Edge Strategy: Tapping Potential at the Edge of Your Core Business with Dan McKone & Alan Lewis

hi my name is Dan McKown I’m a managing
director with L.E.K. in the Boston office and I’ve been with L.E.K. for about 20
years now hi my name is Alan Lewis I am managing director in our Boston office
and that strategy is a disciplined and methodical approach to growth in your
business so many times when we think about growth and businesses we’re
tempted to go for very high-risk gambits we’re tempted to think about how can I
go into a new customer set how can I think about going into a new market
pushing myself to to go into adjacencies which I may not feel comfortable with
and may introduce operational complexity into my core business which I’ve
cultivated over so many years an edge strategy is about moving just
incrementally along the periphery of your business and thinking about how can
i leverage the latent assets that I have how can I take the infrastructure I’ve
already invested in and make that extendable into a new space but not so
new that it introduces undue risk we found that it seems to be a very common
and if I even invoke mindset these days to consider growth strategy as being
something that has to consider far-flung big bets opportunities to look to the
horizon to try and find where you can grow your business and what we’ve
actually observed and we’ve found with many of our clients is that in stepping
over to those opportunities you’re actually stepping past this area in this
twilight between your core and your a non core where there’s a whole series of
opportunities to find incremental high margin growth for your business so a
great example of edge strategies in action is the telecom industry if we go
back to 20-30 years ago the telecom industry was all about access you paid
for local service you paid for long-distance service but it was really
about people talking on phones and then what happened in the 80s and the 90s
well technology improved and moved on and it became possible for the telecom
to layer on additional services on top of its core
call-waiting Digital intercept caller ID voicemail these are all things that
didn’t exist at one point but in the 80s and the 90s
they were slowly layered on into people’s packages first is ala cart
services and then his bundles but when you think about it the infrastructure
was already there the customers were already there and what the telecom
companies did was layer on a very complementary symbiotic service that
enhanced the overall package for the customer for some more money high margin
higher customer satisfaction and relatively low risk because many of the
latent assets were already there so one of the ways that companies can find an
edge opportunity is to try and complete their customers journey so what does
that mean well anyone who provides a product or service is usually helping a
customer on a path to somewhere but not often the case is that that path
continues after that service or product has been purchased and a great example
of that is going to the grocery store so Whole Foods has a great edge strategy
where they realize that a lot of their customers weren’t coming to buy a week’s
groceries they were coming to buy the ingredients of a meal or indeed the the
frozen pizza that they would go home and cook to eat so they’re clearly looking
their journey was to be you know to have a meal and they realized well we can
complete that meal for those customers we can have prepared food hot food ready
ready to eat right there in the in a store then indeed they can leverage the
existing store resources to do that and so they’ve they’ve done this and
they’ve actually had great successes about 20% of their business today and
based on our analysis and estimates the equivalent basket of goods could be up
to five times as profitable for them that’s just selling the ingredients so
we think every executive should be asking the question of their management
team you know what is my edge strategy or what is our edge strategy we found
that all too often it seems to be the sort of mantra to bet big the only way
to grow is to look at the horizon look at distant opportunities and and try and
find ways of being bold and transforming your industry whereas what we’ve
actually recognized almost in any industry we look at in any kind of
company there are readily addressable opportunities to take edge plays and
find incremental high margin sources of growth

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