Growth, diversification and 7th Playbook

• Organic growth is the growth that a company achieves with the resources generated by its own operations, which it invests in new businesses; in this case, the time for implementation and maturation is usually long.
• Inorganic growth involves buying or investing in a company that is already in the market and that usually generates cash flows almost immediately.
• Whether organic or inorganic growth is chosen, the time in which results would be obtained is a determining factor.

Diversification into new businesses is becoming the growth strategy of choice for CEOs because of its extraordinary potential to strategically and financially impact the business.

There are two alternatives:

• Organic diversification: allows taking advantage of economies of scale and existing internal resources. Generally speaking, it is usually more profitable than inorganic diversification. However, it requires significant investment in innovation and tends to be slower than inorganic diversification.
• Inorganic diversification (or M&A): it is usually faster, in exchange for a significantly higher investment and involves greater risk due to the uncertainty associated with the integration of the acquired company's operations.

The 7r Playbook is an approach to diversification through new venture creation in which an existing company uses its internal resources and capabilities to develop and launch new ventures together with 7r. The new ventures are typically aimed at solving specific problems or taking advantage of business opportunities identified by the existing company together with the 7r team.

Experience is showing that the 7th Playbook is an excellent alternative for large companies, since it takes advantage of the two diversification alternatives and eliminates their drawbacks:

• Eliminates the difficulties of inorganic diversification associated with the acquisition of external companies. Which generally entails a significant investment and high risk due to the uncertainty associated with the integration of operations after the acquisition.
• The 7th Playbook can be considered a type of organic diversification, as it involves the development of new businesses from the company's internal resources and capabilities. Like organic diversification, the 7r Playbook allows the company to take advantage of economies of scale, "unfair advantages" and existing internal resources.

However, it is important to note that the 7th Playbook is a more structured and systematic approach than organic diversification, as it has a specific methodology for identifying, developing and launching new businesses. This includes attracting, selecting and training dedicated teams, allocating resources and strictly following a roadmap for company creation.

In summary, the 7th Playbook is a diversification option to be considered by companies that want to grow organically because of its structured and systematic approach, its flexibility and its ability to leverage the company's internal resources and capabilities, as well as to attract external talent.

If I can be of any help, please leave a comment.

Angel,