Kelford Labs Daily: Grow your business, not your operation

How expansion backfires.

Kelford Labs Daily: Grow your business, not your operation
“Companies often end up trying to create many products for many customers—and lose focus on the job that brought them success in the first place.

Worse, trying to do many jobs for many customers can confuse customers so they hire the wrong products for the wrong jobs and end up firing them in frustration instead.

This makes companies vulnerable to disrupters who focus on a single job—and do it well.”

— Christensen, Hall, Dillon, Duncan in Competing Against Luck

Expanding into other markets and customer segments feels like the obvious choice when we want to grow.

But it’s more likely to backfire than propel us further.

Because it stretches our resources and our capabilities too far, beyond our ability to be the credible best in any particular category.

Then, we end up lowering our prices or offering massive discounts to try to capture any market at all, which reduces our quality, creating a vicious cycle of greater expansion, lowered prices, and diminished quality.

And then what do we have left but frustration?

If we want to grow, we need to focus even further, becoming more and more credible in our chosen field, capturing a greater and greater share of the market’s profit—because we have superior cost structure, capability, and reputation.

Otherwise, we’ll end up growing the size of our operation, but not the size of our business.

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