Chief Executive Boards Blog: We do What We do

Focus. It's the key to any challenging endeavor. Precious few difficult things can be accomplished without focus, and business is no exception. Most small business owners, however, believe that they need more, rather than fewer lines of business in order to be successful. Experience has proven the reverse is more likely true, as product/service diversity is the enemy of focus.

This is a tale of two business owners -- one highly successful and another struggling. I watched each of them in person recently, as a new business opportunity crossed each of their radar screens. The difference in behavior was fascinating.

Business Owner A has an interesting stable of businesses. Three, to be exact. They are loosely related, but dissimilar in many respects. Different services and different customers across different geographies -- almost nothing in common. Realizing they're more different than alike, he presents them on his website as three "business units", operating under one brand umbrella. Now, if each of these was doing, say, $10-$50 million and run by an experienced General Manager, it might be a different deal, and he could describe himself as a small "holding company". A couple of them are doing maybe $2 million, and the third is really more of an idea than a business. Not surprisingly, he's having trouble making money. There just aren't enough of his own heartbeats available to focus on any of the three to make them really successful.

Business Owner B has a single business, serving a single industry. He dominates his industry in his home territory -- a single Midwestern state. He is surrounded by 4 other states of similar demographics, size and market needs. His current growth plan, expanding into each of the 4 surrounding states, has the potential for 5x growth over the next several years. All he has to do is cover more territory, perhaps with some satellite offices, and scale up his production operation to do more of what he's already doing. Not easy, but beautiful in its simplicity.

I watched each of them recently as they were approached from outside their companies by someone pitching them on an additional, loosely related business opportunity. Business Owner A got excited. He became more animated, his voice stepped up in pitch, and he completely lost focus on the meeting he was in, which was about improving his three already-unrelated businesses. Like many small business owners, this man believes he needs more, rather than fewer different things to be pursuing simultaneously. I'm hoping he somehow discards this fourth situation, although I'm actually thinking something else will come along and take its place.

Business Owner B, on the other hand, listened intently to a new opportunity being pitched by a person who wanted to start up a loosely-related business under the existing brand and infrastructure. He had a couple of trusted associates and advisors on hand to ask a lot of questions about the new situation and how it fit (or didn't fit) with the core business. It turns out that, other than being in the same vertical market, this new opportunity had few critically-needed skill sets in common with the core business. What it really turned out to be was a person looking for a low-cost startup opportunity, under the umbrella of an established business.

Not surprisingly, Owner B and his associates concluded that the new opportunity, while not without merit, just really didn't fit with their core mission and core competencies. Finally, Business Owner B summed up the entire conversation with one phrase: "We do What We do". That says it all. They know exactly what their business is, and they do it very well. They're growing, profitable, and market-dominant in their corner of the world. They've become that and continue to be that due to relentless focus on "Doing What We do" -- and only that.

They're also generous. They're actually considering some "incubation" services to the would-be startup business, including some space, telephone answering, etc. It's not that he had a bad idea -- just that it wasn't consistent with the core mission of their business. So they plan to help him at arms' length without getting distracted by incorporating him into their business.

Are you chasing too many different rabbits in different directions? Would it be a good idea to narrow your focus to something razor-sharp, so you could also say, "We do What We do"? It's likely to be less complicated, less stressful and more successful.

Please click "Comment" below to share your experiences relative to focus vs. diversity of business interests.

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