Issue No. 39 - February/March 2008
Changing your core business
by Craig Stubing
The landscape for many businesses has changed dramatically in the past 10 years, due mainly to ‘globalisation’ and, more particularly, due to the rise of the economic powers of China and India. This shift has impacted on SA particularly adversely.
A good example is the toolmaking industry, one that has been decimated due to the large first- and second-tier auto companies taking their tooling needs offshore. Unfortunately, very few companies saw this coming and have either shut down or are struggling to survive.
One company, however, had the foresight and leadership to adjust and is thriving in the globalised economic environment. This particular company, Northern Tooling of Pooraka, led by Brian Wildman, is a model case for what companies should have done.
Wildman spent three years campaigning overseas, selling his company’s core competencies to potential partners. Finally, early this year, he found a suitable partner and as a consequence has not only survived this paradigm shift but has capitalised on it.
What then becomes of those companies who were caught out by the globalisation shift and are still clinging to life? They have two choices;
-Shut down and lose a significant amount of money or;
-Change your core business.
Core business is not something that is well understood, so it is appropriate to start with a definition: ‘core business’ is the central - usually the original - focus of an organisation’s activities, that differentiates it from others and makes a vital contribution to its success.
The concept of core business became prominent in the 1980s when diversification by large companies failed to generate the anticipated degree of commercial success. In 1982, Tom Peters’ and Robert Waterman’s book In Search of Excellence suggested organisations should stick to the knitting and avoid diversifying into areas beyond their field of expertise.