Friday, September 09, 2005

Choose Your Battles

“Uh-oh”, I thought, “this is not good.”

I was getting my first peek at the “Strategic Plan” of a company whose financials had been flat for the past four years, and I didn’t like what I was seeing. According to the plan, the company intended to enter just about every conceivable market and niche imaginable. Business after business, industry after industry, region after region, demographic after demographic—all were targeted, all were covered with specific business goals, action plans, and marketing initiatives. On paper, it looked terribly impressive, but I knew that in reality, this plan would not only aggravate the company’s problems, but would most likely worsen them.

In my last book, I quoted Colin Powell as saying “Choose your battles very selectively, then go in with overwhelming force.” Leaders of successful organizations—whether military or corporate—know that a key step of achieving optimal impact and victory is to narrow their scope of activities, attention, and “main event” priorities to the point that they can achieve domination.

Nowadays, fragmented markets and lower barriers to entry yield an environment where numerous competitors provide customers numerous choices that look alike and are “good enough”. Add to that the technological advances that give customers the power to freely compare and contrast the offerings of vendors worldwide. In this environment, you can’t do it all and it’s a fool’s gambit to even try. In my upcoming book, I argue that the way to sustain competitive advantage is to choose your battles (your markets, your products, your customers) very selectively, then go in with overwhelming force with the goal of dominating. In other words, figure out what you can and will dominate, and exit everything else. Do this, and everything else –like profit margins and customer loyalty--follows. Don’t do it, and you’re like Sisphyus forever trying to get the boulder to the top of the hill.

Remember how in the 1990’s Nokia burned past Motorola in the digital phone sector?. Many people believe that Nokia was a startup that found it easy to jump into digital because it had no legacies to protect like Motorola did. Hardly. Nokia was a mid-sized diversified conglomerate making products like cables, rubber boots, toilet paper, and televisions. When it made the decision to dominate the digital cellphone space, it dumped everything else. Motorola stayed in everything, trying to do analog and digital. It didn’t work. Never does.

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