… “The tortoise meanwhile kept going slowly but steadily”…

The hare and the tortoise, a fable by Aesop

Today we will continue with the subject number three about growing paths in corporate strategy.

A vaccine option is a corporate strategy decision. Another week of June has come by. I am extremely thankful. The day before yesterday was my birthday. I am simply grateful for being alive. This year has been more relevant than others, because it is a celebration to be healthy in the middle of the pandemic of Covid-19. We have lost so many people, and it is terrible. Anyway, I forgot to tell you that I was vaccinated with the first dose of Sinovac vaccine around two weeks ago. I didn’t feel any relevant side effects with the Sinovac. Just a bit of sleepiness the first day after the vaccination.  

Why did we opt for the Sinovac? I was expecting to wait until a pharma company as GSK or Novartis or SANOFI or Merck could offer a classical traditional approach vaccine, but that may not happen yet. Since I live with my parents which are in a higher risk than me, I do not want to be in the position of getting the virus, and then pass it on to my mom and dad. That is why I also stopped to swim since the beginning of the pandemic. I try to minimize social interactions to the most minimum. What triggered me to accept the Chinese vaccine was not political. I wish to clarify this, because it is perilous to accept to be inoculated. Particularly when we have no idea of what would be the impact of the new technologies utilized to manufacture these vaccines in the future. The hazard to accept a vaccine coming from the mRNA or the viral vector technologies was not on my radar, and I merely twigged my mind to the only classical vaccine available in the country. The only one accessible and obtainable here, that was manufactured under the classical terms. If Pfizer or Astra Zeneca or Johnson & Johnson would have released a classical virus inactivated or live attenuated vaccine, I would have chosen any of them, but that did not occur. By faith we are praying God for our upcoming well-being with the Sinovac option.

Number 3. Growing from the core and then with diversification

Let´s continue with our saga. In our last post, we explored the second trail for growth at the corporate strategy decision making, Growing through diversification. Today we will cover the number three which is Growing from the core and then with diversification,

Have you noticed that whenever you speak about growth, there is an insane desire to grow quickly without any strategic roadmap? Have you perceived during the last year that the pandemic was plainly utilized by the cutting-edge technology companies to install their new products and services at expense of the classical traditional approach?

Have you observed how quickly our top decision makers of the world make up their minds, to respond without hesitation to fix issues, without considering the importance of time? Have you noticed how many companies in this world utilize “wrongly” the theory of business school corporate strategy professors for their own benefits? Without respecting and considering the fair majority needs and wants of the population? Have you seen just today how many corporate offices are igniting the following messages into the population:

• 💰 How to succeed today by going digital, and transforming your company to become more flexible, streamlined and agile?
• 💡 How to make your own investing rules and get yield from cryptocurrencies as Bitcoin?
• 💰 How to install digital education at a country level by redesigning our practices to improve learning?

There is always a truth behind the truth. New ideas and trends have been used by corporations and development cooperation agencies (without knowing) not for the benefit of the majorities, but to offer new stream revenues to the big corporations that sell these new products/or services. These money flows directly to them, or through fees, or per transactions of your money, or even using your private information to sell it to other companies.

Whenever you wish to grow and then diversify ask yourself about the intentions and the aim of those who want you to grow at expenses of their products and services. Ask yourself what is the selfish interest of others behind this alternative for growth? Is it true that we will benefit from it, or are we simply the “guinea pigs” used to make money for the external parties or for those who are going to directly make profits from it? Who will benefit with my companies’ next move for growth?  For example, we discovered over the weekend, about a corporate strategy plan move of El Salvador Government. I read several tweets about a mischievous plan to install Bitcoin as our currency. I wonder who are the corporations or organizations that will benefit with it? Who is behind this decision making that will make profits with it? And why do they want to use El Salvador to launch it?

The path of growing from the core and then diversify (with related adjacencies or unrelated businesses) is one directional strategy that is well studied, documented and supported in business schools. But those profound investigations happened before the era of the Internet. Nowadays, with the combo of NAIQIs in place _{(Nanotechnology, Artificial Intelligence, Quantum Supremacy and the Internet)}, I am sure that new research is required. Particularly if one of these experiments is using “the guinea pigs of El Salvador” to prove their premises.

The urgence to diversify. In our current times, after the pandemic, is urgent to grow outside the core, even if the financial profit numbers are modest. In addition, don´t believe that because the technological industry has been “the apparent winner” in the middle of our pandemic pain, that is the “only way” ahead to diversify.  If we were invited to provide corporate strategy advisory at this moment, and companies´ leaders will ask my opinion, on how to diversify into the tech sector. I am sure, that CEOs will inquiry to me what to do. And “probably” these CEOs are or started exploring and thinking on how to enter into the NAIQIs new start-ups or how to diversify their financial assets portfolios by buying the “new to be” amazon companies.

