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This article is Part 5 of an 8 part series.  Read Part 4 to learn how a small business can gain market power.

Geoffrey Moore is Chairman Emeritus at TCG Advisors where he divides his time between consulting on strategy and transformation challenges with senior executives, and developing mental models to support this practice.  Below, Geoffrey Moore discusses the idea of core business versus context business, an idea examined in his book Dealing with Darwin.

Curt-In addition to being a writer, I am the CEO of a software company that sells resource scheduling and timesheet software.  The solutions are web-based offerings that can be purchased as software-as-a-service or installed on the customer's servers.  In a nutshell, it's a timesheet on steroids plus cross project resource optimization and is really great at what it does.

It's a crowded space where there are many competitors.  I'm really interested in your ideas of core versus context; the core business versus the context business.  In your book Dealing with Darwin, you give an example about Tiger Woods. In that example, it's really obvious what's core and what's context.  Tiger Woods knows that his core business is his golfing while his context business is the advertising work.  The advertising brings in a great deal of money, but he wouldn't even have that -- the context -- if he didn't have his core golfing business.  

Geoffrey-Exactly. Does your company have a vertical focus?

Curt-It does not have a vertical focus because most of our customers are BtoB service firms.  Actually, about half are BtoB service firms and half are either IT or R&D organizations.

Geoffrey-Okay.

Curt-We have a PR engine at my company that is very effective at getting people to our company's website, to go to our webinars and be more familiar with with we do as a company. Would you consider the PR engine to be core or context?

Geoffrey-Core is what companies invest their time and resources in that their competitors do not. Core is what allows a business to make more money and/or more margin, and make people more attracted to a business than to it's competitors.  Core gives a business bargaining power: it is what customers want and cannot get from anyone else. 

To answer your question, the PR engine isn't core to your offering because when customers actually compare timesheet against timesheet, the PR engine isn't going to have a big influence on that buying decision at that point in time.  It is, however, clearly a secondary competitive advantage because more people are going to look at your company and your products than your size warrants because of the fact that you have more exposure than your competitors. 

If a company has a business segment that they're not sure whether it's core or context, find the core part of the context business.  For you, that might be your columns on Inc. Magazine or maybe it's speaking events at IT and service conventions where your target audience is present.  If a business finds they have speaking and writing opportunities, they can build themselves up to be a thought leader in their industry.  It's about being in front of new trends and marketing your products as a part of those new trends.  Marketing is part of a company's core if it leads businesses to communicate with potential customers.  But even within that, core is a fractal thing.  There is always a little bit of core in every bit of context, and there is always a little bit of context in every bit of core.  So if a business senses that marketing is becoming context, they are probably getting bogged down in the context part of the marketing program.  But there is probably a core part that a business doesn't want to let go of and in fact may want to invest in even more.

Stay tuned for the next installment where Geoffrey Moore goes in depth about the fractal model of innovation (part 6)!

Curt Finch is the CEO of Journyx, 'timesheet on steroids plus cross project optimization.'




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