Fusion Based Strategy

CEO’s and their management teams must make impossible choices about where to deploy resources. Every incremental dollar of investment has a significant opportunity cost.

As a strategist, I am regularly involved in conversations with management teams trying to prioritize how to expand capabilities in existing businesses, while seeking out new ones.  Yet perhaps entrepreneurial companies can have the best of both worlds by leveraging fusion-based strategies.

A fusion strategy extends a company’s core competency with new capabilities that make its offer more compelling.  Such strategies are front and center in business-to-consumer (B2C) enterprises that must combine traditional store fronts, with digital/online solutions. Macy’s has found that multi-channel customers spend five times that of customers who shop only online[i].  Sears, who has invested heavily in online ventures to the detriment of its physical stores, has suffered a severe contraction in enterprise value (Sears’s stock price is down 75% in the last seven years).

Does the fusion concept extend to business-to-business (B2B) enterprises?  As they say in the Midwest, “You Betcha.”

With the convergence of technologies that promote greater speed at lower costs, business transformation is easier to come by than in the past. Even companies in stodgier industries such as capital goods or construction have to find disruptive innovations that can spring their business forward.  To do so will likely meld old-world and new world approaches.

We work with a law firm that deployed tablets in the courtroom last year. While the use of something as pedestrian as tablets may not seem that sexy, within the practice of law (which is slow to change), it has been viewed as game changing.  Not only do the firm’s lawyers have all of their evidence at their fingertips, others in the profession have taken notice that the firm is ahead of the curve.

Similarly, existing business models can be blended with new ones.  Renovation Realty is disrupting two markets.  Say you want to sell your house, but it is in disrepair. Renovation Realty will renovate your home, finance the renovation, and list it for sale. There is nothing revolutionary about any component in the offer, but in combination, the value proposition is transformational.

As you consider how to prioritize your investments think about fusion based strategies that can deepen your value proposition with existing customers while attracting new ones.

Marc Emmer is President of Optimize Inc., a management consulting form, specializing in Strategic Planning. Marc can be reached at marc@optimizinc.net.

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