Page 171 - HBR Leader's Handbook: Make an Impact, Inspire Your Organization, and Get to the Next Level

160 HBR Leader’s Handbook

FIGURE 5-1
Adjacency opportunities for growth

Existing products New products and
and services services

Engage in
breakthrough
Sell current offerings innovation that
New markets to new markets and develops new
customers. products and services
for new markets and

customers.

Sell product
Increase current extensions and
Existing markets business in market variations to existing
share and volume. markets and
customers.

products and markets in figure 5-1. With this framework, you can ask your
business leaders (or even team members) to identify existing products or
services that you could potentially introduce into new markets, and exist-
ing markets that would benefit from extensions or variations on your exist-
ing products. These categories of incremental innovation (the two shaded
areas on the matrix) are called adjacencies. At TIAA, selling existing prod-
ucts to new professional groups (such as hospital staff) was a market ad-
jacency, while diversifying investment and retirement options for existing
higher ed customers was an example of a product extension. At Thomson
Reuters, a major adjacent opportunity was to sell existing products to new
geographic markets around the world, so it created a global growth orga-
nization with the specific objective of doing that.

Divesting

Another way to free up cash and resources to invest in future opportunities
is to sell off or close products, units, or parts of your business that don’t
create great returns today and are likely not part of the future business.