoxes. For instance, companies consistently found the greatest untapped potential in divisions that were already performing well. Sound surprising? Well, there are many such profound revelations to be discovered here.

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