Current economic conditions require that companies expand. Expansion can take the form of new locations or new productcategories. Without a specific strategic for this grow, companies can fall into “mindless expansion”according to Sanjay Khosla, the former president of Kraft Foods International, and author of “Fewer, Bigger, Bolder.”
“Expansion can become addictive, and after a while companies tend to binge like junkies on product variants, brands, acquisitions and new markets,” Khosla explains.
The problem is that this leaves companies spread too thin. More importantly it leads to “stumbles from which it can take years to recover,” Khosla said. Some companies are recognizing this and taking action. For example P&G’s CEO A. G. Lafley announced earlier this month that it was conducting an overhaul of the company which could result in the number of brands being cut in half.
This action is exactly what Khosla and co-author Mohanbir Sawhney advocate as bold moves in order to move from the “seduction of more” to the “wisdom of less.” They have studied a number of companies over a number of years which resulted in the formulation of the Focus7 system which is a framework for achieving sustainable growth.
“Sustainable growth is growth you can maintain without twisting yourself into a pretzel each quarter to make your numbers; growth that produces decent margins; growth that makes organization charts subservient to profits and not the other way around; growth that favors simplicity over complexity,” the authors write.
More on expansion strategies on IndustryWeek.