An organization approaching its maturity stage builds and accumulates various assets along the way. Some are the foundation of the core business, some are successful, highly efficient functions in their own right, and some are forgotten artifacts of previous growth cycles. It is clear how these assets relate to the core business, but it is not as easy to say whether they have any value outside of it. However, as the core moves through maturity and toward its eventual decline, these assets and capabilities may not follow the same lifecycle. > **1. Growth of the core business creates capabilities and assets that may be useful outside of the core:** > - Is it possible to use these assets and capabilities outside of the core? > - How to monetize this non-direct business value? If that value exists and is being lost, the obvious move is to **start managing these assets and capabilities** to get more use out of them. But how do you start changing and selling pieces of a "moving train"? Won't something break? > **2. Re-applying, reconfiguring elements that were created to suit the core business, for other use, is a source of conflict:** > - How to unwire these elements to allow use for non-core purposes? > - How not to harm the core, or how much harm is reasonable? At the same time, the core business itself is built on a chain of dependencies and legacy, which may not be the best long-term setup. Raising the core business cycle's ceiling may not be achievable within the current approach, because previous decisions are already bound to a chosen path of growth. To actually move or reconfigure resources for new opportunities is a risk. The organization has to lower its protection and share unused, or underutilized, elements. Moreover, to extract any value from this, the organization needs to build an "integration layer" that lets it search for better resource recombinations outside the core. > **3. Some "integration layer" is required to start extracting value from strategic capabilities and residual resources outside of the core business:** > - How expensive is it, and does it cannibalize core growth? > - How do you set this up, and who should control it? Because change initiatives visibly cost the organization something, its own machinery, the people whose incentives are tied to the core, starts treating the effort as a threat to the norm. Mandate, incentives, and resource allocation cannot be solved properly within the core's own processes. > **4. Moving from the mature stage toward decline hardens the core's defensive position, aggravating the conflict between core and new.** Regular operational processes and rules are built to realize the value of the core business. A private equity firm can make the harsh calls needed to walk away from a declining asset precisely because it sits **outside the business it's judging**. Building that same function inside the organization means asking the core to sit in judgment of itself, the same conflict corporate governance already solved once by separating the board from the C-suite. However, not building absorptive capacity is even worse, as there is no other "insider" way to realize the dormant, non-direct value locked in an organization's achieved market position. ___ ### Managing a triple conflict How most people in the organization see change and disrupt initiatives: - first, the initiative takes assets from the core business, - then it also takes funding from the core, - and if all goes well, it starts pulling in owner priority and may even pool core resources reserved for the core itself. For a manager with a healthy sense of ownership, a change initiative may look like: "**You demand my resources and money to take over my business?**" So next time you see an intrapreneur approach the business with a bright idea, there is a fair reason why he faces friction. For experienced managers, change is a risk to their control and their plans. ### Benefits of solving old-new conflicts Building an absorption muscle creates a powerful project-success multiplier and strategic pathway that transforms an organization from a story of a single core business lifecycle into an ever-evolving path of re-founding the core and multiplying it. Expected positive effects include: 1. extending and amplifying the core business lifecycle by reconfiguring it in a more sustainable way. 2. getting more ROI out of the accumulated assets, capabilities, and functions, achieving higher productive utilization (from single use to multi-purpose). 3. opening up niche business opportunities unavailable to the broad market (as they utilize closed capabilities and resources).