Napoleon is supposed to have said, "He who seeks to be strong everywhere will be strong nowhere." Regardless of whether the Little Corporal uttered the words-some believe they were spoken by a Chinese general-it's true that the essence of strategy is in picking one or two areas to be strong in and letting the rest slide somewhat.
Harvard Business School professor Robert Kaplan says most businesses should pick a strategy from among three broad areas: operations, product leadership and customer relations. Operational excellence is represented by McDonald's, which excels at serving food quickly, cheaply and consistently. Product excellence is represented by a company such as Intel, which dominates the world microprocessor market because few competitors can match its extensive technological resources. Customer relationships are focused on by firms such as American Express, which stresses the membership aspect of using its financial services. "You can't be all things to all people," Kaplan notes. "Even a big business can't."
Focusing on one area doesn't mean you can ignore the others. "You have to be good at two of them and excel at one," Kaplan says. "If your customer relationships and products are poor, the fact that you sell cheap doesn't carry the day."
Zook says you should pick areas to concentrate on based on your existing strengths. For instance, you may have channel dominance, in the way Dell dominates direct sales of computers. You may have technological dominance, such as that exhibited by Intel. It may be operational excellence, knowledge of customers or other critical assets, such as key locations, patents or brand names. And if you do diversify your company, make sure the areas you choose to expand into play to those strengths, he stresses.
For an entrepreneur like you, deciding where to focus may be as simple as knowing, like Friedman, why people choose you. Once you figure that out, the strategy can last you a long time. Zook notes that Michael Dell started out more than 15 years ago assembling computers in his dorm room from off-the-shelf components, then selling them directly to end users. "It's interesting," says Zook, "that that very simple core, a product assembled from the best components and sold direct, is still the Dell strategy today."
Austin, Texas, writer Mark Henricks has covered business and technology for leading publications since 1981.
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