Over the past decades, companies have systematically outsourced an increasing number business processes that they formerly performed in-house, including: payroll processing, IT support, training, and HR benefits management. Here, we will discussion the importance of understanding core vs. context in lead generation.
These companies had drawn the conclusion that just because they could do something does not mean they should. It is more efficient to find other firms that could probably do it just as well—sometimes better, and sometimes at a lower cost.
But the most important reason for outsourcing is that engaging in activities that are not core to one’s business mission will likely chip away at the intense focus necessary to thrive and even survive in a highly competitive world.
To see why, we will explore a concept popularized by B2B marketing expert Geoffrey Moore.
Core vs. Context
The concept of core vs. context refers to how businesses should allocate resources to optimize revenue through differentiation. “Core” refers to the innovative processes that businesses undertake to create differentiation that wins customers. “Context” refers to all other company practices businesses implement. Core practices allow companies to remain competitive in the B2B industries. Markets reward core initiatives, but never context initiatives. The market only responds to context by punishing businesses if context is implemented badly.
Mission critical versus non-mission critical processes operate in tandem with core versus context issues. The difference between mission and non-mission critical is whether the process shortfall creates immediate detrimental risk to revenue. Mission critical and non-mission critical processes can refer to both concept and core.
Four Quadrants Of Core vs. Context
There are four quadrants of practices for the processes of core vs. context:
- Develop: In this stage, companies innovate new products and services. Here, revenues are still too small to make this process mission critical, but development is key to creating core.
- Deploy: Companies in this core stage release their goods to the market. This is where products become mission critical as revenues rise.
- Manage: The management stage involves managing the mission critical nature of the product or service being sold through context processes.
- Offload: In the final quadrant, companies get rid of non-mission critical processes. The market will always neutralize core innovations as demand changes. Businesses must offload the maintenance of their existing products to others so they can focus on remaining competitive through generating new ideas and developments. The primary way companies offload is through outsourcing. Outsourcing the marketing of existing products is the most efficient and effective utilization of company resources. Outsourcing marketing allows companies to use in-house resources for the research and development of new ideas while continuing to profit from products currently on the market through the capabilities of external marketing.
Escaping Anemic Growth
It is during quadrant 3 that companies become bloated and begin carrying as much context (if not more) as core. Before long, these companies find that though they have plenty of resources, growth is anemic while revenue and profitability targets are missed. They hire more people to add more resources, only to see that costs are growing faster than revenues or profits.
No matter how many resources they add, they can’t seem to escape anemic growth. Perhaps this is because so many of these resources are context (weight) rather than the fuel necessary to maintain growth. Physics can teach us something here.
Read about what physics tells us about resource demand in the build or buy decision of lead generation here.