Chasing New Business Opportunities: Pros & Cons
A recent column about using a structured, unfocused approach to evaluate new opportunities got a lot of attention from our readers, most of whom said they were wide-eyed entrepreneurs who like to try out many ideas and business concepts.
Most of the readers we heard from saw the article as a justification for being unfocused for the sake of being unfocused, rather than using the approach of casting a wide net as a strategic advantage. Our overall point was not that you should seek to be unfocused, but that experimenting in many areas is often a way to determine where your best bets are. A thoughtful, unfocused strategy often can help define focus in a few areas.
But our entrepreneurial nature keeps bringing us back to doing more rather than less, being more experimental, and continuing to tweak ideas and concepts rather than killing them. After all, we built our company on understanding the needs of our customers and finding new innovative ways to serve them. It's not in our nature to say, "We can't find a way to serve that customer." Hence, we perpetuate our unfocused behavior.
Some of our longtime advisors have cautioned us against condoning unfocused behavior. To summarize their objections:
- When you scale a business, simple is always better than complex. Your core clients and the marketplace as a whole needs to define your offer in a way that's simple and easy to understand.
- As your organization grows, it will become more difficult to manage multiple priorities. For a team to succeed, it must be able to easily define the goals and objectives and focus efforts towards achieving it.
- As a small organization, you simply can't do many things well. Choose one or two things and be exceptional at them. When you grow, you can think about branching out.
So what should a growth company do? As we thought more about it, we think there are three relevant postures to take:
1) Create a focused organization, aimed at a singular goal, but regularly evaluate new ideas and new business models. The leadership team can commission specific individuals or outside advisors to build a business case around a new venture. This can be done once a month or once a quarter, as to not take focus away from the primary goals of the core business.
2) Create multiple silos or business units, each focused on their own goals. Some organizations have successfully pursued multiple foci by continually breaking into smaller teams. Each team is singularly focused on its goal, although the collective goals of the teams are diverse and potentially conflicting.
3) Create an innovation incubator by allowing specific individuals or teams to break away from the core business to experiment with new business models. We discussed this in detail in a recent article. Direction needs to come from the top and must be very selective - i.e, it's important that the majority of the team remains focused on the core business.
If any of these elements are executed effectively, your business can take advantage of new opportunities and avoid the tunnel vision that can come from too much focus on the core business. Be unfocused, but in a thoughtful, structured way.
Share your techniques at balancing focus and innovation with us. We can be reached at email@example.com.
KARL STARK AND BILL STEWART | Columnist | Co-founders, Avondale
Karl Stark and Bill Stewart are managing directors and co-founders of Avondale, a strategic advisory firm focused on growing companies. Avondale, based in Chicago, is a high-growth company itself and is a two-time Inc. 500 honoree.