To continue on the course of being open to changing strategy and creating a new strength and core business.  Let's think for a little bit in more extreme terms, such as what to do with your business when the economy is in real trouble.  When I used to pilot single engine airplanes, there was a constant awareness that the one engine that was keeping me airborne might fail, then what?  If you were a passenger on that airplane you wouldn't wan't a positive thinking pilot just thinking happy thoughts, you would want a pilot that had already thought of what to do if the unthinkable happened.  With any business there are times when the engine of your growth fails and you need to have a plan in advance of any trouble.  And, if you look at the world economy and the financial system you don't have to look very far to see a few clouds on the horizon.  Now, none of us know absolutely whether those clouds will turn into a real storm but we don't have to, our job is to make sure we have alternate routes for our businesses if it does.  

If the banking system or our currency were in real trouble, (and it might be) most businesses haven't given any thought about what to do in that situation.  Most businesses need to have a minimum of two strategies, one for growth and one for endurance.  We are due for the recession that pretty dependably comes every 6-7 years.  So, it may be that we are in a business that is recession proof but if we are not, we should think about what our strengths need to be in a recession.  The new strengths we may need could be a different kind of selling, maybe to a different customer and maybe even a new or at least different line of products that do well when money is tight and banks are not lending.  If you go a little further you could think about what you might do to endure a high inflation or more extreme circumstance.  There was a study that produced the "Hyperinflation survival guide - Strategies for American businesses", (Written by Gerald Swanson) that researched the effects of Hyperinflation on businesses in South America.  That might be a start, one key point from that study is that once inflation takes off only the flexible survive.  For manufacturing, (as resources dry up) it may turn out that production is not the best use of capital.  Some businesses survived by leaving their core business to speculate in commodities, so desperation can be the mother of invention.  This may not happen but being willing to look at this kind of event and its effects on your business can be very helpful and can actually bring to light opportunities outside of your core business that you would not have seen without your new perspective.  Remember that competitiveness is not about doing what you are good at, but being able to adapt and provide what customers value!  Customers have different values in recessions vs growth economies. 

Walmart has the largest retail distribution of any company in the world, so you would think that your sales problems would be over if you could get your product in their stores.  However, even though they sell massive quantities of goods, they are only good at selling a very specific list of goods to fulfill a certain kind of customer need.  They are not, for instance, good at selling at the higher end of the market, speciality products, autos, airplanes, lumber, computers or anything that isn’t on their list.  And really, if you were to dig deep you would probably find that they are not all that great at selling any specific item, they just provide product access and very basic help and because of their size they have the volume.  So that leaves the door wide open for just about anyone to sell their own product much better than Walmart especially if your product doesn’t fit into their specific requirements.  You might even keep more profit and create more brand value by keeping it out of their stores.  Unique products do upset Walmart because they already have a business model that has worked and they are not about to change it.  That is one very critical barrier to selling a new product or service, you may need to find or create completely new distribution channels to have it sold effectively.  The point is, that what we see as someone else's core strength might not be, and it might be easier to create that function in house rather than outsource it.  Some of the reason we have such a compulsion to outsourcing is that we measure profitability by gross profit margins and not net profit.  Just changing the way we measure success can give new incentives to innovate with your business model and processes.  Dow Corning is one company that changed the way they measured success from gross profit margin to total net profit and it kept them in product lines that they would otherwise have gotten out of.  The new measurement helped them see the benefits of staying in those businesses that the old measurement kept them blind to.  Look at Virgin Group limited, its core business areas are travel, entertainment and lifestyle, and it also manages ventures in financial services, transport, healthcare, food and drink, media and telecommunications; together, Virgin's businesses consist of more than 400 companies worldwide.  So, what is their core strength?  I would say that the core strength of Virgin Group Limited is actually unlimited and so is yours but you have to think critically about what you need your strengths to be in order to make your business more successful and then go make it happen!

For Apple one of the innovation game changers was retail stores and there were many reasons it made sense to venture into this business and make it a new strength.  Their retail distribution channels were weak and getting weaker, their cash position was very strong and needed to be more productively invested and the product they were selling was their own.  So, their product inventory was not at the whim of an independent entity, they were the whim.  Unlike an independent dealer of cars or other electronic products, Apple had more flexibility with their inventories and cash position and knew when their new product upgrades were coming out.  

However, for an independent dealer this may be heading in the completely wrong direction.  Trying to add distribution channels (ie. new stores) could weaken the cash position and business flexibility because money that could be used for game changing opportunities is now tied up in larger volumes of inventory.  Making the company more vulnerable in market downturns.  So, for an independent dealer a focus on reducing the need for inventory by using a model like Amazon (on a local level) would be a much better strategy.  Doing so would require gaining a new core strength possibly in electronic imagery for marketing and sales that would have the same effect as adding stores for brand expansion but without the burden of inventory.

Likewise, for a building contractor it might make sense to bring an outside trade such as a framing, plumbing or  electrical contractor in house.  That way they can control scheduling, focus on a proprietary process improvement effort for that skill set and keep any breakthroughs in house.  The incentive for cycle time reduction would be high and any cost reduction would transfer directly to the bottom line of the building contractor.

Again, look at your business and where it will need to be in 5, 10 or 20 years to be a leader and determine the strengths it will need to get you there.  Then determine which of those strengths you should own and control in house and which are not as critical to your operational success and can be outsourced. 

“Focus on the core” is the management fad that has been around now for quite awhile but what does it really mean and is it really the silver bullet some think it is?  Focusing on your core strength might actually be the wrong strategy for many businesses and here’s why.  There are times when your core might become obsolete, like in the case of Kodak film.  They focused on their core right into bankruptcy.  Another disadvantage of focusing just on your core is that it limits the new learning that comes from trying something totally different.  Often great insights come from something way outside your normal circle.  Trying new things is what keeps business and life fresh and exciting.  A never ending quest for market share can dull a business quicker than just about anything.  And last but not least, we are capable of having more than one strength, we just need to develop them.  

When Apple opened their first Apple store in 2001 there were many skeptics that thought, with so few products it is too narrow of an appeal, it just won't work.  It also happened when electronics retailers were on the decline and after all what did Apple know about retail stores?  But somehow Apple pulled off a big win and approximately 14 years into the “experiment” they have the most profitable retail space per square foot in America!  Not only that but it has magnified and promoted their brand in ways that were unimaginable before the Apple store. 

It might seem logical to outsource something that is not your core strength but not if it needs to be.  For instance, retail sales was not Apples strength and it may not be yours but it may provide an opportunity for you to clarify product differentiation and promote brand value better than any other way and therefore it needs to be in-house and not outsourced.  Think of all your business processes and determine if you know of a unique product or process that is more effective, cheaper and/or faster than what subcontractors can or are willing to produce.  If you do have an insight on some part of the business you don’t currently control, it might be a big innovation game changer to bring it in house and make it one of your strengths.