Which growth opportunities do businesses go after
Think like a stone masons. Once a stone (product/company) has been carefully selected and set, the shape of the next stone becomes apparent, allowing for carefully finding and placing the next stone. Over time, each stone reinforces the other, provided one of the following coherent strategy is used —
Finance First companies like Berkshire Hathaway access cheap capital, find and acquire people/companies with strong competitive positions and manage cash flow across all investments.
Market First companies like Tata operate in trust-deficit markets. They gain the market’s trust by consistently delivering on promise. Then they keep on launching new products (from soaps to cars) to meet needs of their market.
Capability First companies like Google invest heavily in building core capabilities (store and search vast quantities of data) and then go after most opportunities that they can serve with that capability (search, mail, sheets).
Capability and Market First companies like Apple not only build dominance within their target market but also heavily invest in specific capabilities.
Source: Good Profit by Charles Koch
