(This is post number 5 of a series I’m doing on business strategy. My focus is the work of strategy guru Michael Porter via a book he cooperated on titled - Understanding Michael Porter: The Essential Guide to Competition and Strategy - by author Joan Magretta.)
I was having lunch with the CEO of a sub twenty million dollar company. He held in his hand a multi-page list of "must do's" for the coming year. And I'm not talking about stuff like repaint the break room.
I’m talking about stuff like…
Re-position ourselves at the high end of the market.
Develop an entry level product to protect ourselves from the bottom.
Expand into 3 new geographies.
Launch a new product in a space kinda sorta related to our existing market.
All this, and much more, was scheduled for the existing management team over the next twelve months. A team that this exact same CEO had already told me was stretched too thin.
THE SMALL BUSINESS ADVANTAGE
A huge advantage of being a small business is agility. How quickly you can make a decision and go. And I’m a huge fan of hard work. I cut my teeth working late into the night helping get a couple startups off the ground. So you might think I’d be patting this CEO on the back for being so aggressive.
You’d be wrong. Agility and hard work are big advantages, but only when they’re applied with focus. But don’t take my word for it.
Our mentor for the last few posts, strategy guru Michael Porter, agrees with me. He points out that companies tend to fail when they try to be everything to everyone. For instance, when they try to be both low cost and high value.
This stretch usually leaves them somewhere in the uncomfortable middle. Not quite low-priced enough to lead in that category. And not quite high-value enough to pick off the top of the market. So they kill themselves trying to do everything, and they end up not being the best at anything.
Here’s a quote from page 138 of the Magretta book on Porter…
“The irony is that unless they make trade-offs and deliberately choose not to serve all customers and needs, then they are unlikely to do a good job of serving any customers and needs.”
And here’s a little more wisdom straight from Porter…
“The essence of strategy is choosing what not to do.”
And if you’re sick of Porter, here’s a quote from another guru by the name of Steve Jobs…
“Deciding what not to do is as important as deciding what to do.”
And do you remember the first thing Jobs did back in 1997 when he returned to Apple to try and save the place? He shit-canned a bunch of products. Narrowed the focus.
Now don’t misjudge this as me suggesting your business has to live in a narrow straightjacket. That's not what I'm saying. My point, once again, is that your expansion plans need focus.
Yes, you can pull off something amazing with just a few committed people. But no, even with committed people, you can't do fifty amazing somethings at once.
Focus, focus, focus.
And a high five to Michael Porter. I’ve been down on his work the last few weeks, but he’s dead-on this week. Trying to be everything to everyone is an almost guaranteed path to mediocrity. Or worse.
Which explains what happened to the company with the multi-page list of number one priorities. They ignored Porter’s words, and you can guess the rest of the story.
To protect you from that same fate, I’ll repeat his advice again…
“The essence of strategy is choosing what NOT to do.”
(This site is all about building a Map that will help me do work and life better. So at the end of each post I check in to see if any changes / insights come to mind.)
If this strategy stuff does lead to adjustments I assume they’ll be in the IF sections of my Self and Work Maps. But there’s nothing to report today.
See you next time…
***NOTE: I've added a new section to the website titled SPEAKING. Here you'll find brief examples of my public speaking, and information on how to get hold of me if you're looking for a speaker.