The Core Health Blind Spot: Throwing Money at a Dying Business Model
- Frederic Etiemble
- Apr 3
- 5 min read
Updated: 6 days ago
Every ambitious company wants to grow, but without a healthy core, growth efforts can feel like running in quicksand.
This article is part of our series, Where Are Your Growth Blind Spots?, where we explore the often-overlooked barriers to achieving sustainable growth. Drawing from Vibrance’s Growth Orienteering approach, we aim to help leaders uncover hidden obstacles and unlock their organisation’s full potential.
In this article, we examine the core health blind spot, a cautionary tale for organisations with bold growth ambitions but who are oblivious to a business model entering the decline phase of its lifecycle.
The Core Health Blind Spot
Obviously, every organisation understands the importance of growth in their core. Still, many are unaware of where their business model sits within its lifecycle.
Alex Osterwalder, the CEO of Strategyzer, and a long-term friend and mentor of mine, says it well "Every business model eventually expires, like yoghurt in the fridge."
Indeed, the life cycle of a business mirrors the natural progression of any living organism: birth, growth, maturity, stagnation, decline, and ultimately, death.
So, what to do when the core is underperforming?
In this situation, leadership teams would jump into action, launch ambitious performance targets to galvanise teams, roll out short-term incentive schemes to increase motivation, or initiate transformation programmes aimed at improving efficiency. These are not bad responses. But they are not always the right responses.
Because the truth is: a declining core can mean many things. It might be the sign of a flawed strategy that allocated resources to the wrong priorities. It might be the result of poor execution, where the right strategic intent hasn’t been properly delivered. But it might also be symptomatic of a more existential challenge, an indication that the business model itself has reached the decline phase of its life cycle.
And in that case, no amount of motivation or efficiency efforts will fundamentally change the outcome. You might slow the decline, you might buy some time. But you won’t avoid the inevitable.
So, how do you know which of the three problems you’re dealing with?
That’s where the Disruption Risk Assessment comes in, an essential step in our Growth Orienteering approach. In this step, we scan the external environment to identify the market, technology, regulatory and customer shifts putting pressure on your business model. In the case of an underperforming business, it’s a powerful way to evaluate whether underperformance is a symptom of execution failure, strategic drift, or requires a more structural response: a business model reinvention.
In conclusion, the diagnosis carried out during a Disruption Risk Assessment allows you to pinpoint the root causes of underperformance, raise awareness on where your business model sits within its lifecycle, and decide whether the time has come to reinvent it. Without this awareness, organisations risk falling headfirst into the core health blind spot.
Typical markers of the core health blind spot include:
Ambitious growth targets for a core business that has entered the decline phase of its lifecycle.
“Transformation” initiatives misaligned with root causes of underperformance (e.g. focus on efficiency and rigorous execution of a business model that has entered the decline phase of its lifecycle rather than business model reinvention).
Disengaged employees that don't take growth ambitions seriously anymore.
Tool: Strategyzer Business Model Canvas
When business model reinvention is required, a powerful tool to help with this challenge is the Strategyzer Business Model Canvas. This strategy tool enables leaders to visually map out and analyse their business model, fostering alignment and high-level strategic thinking. By breaking the business into nine key components - value proposition, customer segments, channels, customer relationships, revenue streams, key activities, key resources, key partnerships, cost structure - the canvas helps identify current weaknesses, opportunities for innovation, and pathways for business model reinvention.
We use the Business Model Canvas in many steps of our Vibrance Growth Orienteering approach, including Disruption Risk Assessment.
Business model reinvention is not for the faint-hearted. It requires designing and testing a new business model while maintaining an existing one for as long as possible and managing the complexities of transitioning customers from the old to the new.
Case Study: Hilti’s Business Model Reinvention
One company that mastered that challenge really well is Hilti, a leading manufacturer of high-quality power tools for the construction industry. In the early 2000s, Hilti faced increasing market saturation and growing competition. The traditional model of selling tools to construction companies was becoming unsustainable, as customers sought greater efficiency and cost control. A key client’s request for a holistic tool management system highlighted a major opportunity: moving from selling tools to offering tool fleet management services.
Hilti embarked on a bold business model shift from a product to a service focus – a pattern we described in The Invicible Company - transitioning from a one-time sales approach to a subscription-based fleet management model.
This transformation required them to:
Redefine the Sales Process: Sales teams had to shift from selling individual tools to pitching long-term service contracts to senior executives, a significant change that took years to embed.
Build New Operational Infrastructure: Hilti had to develop IT systems to manage tool fleets, ensuring seamless customer experiences for repairs, replacements, and logistics.
Navigate Financial Challenges: As CEO Dr. Christoph Loos pointed out “from a finance perspective, it’s easier to sell a tool and to get your money after 30 days than delivering a few hundred tools to a customer and receiving monthly instalments over 4 years while piling up receivables on your balance sheet.”
Holding the Course Over Time: As a global company, Hilti had to go country by country, learning from early markets, refining the model, and gradually transitioning customers from the old to the new. Managing two business models in parallel - selling tools and delivering fleet services - required strong leadership alignment and a sustained commitment over nearly 15 years.
In the end, Hilti’s shift to fleet management services not only provided a new sustainable revenue stream but also strengthened customer relationships and improved retention. Most importantly, this transformation helped Hilti withstand the 2008 Global Financial Crisis, as its service-based model provided greater stability than traditional tool sales in a time of crisis.
“The big benefit of recurring service revenues helped us to stabilize our business during the global financial crisis, a time when most contractors wouldn’t purchase new equipment.” Dr. Christoph Loos, CEO of Hilti
Impact on growth
With this bold shift, Hilti positioned itself in the early 2000s on the next wave to carry its growth beyond its traditional product-driven model.
Over the past two decades, Hilti has demonstrated a consistent growth trajectory with a compound annual growth rate (CAGR) of ~3%, successfully weathering major economic disruptions such as the 2008 Global Financial Crisis and the COVID-19 pandemic in 2019.
Overcoming the Core Health Blind Spot
The core health blind spot is one of the most challenging barriers to sustained growth. When your core business enters the decline phase of its lifecycle, no effort focused on the “core as it is” can delay the inevitable for long. The key to turning things around lies in recognising the problem early and leading the required reinvention of the business model.
As the Hilti example shows, companies that maintain acute awareness of their core health, and are brave enough to reinvent their business model when needed, can jump on the next growth curve before the decline of their legacy business model sets in, and subsequently achieve sustained and resilient growth.
Ask yourself: Where does your business model sit within its lifecycle today? If growth feels increasingly out of reach, is it an execution problem, a strategy problem or the sign that your core business model may be reaching its expiry date? And, in that case, only the reinvention of your business model would enable you to jump on the next growth curve.
About Fred
Executive advisor on strategy and innovation. Co-author of The Invincible Company, a guide to building resilience in organisations through corporate innovation. The book was shortlisted for the Thinkers50 Strategy Award in 2021.
New perspectives on Growth and Innovation. Delivered every Full Moon.