McGrath – The Garage Sale

What is a core area in a company? That depends, of course, on its business model. And what was once core may not longer be so when the model is adjusted.  Rita Gunther McGrath advises that when this happens the company should do a “garage sale” of newly non-core assets. Why? To free up capital that can be invested in newly core assets.

So Verizon, for example, sold off assets related to its landline businesses when it decided to focus on wireless.

BTW, there may be an alternative here. As Lafley & Martin point out, owning non-core assets opens opportunities for partnering.  This is one of the core ideas of open innovation — putting a premium on knowing when to partner and with what assets.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s