Intellex Acquires Expert by Big Village

We're thrilled to announce that Intellex has acquired Expert by Big Village, effective March 22, 2024. This strategic move enhances our capabilities and strengthens our commitment to delivering exceptional solutions to our customers.

Stay tuned for more updates on how this acquisition will benefit our clients and experts.

For inquiries or more information, please contact us at info@intellex.com.

×

Achieving Sustainable Growth Through Adjacent Markets: Defining Adjacencies

Finding new areas of sustainable growth is challenging! Developing successful growth strategies through adjacent markets can be tricky for a number of reasons, especially if the market you’re interested in is fragmented or not widely published.

Big Village Insights recently hosted a webinar, “Achieving Sustainable Growth Through Adjacent Markets,” where Big Village’s Brian Reuter and Linda Shea addressed a proven disciplined, repeatable process for adjacent growth.

This webinar addressed multiple important topics, including:

  • Defining Adjacencies
  • Determining Market Attractiveness
  • Gauging Customer Appeal and Acceptance
  • Relatedness to Your Core
  • Putting it All Together

In this first blog post of our five-part series, Brian & Linda will take you through the first part of this webinar, “Defining Adjacencies.”

Brian Reuter:

Let’s cover what we’re going to go over in today’s presentation. First, we’ll talk a little bit about adjacency moves themselves, what are they? What are the kind of moves that someone can do to expand their core business? Then we’ll touch on the importance of adjacent market growth and how it fits into other growth strategies that a company might have such as innovation or acquisitions. We’ll take a look at what the main stages are of an adjacent market growth strategy and then focus in on the evaluation stage.

That’s the bulk of the content we’re going to be talking about today, and we’ll look at the criteria area that are used to evaluate those opportunities. There’s three main categories of criteria. Market attractiveness, customer appeal and acceptance and then relatedness to your core business. Then we’ll wrap it all up and put it together to give you a sense of how this all comes together for an adjacent market program.

Now, the framework we’re going to go through today was developed through three major components. One, literally decades of working with clients, helping them evaluate their adjacent market opportunities. The second component came from research we’ve done through reading books and articles and journal papers about the processes and methods of evaluating adjacent market opportunities. Lastly, we did our own in depth interviews with executives whose job is to find ways to grow the core business, move it up beyond its core and we put all that together and created the framework that we’re going to review today.

So what are the moves that someone can do in terms of adjacencies? So the first one that we’re probably all familiar with is product adjacencies. A good example of that would be say the company Toro taking their knowledge of turf care, and moving over into small construction equipment, there’ll be a lot of expertise they can leverage in terms of the equipment itself and the distribution channel.

Another good one is, another example is the value chain. So a good example of a value chain move would be like Tesla making their own batteries. So sort of a vertical integration plate rather than their competitors, the other main OEMs partnering with battery manufacturers. Another one is geographies. So that’s pretty straightforward. Take the existing business you have today, move it into a new country.

Now, you have to make tweaks based on the local business processes and laws and the customers, but the idea is taking that business to a new geography, then there’s channels. So can you identify other channels you’re not leveraging today, because if you can find new channels to sell through, most likely you’re going to tap into new customers that you don’t have today. A good example of that might be a company opening up a digital channel, either on their website or via marketplace on Amazon, something like that. Then there’s a whole new business. That’s a pretty tough move.

An example of that might be, if you’re a manufacturer and you have developed really strong supply chain and logistics expertise and you decide to take that expertise and offer it as a business offering supply chain logistics services to customers. So the opportunities that I just talked about represent all the different adjacency moves that someone in a business could make. The ones in red are the most challenging ones. Those are really difficult and aren’t done very frequently.

Most of the time people look to make moves of the ones that you see in blue. So such things as product, geography, customer and channel. So I talked about those in sort of a theoretical sense. Linda, can you give us an example of a project that we actually did for a client helping them with adjacency?

Linda Shea:

Sure, Brian. When we think about a lot of different ways to look at adjacencies, we have a lot of clients that we work with. As we look at innovation and we look at technology and particularly in manufacturing environments, there’s an awful lot of focus on robotics. Now, in one particular case, we wanted to try to understand how the introduction of robotics could actually change a work process, a workflow, if you will. This is in a healthcare environment, where an existing set of customers were actually asked to try to learn more about pain points in an existing workflow, and how the introduction of robotics could not only change, or perhaps address those pain points, but also change the workflow.

The changes could lead to increased accuracy of what was being done in surgical procedures, as well as increases from a time efficiency standpoint, and just an overall ability to know that the way in which different procedures are being scheduled, the individual, healthcare professionals involved in these procedures, the time required of them and then of course, the outcome of the procedure that was actually being conducted.

Very real kind of situation is for so many manufacturers within healthcare today, and a very, very positive situation here for the client, where they were able to very clearly understand the opportunity that resides in that particular adjacent market and meet a very clear cut decision in terms of the ability to move into that space, and to be able to successfully estimate what the opportunity would mean for their business. So that’s just one of many, but hopefully gives you something very tangible to think about.

