How to make the most of your overlooked resources to create growth

Opera Singers vs Furry Animals

What do you do if customers are finding it hard to tell the difference between you and your competitors? It’s easy to think that you either have to shout louder or price lower. But neither of those tactics are going to compensate for long.

It would be tempting at this point to think that you need a silver bullet – some external saviour that will provide a one-stop solution. Typically people might suggest hiring a ‘rockstar’ marketeer, new gimmicky promotions, or even an acquisition. And while any of these can work, they can also be risky, not to mention expensive to bring in.

Rather than going outside too quickly, it can be faster and safer to start with a deeper look inside the business. Almost all businesses build up reserves of hidden – and therefore under-appreciated or overlooked – assets. If they can identify and package them appropriately, they can often create new growth (and increase their attractiveness to investors to boot).

For example, consider price comparison websites. Matthew Crummack led GoCo, owner of UK price-comparison site GoCompare, prior to its successful sale to Future plc. He talked to me for my new book, Start With What Works: a faster way to grow your business

Matthew explained that the UK price-comparison market “had got to the point where everyone thought that success was only ever about whose TV advert people would remember: our opera singer versus the competition’s furry animals.”

GoCompare needed a deeper and more sustainable basis for competition.

They asked themselves: “Given the way we operate, what capabilities do we rely on that could have additional value if they were deployed for other applications?”

Sorting through their resources, the GoCo team recognised the opportunity to bundle them up into a micro-services architecture they call SaveStack. They realised they could then take the same software components they used internally, package them appropriately, and offer them to external partners. So now, for example, Virgin Money uses the capabilities of SaveStack to enable its bank account customers to switch energy suppliers.

GoCo didn’t start out with the intention of providing software services to banks. Neither did Amazon start with the idea of providing cloud computing, nor Ocado with the idea of providing e-commerce infrastructure for supermarkets globally. Nor did Basecamp start with the idea of producing project management software (their namesake product was a tool for internal use until they realised it was better than the long-forgotten application they’d originally intended to offer the world!).

Three ways to find overlooked resources

Just as modularity is a key feature of software design, you can use modular thinking well beyond the product and apply it to your whole business.

Here are some of the highest-potential questions to ask yourself:

1) What is implicit in the things we are good at doing? Could we package up these capabilities as new offerings?

The GoCo example is very software-oriented. But this is not just about coding. You can apply a similar thinking pattern to all manner of businesses. Think about Lotus Cars: they started building very light sports cars renowned for their handling and then became Grand Prix winners. As a result, they developed world-beating expertise in automotive suspensions. Now, consulting on suspension design for major auto manufacturers makes up a good half of their business.

2) Where have we solved problems for ourselves with solutions that we could sell?

Ocado has done this. So has Unipart: originally a car parts manufacturer, it built a profitable consulting arm focused on sales and factory improvement,  applying the lessons it had learned optimising its own operations.

3) How come we aren’t worse?

This question often strikes people as weird when they first hear it. Yet when you ask yourself why you aren’t better, you’ll hear about deficits. When you ask yourself why you aren’t worse, you’ll hear about resources.

Starting with what works makes you hard to copy

A business that lazily copies competitors gets into tit-for-tat advertising exchanges or relies on ‘best practices’ developed by others is unlikely to develop distinctive and hard-to-copy resources itself. On the other hand, by starting with what works, by modelling your own success, hunting out the underlying resources and bundling them in new ways, you naturally become more distinctive.

Most MBAs learn Jay Barney’s VRIO framework. It says that if you want a sustainable advantage, you need resources that are not only Valuable and Rare, but are also Inimitable – that is, hard to copy (you need to be organised to exploit them, too). Starting with what is already working in your business can make you Inimitable: you develop and build on your own capabilities, which become both stronger and more singular.

Starting with what works is a great way to build inimitability. And that inimitability helps you to stand out in the customer’s mind, and build the sustainable advantage an investor wants to see, too.

Andy Bass PhD is author of Start With What Works: a faster way to grow your business, published by Pearson Business. Read a sample chapter and download resources here

Written by Andy Bass

Prepared by Ebony Ximines-Parke