In this note I continue my ideas on planning. I am always looking for new mental models to help me understand issues a business faces. In a book by Moore called "Dealing with Darwin: How Great Companies Innovate at Every Phase of Their Evolution" he makes an interesting distinction between various activities of a company which might be of help in setting company strategy. He defines Core activities as the activities your company does that has potential to differentiate you from you competition and Context activities as those activities which you must do well to keep up to or ahead of your competition but will not differentiate you.
For example, personnel support is a very important activity but is not one that will differentiate you from your competitors. Often customer service falls into that category. Certain aspects of information processing can also be a context activity. If you are looking for resources and money to invest in your core activity, these are areas you might consider improving your productivity through outsourcing. Remember these are things you must do well to stay in business but will not differentiate you.
However he does point out the people working in these areas may not be suitable for innovative activities. He does suggest they may be used for managing an outsourcing and in the more routine work in a core activity. This would free up resources more suited for innovative work.
Analysis of your core and context can be very helpful in considering where you should be applying money and resources. How can you differentiate yourself and which way should your business evolve? Sometimes you need money and resources just to keep up with the competition and the business environment.
In his book he also talks about the type of company you are and your stage of growth. I did not find those models as helpful as the ideas on core and context.