GUEST POST from Mike Shipulski
Your core business, the long-standing business that has made you what you are, is both your greatest strength and your greatest weakness.
The Core generates the revenue, but it also starves fledgling businesses, so they never make it off the ground.
There’s a certainty with the Core because it builds on success, but its success sets the certainty threshold too high for new businesses. And due to the relatively high level of uncertainty of the new business (as compared to the Core) the company can’t find the gumption to make the critical investments needed to reach orbit.
The Core has generated profits over the decades and those profits have been used to create the critical infrastructure that makes its success easier to achieve. The internal startup can’t use the Core’s infrastructure because the Core doesn’t share. And the Core has the power to block all others from taking advantage of the infrastructure it created.
The Core has grown revenue year-on-year and has used that revenue to build out specialized support teams that keep the flywheel moving. And because the Core paid for and shaped the teams, their support fits the Core like a glove. A new offering with a new value proposition and new business model cannot use the specialized support teams effectively because the new offering needs otherly-specialized support and because the Core doesn’t share.
The Core pays the bills, and new ventures create bills that the Core doesn’t like to pay.
If the internal startup has to compete with the Core for funding, the internal startup will fail.
If the new venture has to generate profits similar to the Core, the venture will be a misadventure.
If the new offering has to compete with the Core for sales and marketing support, don’t bother.
If the fledgling business’s metrics are assessed like the Core’s metrics, it won’t fly, it will flounder.
If you try to run a new business from within the Core, the Core will eat it.
To work effectively with the Core, borrow its resources, forget how it does the work, and run away.
To protect your new ventures from the Core, physically separate them from the Core.
To protect your new businesses from the Core, create a separate budget that the Core cannot reach.
To protect your internal startup from the Core, make sure it needs nothing from the Core.
To accelerate the growth of the fledgling business, make it safe to violate the Core’s first principles.
To bolster the capability of your new business, move resources from the Core to the new business.
To de-risk the internal startup, move functional support resources from the Core to the startup.
To fund your new ventures, tax the Core. It’s the only way.
Image credit: Pixabay
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