Developing adjacent businesses is another way of saying you’re committing to doing the same thing as before.
Building a growth strategy based on category adjacencies sounds like a great idea. Adjacencies are intended to leverage your company’s existing infrastructure, know-how, brands and route to market. They enable your company to launch new products and innovations faster, with less investment and risk.
There are a myriad of studies and articles promoting this approach – and it has worked in the past for companies including P&G, Nike, Mondelez and others. But it’s not a strategy for success anymore. Building adjacencies worked when the rate of change was slower, competitors were known, and the market needs were stable. None of which are true anymore, particularly in CPG, particularly in the post-COVID period we are in.
A great strategy creates ownable, and profitable, competitive advantages that grow the business. When all your known, and unknown, competitors have the similar core competencies (and are probably looking at the same adjacencies) growth will only come from taking bold steps away from your core business.