What is the Key to Edge Strategy?

In Their Own Words: L.E.K. Partners Alan Lewis and Dan McKone Discuss Edge Strategy

Alan Lewis: Edge Strategy recognizes that the delineation between what’s core in your business and what is a new venture is not a hard line. And in reality, you can very easily find ways of accessing new and incremental profit by challenging where that line sits.

Dan McKone: And that is a sharp departure from many of the other incremental growth strategies that companies might pursue if they were to pursue, say, new avenues, new customer sets, new products, new markets, or try and grow inorganically by gobbling up other players. Edge Strategy starts with your core proposition, recalibrates it slightly, but it does so with marginal investment in a way that pleases many more customers much more effectively.

Lewis: Edge Strategy is about recognizing the needs of your existing customer. When you do that, you’re taking advantage of a relationship you’ve already won. You’ve already made that investment. You’ve already secured that customer. Now you just need to go a little bit further in meeting those needs to access profit.

Lewis: Increasingly, as we looked at the different examples of Edge Strategy, those companies were best described as taking on a mindset. Because there are opportunities that were hidden in plain sight. They were already there. It’s sort of found money. It’s the return on the investment you’ve already made, just by thinking about what you’ve already done.

McKone: Many, many times we’ve seen that an Edge Strategy results in a relatively modest portion of a company’s revenue, maybe five, ten, 15 percent at best. The magic happens because it is so high leverage that the profit profile of that ten or 15 percent is huge.