As we approach year three of the economic recession, I wanted to write about the power of being Specialized.
Many businesses in a down-economy feel the need to try to become everything to everyone as an attempt to maximize their ROI and bring in as many sales as possible. What happens in this scenario is the business dilutes their product mix and efforts, unable to focus on their core strengths. These core strengths are what identifies the company with it's customer base. It's what the customer expects of and from the business.
An example of this scenario is Greg's A1 Products, Inc. (yes, I did just make that up). This company had it's core strength in providing the most precision-based stainless steel and titanium scissors to the surgical market, where they were the only company providing this quality product to this market. They had a team of sales reps selling the hospitals and medical professionals around the globe and had sales in excess of $20M EU. Their sales and marketing departments knew their market and what it demanded. They were the dominant market player for over 20 years and enjoyed a moderate growth pattern year after year.
As the recession hit the global markets, the Board of Directors and Management of Greg's A1 Products decided that they should diversify their product mix and go after the scissor market for other niches, even thought their sales numbers remained the same. You see where I'm going here? Greg's A1 Products entered into two new markets they didn't do their research on…education and art. They pushed their sales teams to sell into these new markets with gusto and really grow their brand.
The marketing department created all kinds of new marketing collateral to help support the sales teams efforts. The sales teams had a few successes, but their product mix was all wrong and didn't address the needs of the new markets. They were too high-priced and didn't provide lower-grade models to choose from. Remember, we're talking education and art markets here. Needless to say, as Greg's A1 Products were concentrating on the new markets to grow their brand, they left their global surgical market alone, assuming that growth would continue no matter what they did. Oh, how wrong they were.
While Greg's A1 Products sales teams were selling into the new markets, another competitor came into the surgical market and started taking customers away from Greg's. What started as an attempt to grow a brand, resulted in diluting a perfectly good product mix and losing their core strengths. Greg's A1 Products never recovered and eventually had to sell out to their competitor for just over $500k EU. A sad story, but shows the reality of not sticking to your core strengths and staying specialized.
Stay Specialized - Do what you do best and you will succeed. Your core strength is exactly that, it's what holds you and your business together.