Sticking to your knitting
Businesses thrive when they focus on what they do best, Director Andrew Rowell explains why if you are good at what you do and focus on that, there is the potential to succeed, even in a crowded market.
Whether this is as a producer of high-end mobile phones or the local greengrocer selling quality product.
However, businesses often come unstuck when they experience ‘mission creep’ and end up focusing on non-core activities or expanding into areas where they don’t have the requisite expertise. For example, how many fashion designers have come unstuck when they’ve branched out into a retail offering?
In 2005, Ebay bought Skype for US$2.6 billion, only to offload it four years later for US$1.9 billion. Even now, it is hard to see where the logic was in taking a sales platform and adding a communications platform.
However, that doesn’t mean companies shouldn’t innovate and evolve in what they do and offer. Amazon has evolved from an online bookstore to the largest online retailer on the planet. Apple evolved from a struggling personal computer maker to one of the largest phone makers (as well as the largest music store).
What it does mean is that when you do start offering new products and services, they need to be better than average and provide some form of competitive advantage to your business.
For example, there is not much point adding a delivery service to your restaurant when you can bring on UberEats or Deliveroo to do a better job for less. They have the customer base, online infrastructure and drivers already in place and can likely offer a quicker uptake than trying to organically build out that part of your business.
In many companies there are tasks undertaken every day that are non-core and potentially better offered by outsourcing. While many companies already outsource their IT management requirements, there are other areas ripe for the picking.
This could be the automated updating of your corporate website, or online monitoring of printer toner levels, leaving these to other parties frees your team up to focus on working on your business, rather than in your business.
If you take the approach that you are in business to offer a better service or product than anyone else in your area, it makes sense to decide what tasks are helping that cause and which ones are preventing you from achieving your goals.
Andrew Rowell is an expert in Investor Relations and leads a Cannings Purple team that has advised on more than 115 M&A transactions with a combined value of US$130 billion over the past 12 years. We placed first on Business News’ PR League Table in 2017-18 and are again leading the field this year. Contact Andrew