Expanding into related areas, areas that are generally known as adjacencies, can be a successful path to business growth. However, not all adjacencies are created equal. So, it is important to pursue the right ones.

Adjacencies with good success potential are those requiring strengths that the company has or can readily develop. Strong success potential does not necessarily come from adjacencies that are merely a part of the same general industry as the current business. Even within the same industry, the success prone adjacencies are those where the company has the strengths required to perform successfully.

An example is when Apple Computer founder Steve Jobs left the company and went on to start another computer business called NeXT. That new company developed a sophisticated high end computer that was ideally suited for the largest users, such as major universities, research organizations or very large corporations. NeXT’s business might be thought of as an adjacency to Apple because both are within the computer industry. However, Apple’s market was heavily in the consumer sector, while NeXT developed a product suitable for the largest organizations. And, after his initial stint as Apple’s founder, Jobs was not well equipped to sell computers to huge organizations, particularly since his previous company, Apple, leaned more toward a consumer market focus. Granted, NeXT is a separate company from Apple, but this example does illustrate how merely being part of the same industry does not give an adjacency attractive success potential.

Successful expansion into adjacencies entails going into areas where the skills required are those that fit the organization’s strengths. The success of Dick’s Sporting Goods with its expansion into larger House of Sport stores is a good example. In addition to selling sports products, the House of Sport also pursues adjacencies by offering experiences related to sports, such as lessons, simulators for trying out sporting goods, and rentals for events such as birthday parties.

The March 19, 2025 Wall Street Journal article “Dick’s Sporting Goods Goes Big in New Format” by Kate King discusses Dick’s successful move into a newer, but related and thus adjacent, business concept. Describing Dick’s new House of Sport stores, the article says, “The store boasted a rock-climbing wall in one corner, golf simulators in another, and an outdoor running track and turf field. The cavernous space was already twice the size of a traditional Dick’s.” The article points out that Dick’s new House of Sport business concept entails much larger stores at a time when many other retailers “are rolling out smaller locations to reduce real estate costs”.

But, according to the article, House of Sport stores “generate about $35 million in their first year of operation, compared with $14 million at Dick’s new smaller locations.” The article reports that Dick's “recorded the largest sales quarter in company history during the 13-week period that ended Feb 1.”

Dick’s House of Sport offerings not only produce added revenue from the new areas such as rock climbing or birthday parties, but these new areas also help promote sales of the sporting goods that might traditionally be sold in Dick’s smaller, previously existing, less diverse locations.. Expansion into these new areas is successful because they entail things that Dick’s is capable of doing, even though it is something new. This contrasts with Steve Jobs going into an adjacency that was merely in the same industry, but required strengths that Jobs lacked.

Success in new areas comes when the new area is a good fit with business strengths. As Dick’s House of Sport illustrates, success can come from building on strengths to pursue new, yet related, areas, even at a time when many in its industry (retailing) have been cutting back. Furthermore, the success of House of Sport illustrates that bricks-and-mortar locations can still be a valuable business resource.