The Virgin Group demonstrates a different share-of-wallet strategy. Virgin became a global conglomerate of 300 consumer companies, including airlines, mobile phone service providers, and fitness centers, by emphasizing brand recognition and customer loyalty. Virgin grows by continuously looking for new growth in a wide variety of lifestyle markets.
To be profitable, these share-of-wallet opportunities must be clearly defined, and their link to your current strategy and capabilities must be clearly understood. Consider the story of one organization, a successful construction equipment rental business whose customers were mainly local building contractors and construction tradespeople. The firm sought to extend into a “party supplies” rental business, providing tables, chairs, and utensils for social gatherings and events. Although the two businesses shared some elements, they had two very different target markets, and the new business failed. After some reflection on its share of wallet among contractors and tradespeople, the organization then successfully expanded into new businesses that served its original customers.
2. New Regulations
The regulatory lens looks for externally imposed changes in market conditions. Along with government regulation, this lens includes the influence of nongovernmental regulatory advocacy groups, and the voluntary initiatives of large companies that force competitors to follow them. The core question associated with this lens is, How can we shape or respond to the regulatory environment to create new and profitable business opportunities?
New laws are the most common stimulus for new growth ideas from this lens. For example, the emergence of regional and national emissions trading programs around the world has created a vast array of business opportunities, from energy efficiency retrofits in buildings to carbon trading. Many companies in manufacturing and services businesses are tapping into this opportunity. JPMorgan Chase & Company is an outstanding example. It found a growth opportunity in green regulations when it decided to develop its carbon credit trading capabilities to participate early on in the rapidly growing market for these credits. That market has grown from about $12 billion in 2005 to $140 billion in 2009, an 80 percent compound annual growth rate.
A combination of pressure from NGOs and accelerating green consumerism has inspired market leaders such as Walmart and Procter & Gamble Company to become market leaders in environmental sustainability. Both Walmart and P&G impose strict sustainability requirements on their suppliers. The large buying volume and market power of companies like these change industry standards and affect consumer goods companies in many markets. For example, when Walmart decided it would sell only concentrated laundry detergents to use less shelf space, increase logistics efficiencies, and lower costs, the move precipitated a shift that affected every detergent manufacturer.
Companies can proactively shape the regulatory environment, too, by influencing government actions and industry operating standards. When they do this and successfully shift the playing field to their advantage, they can prosper. For instance, the Xerox Corporation’s competitors played an influential role in the U.S. Federal Trade Commission’s decision to force Xerox to license the patents that had enabled it to monopolize the plain-paper copier business in the 1970s. This opened the market to low-cost Japanese competitors, such as Canon and Toshiba, and high-end copier companies, such as IBM and Kodak.
3. Technology and Applications
The technology and applications lens looks for ways to apply existing products and technologies to gain entry into new markets. The core question associated with this lens is, Where could we use existing products or technologies to create customer value in a different market?
Stanley Black & Decker Inc. has successfully applied its electric motor technology, originally developed for home power tools, to a vast array of other products, including toothbrushes, to expand its markets and capture new growth. The Kimberly-Clark Corporation has used its technology in paper manufacturing to create an expanded portfolio of “adjacent” products that rely on the same or similar technologies (feminine hygiene pads, diapers for children, paper towels, and floor cleaning products). Today, all are important drivers of growth. (See Exhibit 2.)