Discovering significant and viable new businesses: have faith in strategic planning basics
Purpose ‐ Managers need research-based guidance on how to find sources of new growth when their core business is maturing. Design/methodology/approach ‐ Authors shadowed managers responsible for finding and entering new businesses, interviewing them every three or four months for an average of two years. They surveyed over 100 corporate venturing units and corporate incubators and assembled a database of over 50 stories of companies that had successfully developed or acquired a significant new business. We interviewed managers in about half of these companies that had successfully diversified and we tested our emerging hypotheses against this database. Findings ‐ All research indicated that managers need to assess opportunities more strategically and be less activity driven. The authors concluded that managers were investing in too many projects, most of which had little chance of success. Research limitations/implications ‐ If research is reported on in the paper this section must be completed and should include suggestions for future research and any identified limitations in the research process. Practical implications ‐ Ashridge Strategic Management Centre has developed a screening tool ‐ The New Businesses Traffic Lights to test opportunities before a business plan has been developed, alongside a business plan to assess the strategic logic for the proposal, or to an existing investment that is failing to meet its short-term targets. Originality/value ‐ Applying the screen to the portfolio of new business investments in most companies will result in red lights for many projects. Not only can significant money be saved from the "new businesses" budget, but also extra resources can be focused on improving the core businesses.
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