Most businesses look for new opportunities in obvious places, adjacent to their current position. They typically ask two questions:
1. What new markets can we sell our existing products or services into?
2. What new products or services can we sell to our existing customers?
These are perfectly valid questions. You should ask them and you explore the possibilities that the answers bring. But don’t stop there. If you do then may miss other and more exciting possibilities. Look for some distant relations as well as close cousins.
Caterpillar was a well-established leader in heavy earth-moving equipment. Then in 1996 they started selling ‘Cat’ branded work boots. These were successful with young consumers who would never use or buy heavy Caterpillar machinery. By 2000 they were selling over 25 million pairs of boots. They have now branched out into other kinds of clothing and toys to exploit the Cat brand.
Disney Corporation was a leader in cartoon films before it made the bold choice to go into theme parks. There were some synergies but it was not exactly an adjacent space in the market. It was a great success and Disney subsequently branched into other areas such as musical shows (such as the Lion King) and stores selling related Disney products.
Richard Branson’s Virgin Group takes this principle to extremes. They deliberately break the marketing rules about only choosing adjacent markets or products. Virgin, having started in music, has launched companies in airlines, trains, banking, cola, wines, bridal wear and so on. Indeed Richard Branson has founded over 200 separate companies. The only thing they have in common is the brand image of aggressive innovators and upstarts.
How can you find distant relations? Watch out for unexpected customer orders or compliments. Look for skills, strengths, extra services or by-products that your business has today but is not commercialising. Ponder what you are really good at. What is it that you can get passionate about? Ask employees and customers for ideas and suggestions. Above all, keep an open mind as regards possibilities.