I saw this situation unfold just the other day in my own backyard. Two brothers were playing ball next door and the older, more experienced one wound up and threw a perfect pitch to his father. I knew that he was the star pitcher on his travel team. Then the younger brother says ‘me too’ and tosses a pitch that sailed over his father’s head. The younger brother was disappointed, yet the father didn’t look surprised. However, the world seems filled with companies with this ‘me too’ syndrome; companies that think that they can do just as well as the experts in the field and then seem surprised when they fail. Truly successful businesses fill a need with a service they do with excellence.
Like with any expertise, it takes knowledge, hard work, and extreme dedication to be the best. Chronotek is considered an expert in timekeeping and remote employee management. There are other companies that have their expertise in HR, payroll, and staffing. As a consumer I would expect their service to be the best. A phenomenon has been happening though. Companies are trying to diversify into other areas outside of their core focus, which dilutes the quality of the product or service. According to Peter Bloom, writing in the Washington Business Journal, diversification can be deadly. He says, “… a company that diversifies without appropriate strategic considerations risks duplicating its systems, increasing overhead cost, distracting company leadership, and potentially even competing against itself.”
Sometimes companies feel pressured to diversify because their clients demand certain services that the company doesn’t offer. Fear of losing one or two clients will throw the company off track. Or a company may have venture capitalist partners pushing for higher and higher profits, and the company has to scramble for more revenue streams. But it’s imperative for the small business owner, the expert in the field, to identify what “upgrades” fit their business model and which ones do not. We have heard from many of our clients who first tried “me too” companies that offered multiple services and timekeeping was an “add-on”. You know how that ended, because now they are our clients. Other customers have left us for these type of companies only to eventually come back to us.
A small business needs to continually evaluate its mission or core purpose. S. Truett Cathy, the founder of Chick-Fil-A, strategically chose his company name to constantly remind him of his core business-chicken sandwiches made from the best part of the chicken, the breast fillet. He also modified the spelling of fillet to end in a capital “A” to symbolize, Grade A, the best.1 The Chick-Fil-A sandwich has been the cornerstone of his business for over 50 years and the menu has expanded very little in that time.
Why did you start? Who are you trying to help? Does diversifying and offering more services and products enhance or detract from your core purpose? The greatest way to preserve your profits is to stick to what you do best in order to serve your customers with excellence. Purpose first, and profits will follow. Or stated another way, keep focused on your vision and the provision will come.
Our core purpose has always been to help our clients succeed by providing a proven way to control labor costs and increase their customer satisfaction. Diversification is ONLY an option if it strengthens this core and serves our clients better.
Your clients and venture capitalists may demand more services, but they wouldn’t be happy if chasing after these add-ons had a negative impact on the quality of your existing services and products. This type of chase could damage your credibility. You know your business best. Don’t be pressured. Build a client base that understands and appreciates your pursuit of excellence and commitment to the core purpose that serves them best. Let the ‘me-too’ companies be the jack of all trades and master of none.
You can be the All-Star.
- How Did You Do It, Truett? S. Truett. Cathy