What will I tell them? Given my experience, I will recommend to simply try to adjust their value chain to continue function in two scenarios: a new pandemic, and a cyber war that can destroy their technology NAIQIs infrastructure. I also will advise to proceed with a cautious approach into the tech sector. To consider new ways to obtain inputs and distribution in local markets (not just importing from Asia). And I will also advise to start to consider diversification into essential products and services. A diversification that won´t hurt.

A Global Cyber War on the horizon. The tech sector is so ample, the next unicorns and hype-curve positioned technologies are of interest for many big, medium and small traditional players. Nevertheless, be sure and without any shadow of doubt, that the next war, for sure, won´t be a military one, but will be a global cyber war of behemoth dimensions that will attack the structural bone of Internet and its related technologies. Particularly the electronic money. It will be a cyber war in which the digital money transfer system will suffer. Of course not only the currency e-digital money, but all the concentric financial technologies (fintech), the e-government and beyond.

Where money is located, robbers are attracted to. If money is located in a bitcoin wallet, that is where robbers will go to steal. If money is positioned in the privileged cryptocurrencies, it is just a matter of time, for high-tech thieves to get acquainted with it, and money will be not just stolen, but the structure of the money mechanisms will be attacked. Bitcoin and cryptocurrencies were never of relevant importance, until the pandemic arrived. So this is so new. Moreover, if you observe the value of BTC (Bitcoin), you can perceive what I am talking about.

How to grow from the core and then diversify?

1. The company has to be ready. Start your preparation to diversify. For example, the board of directors and managers, including staff have to understand why a telecom company will merge with an agriculture company at that location?
2. Consider unique links or related diversification, new products/services or markets (or any type of adjacency). But do not put all your eggs on the same basket.
3. Consider to diversify with unrelated businesses (which are essential to our living). Find possibilities for organic growth (green-field) or at least try to make strategic alliances. Or at least invest a minority percentage into essential companies.
4. Use a process to scan, evaluate, decide and integrate new opportunities. To diversify is not going to give you huge profits at the beginning, but it will be your plan for survival for future pandemics and cyber wars. Conform with modest stable net profits in these new ventures.

If your company has been hit at the core of your business activities during the pandemic, we advise to begin a radical preparation for the future. Be prepared. Prepare yourself for something of this caliber in the future.  It is crucial to build the right capabilities in your team, meanwhile you are considering to diversify. Once the company is ready, it is also convenient to open your minds outside the technology sector. In addition, consider all vertical integration options, to grow organically, or how to deal in partnership or licensing/franchising or by acquiring other companies.

Don´t forget that the rationale of unrelated diversification, is clearly more difficult than to grow from and around the core, or through adjacencies. But there are many corporations that have been successful with it, and have passed with an A+ grade during the pandemic, as an example to demonstrate it.

We all have lived how vulnerable we are. With the pandemic and with an scenario of an inevitable cyber war, we can´t continue believing that growing from the core and its adjacencies is the “only way to go”. It is impossible to survive in an uncertain world, if you only focus in industrial sectors which are non-essential. It is impossible to believe that I can build a company with inputs coming from China or from other countries, if mobility will be restricted in another pandemic scenario. We will be forced to produce our own inputs locally. We will be forced to study and be prepared, and do what China does in Asia, but in our countries. At least partially. We will have to yield around our communities.  All strategy professors and researchers will have to help with new theories on how to make non-related diversification work. And this mindset shift will inevitably stay during the next decades ahead.

On our next publication, we will continue with the second corporate strategy path: Stability. Have a nice week. Thank you for reading to me.

Bibliography utilized to get some ideas when writing today.

https://www.pearson.com/uk/educators/higher-education-educators/program/Wheelen-Strategic-Management-and-Business-Policy-Globalization-Innovation-and-Sustainability-Global-Edition-14th-Edition/PGM1079024.html
https://www.wiley.com/en-us/Contemporary+Strategy+Analysis%3A+Text+and+Cases+Edition%2C+9th+Edition-p-9781119120841
https://www.jstor.org/stable/4165132?seq=1
https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/growing-beyond-the-core-business

Disclaimer: Illustrations in Watercolor are painted by Eleonora Escalante. Other types of illustrations or videos (which are not mine) are used for educational purposes ONLY. Nevertheless, the majority of the pictures, images, or videos shown on this blog are not mine. I do not own any of the lovely photos or images posted unless otherwise stated.

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Published by eleonoraescalantestrategy

Corporate Strategy Artist, San Salvador, El Salvador View all posts by eleonoraescalantestrategy