I read a couple of different articles that both discuss, in somewhat orthogonal ways, some of the issues of building a business. The first was a guest article on Inside Line by Bob Lutz, discussing a to-do list for GM to rebuild their business. The other was an article in Forbes on arrogance traps for entrepreneurs. Bob’s list contained 5 items (4 really, since the first is repeated for good reason), but what struck me was a comment he made toward the end of the article, specifically:
That’s the beginning of a pretty good to-do list. There’s a lot more.
How does the Forbe’s article apply? Well, I had this feeling that their 10-item list was missing something, and Bob’s comment made me realize what it was: focus. It’s easy for a business to lose focus on what they do, and get distracted by something. I’ve seen businesses, on occasion, get sidetracked and misdirected as they lost focus on their core business and pursued other opportunities. They didn’t, however, drop what they were doing already. It wasn’t a question of lurching from pillar to post, looking for “the next big thing”. All they did was pile on new “opportunities” and build an ever-expanding web of different products and services.
Keep Your Eyes On The Target
This idea of staying focused applies, I believe, to businesses of any size. For GM, having a 5 point to-do list should be enough for now. They aren’t in a position where they should be trying to “do everything” and be all things to all customers. That lack of focus is part of what got them in trouble in the first place. Bob’s list is a very good one, and anything that doesn’t apply to executing those 5 points is extraneous. By making the list of things they have to do longer and diverse, they run the risk of (again) losing focus on what their business is about, and what their customers really want. That isn’t to say that the items on the list won’t change. No plan is static, and nor should it be, and companies will have to change and adapt to their market conditions.
The same should apply to small businesses as well. It can be tempting with a new business to try to grab at every opportunity that comes by. Each opportunity, logically, may make sound business sense, and each may have tremendous potential for future growth and profitability. But when you add all these different and diverse “divisions” together in a small company, it can result in an unmanageable mess.
As an example, consider a colleague’s company that provided contractors to companies, primarily technologists. When I first met him, his company also offered training services, resold a software toolkit, built their own GUI design tool, and provided technical writing services. The technical writing was complementary in some ways, but the others were really more of a distraction. He was also trying to provide consultants for a broad variety of contract types, and was going head-to-head with larger companies with deeper pools of people. Fortunately, he had started to build an advisory board of experienced outsiders, and one of their lessons was to lose the distractions and stick to the knitting. He also had to find a way to distinguish himself from his competitors. He ditched the extraneous activities, combed through his entire database of consultants, and put a laser sight on an under-served area of the market: providing consultants for short-term work on 1-2 days notice. His business is now a lot larger and more diverse (and very successful), but at the time, his attempt to diversify became a distraction that nearly sank his business.
The key there was two things. First, it was to focus on the business. The second was to re-evaluate what he was doing. Logically, it made sense to offer a broad suite of products and services. It meant hypothetically he wasn’t reliant on any one part of the to generate revenue. In reality, though, none of the non-core activities generated enough revenue to justify its existence. To succeed meant stepping back, looking at the parts objectively, and realize they weren’t helping the whole.
Don’t Ignore the Landscape
Staying focused on your objective is one thing. To obsess about it but never critically evaluate it from time to time is another. You need to be prepared to step back from your “big idea” and make sure it is on the path to success. You also need to be prepared to change course if your current objective isn’t actually a feasible business. It’s one thing to stay focused on your core product or service. It’s another to be so focused that you fail to realize that the product isn’t going to succeed. Being single-minded and focused on something that can bring you long-term success is fine. Working with blind optimism and being unwilling to stop and re-evalute the state of your business from time to time is bad.
We applied this combination of focus, but still looking around, at Alberta Market Solutions. We knew that the contract and consulting work we were doing wasn’t our long-term future. Our first business idea (that eventually became BIDS Trading) didn’t start out in its current form. It went through a few iterations. As a team, we would take the idea to a point, step back and look at it, and decide that the direction wasn’t quite right. We would test our ideas with trusted outsiders. Once we thought we had the right direction, we set a deadline and a goal for ourselves. If it hadn’t achieved a particular outcome by a specific date, we would once again step back, re-evaluate and decide the next course of action. We focused when we had to, but were willing to stop and re-evaluate to make sure that our business target made sense.
We also looked at other business opportunities outside our market space. We had one that, up front, looked promising. However, we weren’t going to commit to the business until we took some time to look at it, understand it, and evaluate it against the other ideas we had on our list. In the end, we decided that the business opportunity wasn’t worth it. There was too much risk, the company we looked at was in very bad shape financially (and had issues with corporate governance). We could have built a new company and product suite from scratch, but the opportunity just didn’t suit what we wanted to accomplish.
So Focus, But Look Around
The goal, in a way, is to stay focused but use your “peripheral vision” to still be aware of what is happening around you. Don’t lose sight of the target, but be prepared to accept that you might have the wrong target. You don’t ignore new opportunities, but you evaluate them critically through the lens of your current business, your experience and your goals. It may make sense to expand your scope. It may make sense to shift your target. But don’t do that if you risk compromising an already promising objective.
The other part of the equation is being willing to take a step back, and look at what you are doing. If you set goals and deadlines when you embark on a particular path, you have a framework for evaluating your current state relative to your objective. There will come a time where the goal you have in mind isn’t one that can succeed. It takes a degree of courage to put an idea on the shelf, and save it for another day. It could very well be that the idea, concept, product or service never sees the light of day.
Staying focused on your objective, while still keeping an eye on the rest of the landscape, should help with the success of your business. Stepping back from your business once in a while, and evaluating the state of the business against goals and deadlines, can help keep you on the right track. There are no guarantees, obviously. But being on the wrong track can be a waste of money, time and energy. Adding complexity by expanding scope and losing focus can be costly. Focus on the target, but look around from time to time, and you at least give yourself a chance to succeed.