When operating a business there is a question that has to constantly be asked in order to remain competitive and successful: If we focus our efforts on our core competencies will we stay in a satisfactory place or can we pivot to new innovative business opportunities? In terms of core competencies I mean the “bread and butter” of a business. For example, for a long time E-Commerce was the core competency of Amazon, and brought in the majority of their revenue. Eventually there had to come a time where Amazon was in a comfortable place to invest effort in other channels of business. Through this shift they now have a main revenue stream through Amazon Web Services instead of E-Commerce.
There are a lot of different situations a business could be in when looking at the question of resource allocation. They could be in a hole trying to get out or doing extremely well and looking to expand their business:
- Would it be better to focus R&D on our core competencies to improve them, or is it time to try something completely new?
- Will our normal business suffer if we reallocate resources to new projects?
Flat out, running a business just isn’t easy. You need to decide when to keep feeding the fire and when to completely pivot to something different. Your companies Research and Development plays a crucial role in helping make the right decision, but at the end of the day a lot of it is chance and risk-taking.