I ran into one of my favourite professors from business school the other night for the first time in years. His was one of the few classes that I still refer to every day. Roger More (yes, that’s his real name) is one of the most interesting and funny guys in the business school game. Roger has been consulting with the auto industry for many years. As a result of this vast experience, he recently published an analysis of the General Motors debacle, “How General Motors Lost Market Focus – And Its Way.”
Roger believes that GM didn’t effectively focus its product portfolio. By letting it become too large, by pursuing too many segments with too many product offerings, GM created a massive negative cash flow. He suggests that the economic downturn was merely the straw that broke the camel’s back. It exacerbated the problem, but didn’t cause it. If you have some time, I suggest you read Roger’s article.
Lack of focus wastes scarce resources: money, time, knowledge or people. Most of us would agree that with limited resources available, you don’t want to spread yourself too thinly. In other words, if you only have so much time and money, then you need to focus on what you can successfully accomplish. Focus also allows you to deeply understand your customers’ needs in a way less focused competitors may not. By focusing, you actually increase your likelihood of success. And that is what you hear from the management gurus. Focus. Focus. Focus.
Except. There is a another less well known stream of thought. Michael Raynor, who wrote the Strategy Paradox, and Phil Rosenweig, who wrote the Halo Effect, both believe that the benefits of focus are overstated. But that is for my next post.