Definition
An analysis framework that first defines the core business where the enterprise currently has true differentiated capabilities and profitability, then judges which adjacent customers, products, channels, or geographies can reuse these advantages for growth.
In detail
Core and Adjacencies is a choice framework within the Strategic Plan, not equivalent to the Strategic Plan itself. Core answers "on which customer problems do we already have a provable winning capability," while adjacency requires that a new opportunity share customer relationships, technology, channels, brand, or operational capability with the core. It prevents a company from calling any fast-growing market an adjacency; if a new opportunity cannot reuse core assets and requires an entirely new capability system, it is closer to a new business investment. Judging an adjacency requires three conditions to hold simultaneously: it borrows an asset or capability from the core, it makes sense to the customer, and it significantly expands the addressable market; merely adding one product model does not count as an adjacency.
Example in practice
An industrial inspection company defines its core as high-reliability sensors, regulated customer relationships, and field service networks. The team evaluates three opportunities: selling software subscriptions to existing customers can reuse channel and data capabilities, which is adjacency; entering consumer electronics, although the market is larger, has completely different customers, channels, and cost structures, and should not be placed in the adjacency portfolio merely because of high growth rates.