Is product diversification essential to building resilience?
18 March 2020
Following the blog on market diversification, another major factor affecting business resilience is a lack of product diversification strategy. If you have only one product in your business, then you are exposed to the risks of new entrants, pressure from key suppliers, the threat of substitution, and changes in your customers and their needs. The good news is that whether you are identifying new applications for existing products, extending your product life through new features or innovating totally new products, then there is lots of support to help your business.
To illustrate how much support exists, below are some of the great ways your business can find help if planning to diversify:
- Knowledge transfer partnerships: These link businesses to research and skills in universities and help companies benefit from the latest academic thinking. The company part-funds the research position, but then benefits from the research using the university resources
- Catapult centres: These are a network of world-leading technology centres designed to transform the UK’s capability for innovation. They are focused centres to help turn ideas into products and services
- Research and Development tax credits: Businesses still fail to claim genuine tax incentives to support innovation. Even aborted and failed research is eligible
- Grants: In addition to national grants from sources such as Innovate UK, there are also regional grants such as Made Smarter and the Manufacturing Growth Fund
- Regional Growth Hubs. These are public funded organisations designed to support businesses and help them connect with support in their region. Our own business resilience workshops are sometimes funded through the regional growth hubs to deliver focused advice targeted at areas businesses most need help with.
So is this strategy for you, would you be better off? Below are 5 useful questions to help you think about whether you should invest in new products:
- What is the maturity profile of your existing products (Emerging, Growth, Maturity or Declining) and is this balanced?
- What substitutes exist for your product, and what developments are taking place with those substitutes?
- Are you seeing competition either entering or leaving your market, since this could indicate saturation or disruption in your existing market?
- What trends, regulations or demographic shifts could impact the market for your product (eg. what if plastics are banned, how will global travel bans impact sales)?
- What resource could you allocate to planning, research, development and commercialisation and is this adequate to ensure success?
Click here to get in touch with our business resilience team to discuss how we can help you with your diversification options or enquire about a business resilience workshop.
Our simple and free online diagnostic can also help you think about how you might build increased resilience in your business.