An adjacent service can alter the reason clients trust the first one

## Follow the income back to the recommendation

An adjacency often looks persuasive because it begins with something familiar. The company already knows the customer, visits the location or understands the technical problem. Adding another service seems to extend a relationship rather than create a new business. That can be true, but familiarity does not answer every strategic question. The new service may change how the company earns money from the judgement it originally provided. A client who bought an inspection may need a different explanation when the same supplier can also earn from the repair that an inspection recommends.

I initially supported examining repair contracting alongside our fictional risk-engineering service. The proposed division's central case projected ₹14 crore annual revenue. Operations colleagues saw a practical opportunity to help clients obtain implementation through one organisation. The sites and technical language were familiar, and the existing relationship could make the new service easier to introduce. Those were real attractions. It would be dishonest to describe the eventual decision as if the proposal had never made sense or as if I had recognised every concern before the team invested in feasibility work.

Girish Qevzari asked us to trace the income back to the recommendation. If an engineering finding could generate work for our own repair division, how would we explain the relationship to the client? Which decisions would remain separate, and what evidence would make that separation credible in operation? The question did not assume that every finding would be distorted. It asked what the company needed to establish when its commercial incentives changed. A professional service should not leave that question for individual engineers to resolve through personal restraint after the business model has already been approved.

The sponsor proposed separate teams and disclosure. Those were arrangements worth assessing, not ideas to dismiss because the concern involved incentives. My role was to ask whether the proposed account was sufficient for this company and this service. Appropriate technical, commercial and professional owners needed to examine the actual arrangements. Strategy could not certify them through a general statement that all conflicts were manageable. Nor could a forecast of additional income settle the issue merely by making the proposed division financially attractive. The relationship was part of the business being considered.

## Compare the new relationship with the original purpose

The original service supplied observations and engineering recommendations within an agreed remit. Site owners retained responsibility for their operations and remediation, and insurers retained their own decisions. A repair division would add delivery, commercial terms and income connected to carrying out work. That might be a viable combination for some organisation. It was not simply more of the same professional service. A useful strategy paper needed to describe the new responsibilities and incentives as clearly as the existing customer access that made the expansion appear easy.

After ₹65 lakh of feasibility work, we declined the division and allocated ₹30 lakh to a narrower referral-process improvement. That route helped clients seek an implementation path through appropriately selected outside providers without creating a repair commission for Dorlavi. It did not reproduce every benefit of a single supplier. The client could still face coordination work, and the quality of an outside contractor required its own appropriate assessment. We did not describe the referral process as a universal certification or as a transfer of the site owner's obligations. The alternative addressed a defined need with a different boundary.

The comparison therefore had to retain what we gave up. The operations sponsor wanted a more complete service relationship and a new income stream. Our chosen route did not provide either in the same form. It preserved a different account of the inspection business while leaving implementation elsewhere. Calling that route simply more efficient would have concealed the actual choice. Directors needed to understand which responsibilities the company was willing to add, which incentives it was prepared to manage and which opportunities it was choosing to leave outside its business at that time.

This is where strategic discipline differs from a broad preference for staying close to core activities. Some companies should enter adjacent services, and a familiar customer base can be a genuine advantage. The point is to define what changes, including the relationship that makes the original service valuable. An adjacency can be operationally close and commercially different. A company that overlooks that difference may discover it through client questions after launch, when a team, investment and revenue plan already depend on continuing. Examining it earlier gives management a more deliberate choice without assuming the answer must always be no.

## Retain the opportunity forgone without inventing a loss avoided

The ₹14 crore figure was projected annual revenue, not an established business we closed. Declining the proposal did not create a measured loss of that amount, and it did not prove that the company avoided a particular future harm. We spent ₹65 lakh to learn enough to make a decision and then chose another route. The account is useful when it preserves that status. Inflating the foregone forecast into actual revenue lost would overstate the sacrifice; inventing a liability avoided would make the recommendation look vindicated by evidence the review had not produced.

The expense of investigation also deserved a fair description. A feasibility programme that ends with a declined proposal is not automatically wasted money. Its purpose is to improve the commitment decision, and sometimes the useful result is a more accurate understanding of the business the company was considering. At the same time, that does not make every investigation worthwhile regardless of scope or quality. Management should explain what changed in its understanding and whether the work addressed the questions that mattered. In this case, the incentive relationship became more explicit than it had been in the original customer-overlap argument.

For a board, I would begin with a few concrete questions. What new income arises from the professional judgement we already sell? How does the client learn about that relationship? Which people and processes retain authority when commercial pressure favours a particular recommendation? What does the alternative leave unresolved? These questions do not require directors to redesign inspection methods or manage a repair crew. They ask management to explain the business model and the basis on which it believes the company can sustain the trust that makes the original service useful.

My own change in practice is to put the incentive map beside the customer map. The customer map shows why a proposal is attractive; the incentive map can reveal what it asks the company to become. Neither should replace the other. We declined this repair division, retained the feasibility cost and accepted a narrower referral route. Another company or another set of arrangements might reach a different conclusion. The leadership lesson is to make that conclusion deliberate, with the revenue opportunity, professional purpose and continuing responsibilities visible before familiarity does too much of the strategic work.