2: The bigger you are the more focused you need to be
I heard this quote several years ago from the CEO of a very large transport company, and I initially doubted it. I thought that if you are a very big business you can branch out to new activities, and increase ‘share of wallet’ of your customers. You should be able to leverage your scale and customer access.
Over time I realised instead that this gentleman was right.
Focus is one of the most important decisions to take as a business. Sometimes it is against trends, consultants’ opinions, and your own team’s views. Fact is that if every business could sell something else to their customers, they would sell it… but to sell something else to your customers, different from your main product or solution, is very hard. Not impossible, but unlikely.
It is not because you are selling a car to a customer that they will buy an insurance from you. Or if they buy an insurance from you, they will not buy some tires on the side. And if they buy some tires from you, they will not buy a car: you got the gist. Focus and specialisation matter.?Adam Smith got it, broadly, right already in 1776 [1]. I have had this experience myself and gained a few scars for trying something too far.
Many villas have been bought on the advice to managers that their company could increase share of wallet and sell something totally different to their large customer base. Reality is: do what you do well and do it better and better. Only when you have finished that path start a new one. The reason why this matters is because starting to create a hypothetical new revenue is time consuming and brings the real risk of losing existing revenues from your core business.
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Of course, this is not impossible, and the proof is in fuel retailing that expanded to convenience retailing in the last 30 years, successfully. At the same service station where in 1993 you could only buy two grades of fuel, you can now enjoy a very wide range of products, including great coffee. But it also took thirty years…
HAS YOUR COMPANY EVER TRIED TO SELL SOMETHING DIFFERENT FROM ITS CORE OFFER? WHAT HAPPENED? WHY?
Aviation Services Manager at Shell
10 个月Very good thoughts and discussion here. For me the key statement is ?do what you do very well first“. Diversification is not a cure for delivering a bad product in the first place. If you deliver a great product to your customers you create trust and the greater the trust the more likely they are to buy adjacent products from you. Given of course they are of the same great quality…
OBAM (Office Based Account Manager ) Commercial Fleet BELUX
10 个月Very interesting post ! As I have noticed a lot of companies that have been very successful in recent years have moved from a red ocean strategy to a blue ocean strategy..as somebody said before It’s very easy to be different but very difficult to be better.All the best in 2024!
Be the change you wish to see. ???
10 个月Giorgio, always thought-provoking. 10+ years ago, my masters case study was about: What business is Dyson in? While most perceived it as a "vacuum cleaner" business as this was their only product range then, the correct answer was "air technology-based consumer products." Since then, they've successfully expanded their range to include hand dryers, hair dryers, air purifiers, etc., unrelated to vacuum cleaners. Their USP has consistently been their air management technology. The key to determine ‘focus’ is a clear definition of our business. In our case, we are an energy company, providing solutions that mobilise humanity. Our distinct position involves delivering best-in-class CVPs emphasising quality, whether through premium fuel or hydrogen chargers, and utilising our own or leased real estate under our brand name. Referring to your example, as a roadside retailer, we do sell coffee and other products beyond energy, necessary for people on the move. However, being able to generate profit from a product range doesn't define our standing in consumers' minds. Our existence centers around being a hub for energy needs, where our USP outshines supermarkets/coffee shops, and where “more focused we need to be” as per your note.
Global Marketing Strategy & Innovation Manager I Committed to help people make good choices in their personal #energytransition, #mentoring talent and fostering progress through #collaboration and #networking
10 个月I agree with the point on focussing resources on growing your core business but also believe you need to allow testing adjacent business opportunities, especially if you have a strong brand. Needless to say that test beds need to be selected very carefully and with rigorous prioritization and strategic intent, new areas shouldn’t be explored at expense of core business, scaling should only be invested in once commercial model is proven and strategic partnership are a good alternative to trying to build new capabilities in house. Like always - the trick is in finding the right balance
General Manager Mobility Wholesale USA at Shell
10 个月Interesting thoughts Giorgio. I always believe your size and scale affords you a unique oppportunity to look at other growth opportunities. It’s only a problem if you shift too much of your resources or shift them too quickly. A strong base business requires resources to grow and prosper as well.