Wednesday, December 01, 2010

Neglecting the Core

Many companies face a formidable challenge when they try to launch a new internal venture. Many consultants and researchers have focused on the phenomenon of how "big companies eat their young" i.e., the core business sometimes strangles the new venture's efforts to get resources, organize differently, and develop a unique business model.

I find, however, that an equally challenging issue emerges for many companies with regard to what I call "neglect of the core." In this circumstance, so much attention gets paid to the promising, but not yet profitable, new venture that the core business fails to get the attention and resources it needs to continue to thrive. Cross-subsidization from the "cash cow" helps the new venture, but it stifles innovation efforts at the core. It also becomes harder, as a result, to attract young talent to the core. Over time, the core business falters, and it brings down the entire organization.

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