In the life cycle of many businesses, a turning point is reached when growth stalls and changes are required to climb to the next level. One answer to this plateauing, which is often advanced by recessionary times, is to diversify markets and product lines. But doing so can be disruptive, frightening and, if mishandled, dangerous.
THE PROBLEM
For more than 10 years, Burnaby's Icron Technologies Corp., a TSX Venture-listed company, grew steadily in the business-to-business (B2B) market. The company developed and commercialized USB extension technology, which - via wire, fibre optics or wireless - enables USB devices to be used far beyond the traditional two-metre cables attached to most of them. But recently that growth slowed and Icron had to find a new way to continue its upward trajectory.
THE SOLUTION
The Icron board noticed this revenue peak and decided to make a strategic shift. After much deliberation, it formed a new strategic plan that emphasized creating and marketing products for different areas of its normal market sectors and targeting regions it had ignored previously. But it also meant changing its core business model. Instead of exclusively working the B2B market, Icron chose to diversify its product line into the perilous and unknown consumer market.
Diversification is generally viewed as a less-thanradical form of innovation strategy, but it isn't as easy to pull off as that might imply. As with any innovation thrust, company cultures and self-identities become entrenched over time, rendering it difficult to manage the required but often disruptive change involved.
Icron went about overseeing this change methodically. First, it examined its existing markets - industrial automation, medical imaging, interactive digital signage and remote desktops and kiosks - for further applications of its technology. Then it diversifi ed from its traditional North American and northern European hunting grounds into other regions, forming relationships consumers to run any PC application on their TV using standard USB keyboard and mouse peripherals. It took a year of heavy engineering, re-engineering testing and trial and error to make it work, but Icron plans to launch its new TV 2.0 consumer product through several channels in the new year and has high hopes for its commercialization.
While these new markets and products were developed, other changes were going on. New salespeople with experience in the selected markets were brought on board. Three of the five-member management team were changed over the course of a year to bring in fresh thinking and better position the company for growth.
LESSONS
• Commit. Challenges will appear, expenses will rise and stumbles will happen. While risk management is important, you can't waver in your strategy.
• Focus appropriately. You can't change everything at once, so recognize where priorities lie and concentrate on them. Execute intelligently.
• Get the right people on the bus. If you're changing direction, you need the appropriate leadership to steer you there. This doesn't mean attacking the old guard but understanding that a different viewpoint is required.
Check out Tony's blog at bcbusinessonline.ca/insider