Brian Reuter:

So why is it important to consider adjacent markets? The reason we want to take a look at adjacent markets is they can really drive growth for your company, but when we look at all the different ways to grow a company outside of growing for itself, none of them have a really strong success rate. Adjacency is 25%, new products 30, even with new products and CPG it’s worse, about 10%. P&G really does a lot of product testing for that reason, because success in CPG, new product launches is pretty low.

You can see the other areas we have that just the odds of success are not real high, and in addition to that, managers tend to have a built in bias to underestimate and unprepared for moves like this, mainly because they’re under so much pressure to act fast and deliver results fast. There is a reason to believe if you will, in adjacencies. If you look at some research that McKinsey has done, trying to understand where The targe components of growth come from, they discovered that 80% of a company’s growth comes from the choice of markets to be in an M&A, and really, those are forms of adjacency.

Other than M&A activity where you might make acquisitions of direct competitors, but if you make acquisitions to get into a new product area, or a new geography, that’s all adjacencies and a choice of markets to be in. Other than your core, that’s adjacencies. So 80% of growth comes from that, while only 20% comes from growing your existing core market itself. So that’s why it’s important to develop a good strong adjacent market process. Linda, can you talk a little bit about, share some insights about how being successful with adjacencies relates to getting closer to your customers?

Linda Shea:

Certainly. I think as we look at the myriad of options that you have, you really do need to think about what are you learning from your customers, what can you learn from your customers. So much of the work that’s done in the customer experience world is focused on improvement. Improving experiences that are provided to customers today. Sometimes we forget about the fact that there are tremendous opportunities that are surfaced in many cases, in terms of understanding unmet needs, and looking at opportunities to move forward.

When you start to think about where success can come from, that’s certainly one angle to think about. We would also encourage you to start to think a lot about your core, the strength of your core, to understand what you can really leverage to help you move forward into an adjacent space. I would also encourage you to think about how do you execute? I think in so many different cases, when we work with clients, we think about so many different angles to an adjacency, and sometimes you tend to overlook execution.

The devil in those details can really create a significant failure for you, if you’re not wise about thinking through how do you actually execute. I would also say an additional point to think about is repeatable characteristics, something that you can build on. Does that mean perhaps you’re moving into a new space, a new geography, something that would allow you to leverage the core and to also leverage those repeatable characteristics.

Then last but not least, as I started off saying, it really is about trying to understand, talk sometimes with your customers and understanding their needs, their opportunities. The example used just a few moments ago was with a client’s existing set of customers and looking at pain points and trying to understand where in that case different forms of technology could actually help.

So you’ve seen cases like this, success rates can jump up dramatically higher than Brian just spoke about. Upwards of 60 to 80%, which is notably different from what we just heard from Brian a few moments ago. So Brian, do you want to take us through then some of the stages that I know we’re going to talk through?

Brian Reuter:

Yeah, definitely. Before I do that, I just wanted to share one other example about the repeatability angle. A great example it’s a little bit older, but it’s a really good example that clearly illustrates the power of finding repeatable formula for your adjacencies, and that is Nike. If you look at what Nike did, this was their formula. They would identify a sport to enter, they would lead with shoes because that is their core expertise in the United States.

Once they started to get a foothold there, they would leverage an athlete, a celebrity athlete to endorse the shoes. Then once they had good success in the US, they would then start going internationally and go start doing the same thing in other countries. Once they had, for the most part, penetrated the shoe market in that sport, then they would go to soft goods like clothing and whatnot, and do the exact same thing. Start in the US with a celebrity athlete expand globally, then they would come back to hard goods and they just kept repeating that formula to different sports over and over and it was a really successful adjacency formula with repeatable characteristics.

So the stages of adjacent market growth strategy, there’s four of them. The first thing is, you have to identify some potential new opportunities and there’s some framework for doing that, that Big Village can help you with if you’re interested in. The next phase is evaluating those relevant opportunities. That’s what we’re going to talk about today. That’s a very important step in the stages. The third stage is then strategizing how to pursue them, and then fourth executing strategy, and that’s nothing to sneeze at either, right?

You’ve heard people say, anybody can create a strategy, but it’s executing the strategy that’s the tough part. We’re going to focus in on the evaluation stage in this webinar today because it is so important. If you don’t evaluate opportunities correctly, you can waste a lot of time chasing opportunities you have no business pursuing. You can either miss opportunities. You may not be able to compare the merit of two different opportunities if you don’t have a good way of evaluating them and comparing apples to apples and oranges to oranges.

Keep reading to find out more about our second post in this series, where Brian and Linda address “Determining Market Attractiveness!”

Want to learn more about how you can achieve sustainable growth through adjacent markets? Contact us now!

Leave a Reply

Your email address will not be published. Required fields are marked *

Let’s find you an expert

Request an Expert

Questions? Comments? Concerns? Let us know. We love to hear from you.

Contact Us
Dev Tool:

Request: expert-insights/achieving-sustainable-growth-through-adjacent-markets-defining-adjacencies
Matched Rewrite Rule: expert-insights/([^/]+)/?$
Matched Rewrite Query: post_type=post&name=achieving-sustainable-growth-through-adjacent-markets-defining-adjacencies
Loaded Template: single.php