Leveraged Growth. At a time of heavy competition and cost pressures, it’s critical that companies manage their resources with tremendous precision. They must be able to handle their finances with great skill, actively assess stocks and inventories, and carefully manage their production resources. Efficiency rules. Productivity gains are highly sought. Companies are now trying to leverage their internal capabilities to do more with less – and meet the heavy demands of their customers.

But they are increasingly finding that they cannot excel without clearly defining their core competencies and they cannot meet the full range of customer needs without partners and alliances. In other words, they must be focused – and they must be collaborative. Customers expect world-class offerings – and they expect full and integrated solutions. It is more than one company can handle on its own.

What seems apparent is that companies must better determine where their key strengths and capabilities lie. By focusing on these core competencies, they determine how best to invest their time, attention and resources. What often keeps them from doing so is the awareness that they cannot meet certain customer needs if they are too focused. Rather than trying to take on these peripheral responsibilities, they should be collaborating with partners who can take them on more productively. In this fashion, they can embrace a more profitable and differentiated approach to business development.

John Hagel, business consultant and author of Out of the Box, calls this approach “leveraged growth.” It is the ability to mobilize resources, capabilities and assets on one’s own behalf without assuming ownership of them. It enables companies to magnify the value of their own assets and those of others in an agile, focused and collaborative way. It has the potential to reduce risks associated with fixed assets and rigid capabilities, while expanding the dimension of service that one can provide to a customer. “This approach begins with the realization that ownership of business assets is not always necessary to support growth,” states Hagel.

In order to extend their capabilities in this fashion, companies must build powerful relationships and connections with the partners, suppliers and service providers they will depend on to deliver a wider range of customer value. They must be able to interact and transact with these partners in the value network in an automated fashion, while enabling their people to take on increasingly skilled and value-adding roles.