Business gurus preach various routes to success. One of the least contentious of these is the simple recommendation to focus upon your core activities. It’s said to be a safe strategy in uncertain times: don’t take risks by pushing into areas beyond your competence and skillset. Grow your business by being the best at what you do. Grow the volume of your sales with your core customers rather than venturing into new
volatile markets.
There’s nothing new in this advice. It’s proven its worth over hundreds of years. History is littered with businesses that failed because they forgot their purpose. People have been using the term ‘jack of all trades and master of none’ since the 1600s. The phrase is surely one recommending the development of true craftsmanship in one discipline – the one at the core.
Because you can doesn’t mean you should
In the 21st Century, many have, unfortunately, chosen to ignore the second half of the phrase. Jack of all trades has become a positive, indicating someone who can turn their hand to anything. Versatility and the word it’s often associated with – agility – are seen as key assets in business. I don’t dispute the value of these qualities, but if they blind a business to the wisdom or otherwise of its next steps, problems can arise. Do you remember Virgin deciding to go up against Coca Cola and Pepsi? All Virgin’s previous successes in diverse fields didn’t equip them to fight the soft-drinks giants.
There are times when the right business strategy is to diversify – maybe adding aluminium or steel fabrication to your core PVC product portfolio, for example. But without a core of excellence at the heart of your business, diversification can also be a recipe for disaster.
It can lead to an across the board dilution of standards if you get involved in firefighting. In trying to manage teething troubles, it can be easy to ignore the needs of long-standing clients and jeopardise their loyalty. You can lose sight of the strengths and skills of key personnel and push them into unsuitable or unsatisfying roles. By attempting to build a bigger, stronger business you can destabilise the one you already have.
Distractions or core enhancements?
To me, it’s important to consider whether any new venture you undertake is an enhancement to your core activity or a distraction. If it’s a distraction, what are the costs and benefits? Is it essential to maintain your position in the market? Is it an activity you could outsource?
I speak as someone running an operation that offers a range of products and services. Everything from the advanced engineering of a CNC controlled machining centre to software. Now, you could argue that engineering in terms of the steel and the drive shafts has no similarities with the writing of code. Software is built with bits and bytes, not rivets and bolts. But when the software is specifically written for the machine and its purpose and to the same standards of excellence as the physical engineering, then it becomes a core activity. It’s a legitimate and valuable part of our operation’s portfolio.
I’ll also argue that other things we offer – training courses, servicing, spares, machine audits, retrofits and rebuilds – are not a distraction but a part of our core activity. One of the reasons I say that with confidence is that all these activities serve the needs of our core customer base. If we started servicing motorbikes or stocking spare parts for washing machines, I’m sure we could do it, but it wouldn’t help those who were in fabrication, vehicle bodies, marine engineering or construction.
Don’t rush it
We have added these services to our core engineering business because they enhance it. We have been able to do it because we have established a firm foundation first. We have not tried to run before we can walk, or throwing another cliche into the mix, bitten off more than we can chew. Sadly, many of those whose diversification projects fail don’t have the experience, the financial backing, the staffing or the resilience to make it work. They believe the way forward taken by others is right for them and in rousing words, spout big ambitions that lead them into heaps of trouble.
Any personal trainer will tell you that a strong core can drive the body’s overall performance. But our body’s core is made up of multiple layers of muscle. At the core of a business, there can be core products, core services, core clients, core people, core principles. If you keep all of them healthy, you’ll be in an outstanding position, well balanced and ready to reach out.
Neil Parton
MD
elumatec
