The Thesis of "Insight-Centric Growth Strategy"

The motivation for writing:

I have been very fortunate to be engaged in the hands-on work of business creation in many forms — as a board director of a listed company, as the CEO of a venture, and as an advisor.

Thanks to many mentors and direct practice, I have been able to learn business creation, and recently I feel a certain degree of reproducibility has emerged.

At the same time, I came to feel that the methods being practiced by genuine operators are remarkably unknown — or misunderstood — by the broader public.

It is, for example, not unusual to come across a case in which a team uses a patchwork of frameworks: "We performed PEST analysis, then SWOT analysis, applied Five Forces to the target industry, drew a Business Model Canvas, and..." A patchwork of frameworks generates a great deal of fill-in-the-blank work, but drifts away from the goal of actually building a business.

In response to this, I developed the motivation to interpret the methods that operators actually practice, distill them into a simple methodology, and accelerate companies' expansion into new domains.

Characteristics of the methodology this book proposes

I will explain each point in detail in the book and on the blog, but the main claims of this book are as follows.

Target domain:

• Companies are heavily constrained by their own capabilities. They need to accurately grasp those constraints and define the business domain accordingly.
• If you wish to move into a business domain that requires new capability acquisition, that intent must be accompanied by investment intent. To acquire new capabilities, you can shorten the time required beyond simply building them in-house — by leveraging M&A and minority investments.
• It is possible to begin examination while ignoring capability constraints, but later in the process you will run into questions such as "can our company beat the competition?", "before winning, do we even have the capability to make this business viable on a smaller scale?", and "who will lead this as the principal owner?" If you do not hold the view that, although the capability is not currently in-house, it will be acquired through bold investment (M&A or hiring of key players), then examination of an adjacency far from your current footprint is highly likely to end in waste.
• Defining the target domain is the very essence of a company's mid- to long-term strategy. You need to be able to make the claim: "We want to do XYZ. We currently hold the capability of ABC. To achieve our goals going forward, building on the capabilities we currently hold, we should win in the DEF domain." It should not be something swayed by buzzwords.
• By defining the target domain, decision-making accelerates, and assets (information, networks with customers and suppliers) can be shared across multiple businesses.

The company's capabilities:

• Your company's capabilities can be understood by unpacking the reasons your company is able to make a profit today.
• Capabilities can largely be described as a system combining "planning and design," "production and service delivery," and "sales and marketing."
• What does not serve as a reason for generating profit cannot be defined as a core capability of the company. Patented technology and a customer base can serve as a catalyst for moving into new domains, but they do not guarantee sustained advantage. These two in particular tend to be overestimated when companies talk about their own capabilities.
• Acquiring capabilities takes time and carries high uncertainty. This is especially true for companies that have not made capability acquisition a habit. By making capability acquisition a daily practice, a company can continuously expand its business domain. To realize this, they should make the routine pursuit of new customer segments, the launch of new offerings, and challenges in new businesses a habit.

Insight:

• In this book, the core element of strategy is called "insight."
• Insight is a claim, made with supporting evidence, that says: "There is a value customers are seriously demanding. However, for structural reasons (mostly organizational), incumbents are currently unable to provide a product or service that fully satisfies that demand. We are confident our company can."
• To discover insight, repeated dialogue with customers and incumbents, and the iterative gathering of feedback on your own ideas, is effective. The information you can grasp through pure research is limited.
• Insight is difficult to convey objectively, and can be shared only with those who share the same background knowledge and experience. When you need to explain it to others to secure investment or approval, creating a small sales record is more effective than the insight itself.

Business launch:

• Launching a business is impossible without a passionate business leader who concentrates a great deal of time on it, and an agile structure. Without these two, no matter what kind of strategy you draw up, the difficulty of making the business a success becomes extremely high. You should pursue strategy formulation and the building of an agile operating structure in parallel.
• An agile structure is a state in which, although there are some constraints on authority, an execution organization centered on the business leader can change strategy on its own and immediately. This structure should be built by engaging the executive team and the department-head layer as well.
• Launching a business part-time significantly damages speed. At least one person should be 100% focused on the business launch for three months. The business leader also needs to be facing the customer, not the internal organization. For startups and similar settings this is obvious, but when a business is being created inside a company, it is not unusual for more than half of the business leader's work to be internal-facing — which significantly lowers the probability of success.
• Every day, the business leader must be able to explain — and act on — the business goal, the gap between the current state and the goal (the challenge), and the effective measures for resolving that challenge. If they are not doing so, you cannot call it "working on a business launch."

An invitation to joint research and discussion

Through the cooperation of wonderful colleagues, I feel we have been able to organize the methodology to a reasonable degree, grounded in concrete cases. At the same time, I recognize that there are approaches beyond those described in this book.
Nor do I, of course, claim that my own thinking is perfect.

I intend to continue research activities based on a variety of cases. If you would like to "co-author reports or papers" or "discuss interpretations of cases," please get in touch.