Moving into New Ecosystem Roles is Difficult, if Necessary

One of the surest ways for any contestant in the internet ecosystem to broaden its portfolio is to move into an adjacency. It is, nevertheless quite difficult. Some obvious examples are app providers becoming device suppliers; telcos moving into entertainment video or cable companies moving into voice.

Moves into adjacencies might also include hardware suppliers moving into new product areas; software suppliers moving into new roles outside their present core.

Consultants at Bain and Company, for example, argue that the odds of success are perhaps 35 percent when moving to an immediate adjacency, but drop to about 15 percent when two steps from the present position are required and to perhaps eight percent when a move of three steps is required.

source: Bain and Company

And those are the easy ways to diversify. That is why one often hears it suggested that service providers “stick to their knitting” and focus on their existing core business. That might work for some. It will not likely work for many when the core business is shrinking, and shrinking rather fast.