The simplest growth strategy

Copy and paste

My feet are abnormal. They’re flat, wide, and aging. I use orthotics to ease the pain. Shoe shopping is difficult but I’ve narrowed my choice of stores to Athlete’s Foot and Skechers. There may be others but these two have what I want.  

What’s more, they're international. If I forget to pack my ideal shoes, I can buy them in most countries. My needs can’t be that abnormal because both chains are global successes. There are 1,700 Skechers in 160 countries. The equivalent numbers for Athlete’s Foot are 483 across 27 nations.

The success is not about my feet. It’s the business principle called strategic differentiation and it’s the primary consideration when you expand into new markets, whether they are in the next suburb or the next country.

Start with what you are good at 

Every business does something better than others. It’s one reason people think about new territory. They’ve already captured significant market share and there’s not a lot of headroom left. Your strengths might be convenience, service, price, product, range, location or some other aspect of your value chain. You mightn’t be great at everything but you are good at something. What is it?

This defines what other markets you can easily enter. 

Put together a manual of the way you do things. Drill down on your own model — what works well, what doesn’t, what could work better. It’s good practice even if you never venture out of the street. You will see what’s required to  optimise your business. Once you’ve got your manual, you have a template to test in other markets.

A checklist

Look out for  things like disposable income or regulatory differences. Even the adjoining suburb might come under the jurisdiction of a different town council, not to mention the next state let alone the adjoining country. What works in South Korea probably won’t fly in North Korea. 

But where does it fly? Does your strategic difference offer something local alternatives do not? Do you already have existing relationships with particular suppliers that support geographic expansion? Is the third-party infrastructure you need available? 

Ask the basic questions. Is your business self-supporting and sustainable in its current shape? It should be, even if you aren’t going anywhere. Can you afford the set up costs of a new market launch? If not, you might want to look at why not. And who is going to run it? If your business is well managed and your manual is structured and specific, you should be able to delegate the job to someone else. Even if not, other tactics might include joint ventures, licensing or franchises.

Easily replicated business models usually have a product that takes advantage of existing but untapped resources in the target market. An HBR review of the subject looked at Vanguard’s exchange traded index funds (ETFs) as an ideal example. They are a global product. They work anywhere there’s a stock exchange with an index. Skechers and Athlete’s Foot can operate anywhere people have sensitive feet.

It’s a simple strategy. 

If the shoe fits, get another one like it.

Comments

[Norman Chorn]

Alan, you have taken a subject that most people think they understand. And then you've given it the "Hargreaves" treatment that surfaces key insights in simple and direct terms. Well done!

[Ellie B]

There are plenty of fashionable shoe shops. The thing about skechers is they care about your feet as much as they do about fashion.

[espion.com]

The best differentiation is customer service. A lot of product offerings are pretty similar. What makes me go back to the same place or the same supplier is how my query, problem or issue is managed. Good post. Reminds me how simple basic business strategies cut through a lot of commercial overthink.