Markets

 

This week, a friend sent me an article about a new “eco-friendly” proposed Bitcoin competitor, Chia Network. Aside from my confusion on the “Proof of Space and Time” consensus algorithm Chia uses, the gist of the article, and many like it that have arisen recently, is that as Bitcoin’s mining difficulty continues to increase (existing power-consuming mining operations grow and new entrants arrive into the space), Bitcoin may ultimately consume all the world’s energy supply. Continue reading Will Bitcoin Mining Consume All the World’s Energy Supply?

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Did Coke have 51% or 49% of the soda market? Coke executives were tired of the meaningless distinction and came up with another metric from which they could measure success and opportunity – share of stomach.

“It was a mind-bending paradigm shift for me. We weren’t trying to get share of market. We weren’t about trying to beat Pepsi or Mountain Dew. We were about trying to beat everything.” – Coke Executive

This expanded strategic vision led Coke to pursue many successful non-soda acquisitions including PowerAde, Nestea, Fruitopia, Dasani, Odwalla, and Vitaminwater.

It worked for Coke. Will it work for you?

Probably, not.

Lane Closed

While it is tempting to want to broaden your product focus to new market segments, unless you are already a dominant force in your own product vertical, diversifying your offerings may slow growth in your core product by diverting resources and focus from the core vision. In Coke’s case, when the new strategy came about, Coke was already the soda world leader. More importantly, Coke became the soda world leader by dominating its original market for decades and not abandoning its base competencies.

Comparison

Coke was able to execute upon the new vision of their addressable market by realizing that their expertise was not only in soda, but liquids generally. While this seems (and is) a logical step for Coke, there are not many businesses with products as comparable as soda and water.

Conclusion

Although share of stomach is no longer part of Coke’s strategy, it provides several good guardrails for when to and not to pursue expansion across similar products. Including similar products in your growth strategy can make a projection more exciting, but pursuing these opportunities before you are a dominant leader in your core market will likely lead to both segments not reaching their potential.

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