Category: Business Competition

Focus or Breadth?

Posted on by adminton

Some companies concentrate on their strengths, others try to appeal to a broad range of customers. One is Annapolis Clean Carpet who doesn’t try to be the cheapest, but they give a reasonable carpet cleaning price, do a good job and concentrate on what they do well.

Another is Cove Cleaning and Janus Furniture who have a number of services and products. This may spread them thin but they have more potential customers.

Annapolis Clean Carpet has focused on carpet cleaning and related cleaning services that use the same technology. They do steam carpet cleaning, upholstery cleaning and drapery cleaning. They also do rug cleaning of Persian rugs and Oriental carpets and others.

Cove Cleaning on the other hand has decided try to provide as many cleaning services as possible. This is not unusual for a larger company but Cove isn’t very big. The question is, are they losing focus and quality and service by spreading themselves over so many areas?

They do carpet cleaning, upholstery cleaning, drapery cleaning and rug cleaning. So far so good. Same as Annapolis Clean Carpet. But, they also do tile stripping and waxing, house cleaning, window cleaning, office cleaning, janitorial services, power washing, industrial power washing and there are probably others that don’t come to mind at the moment.

Janus Furniture, actually doesn’t sell furniture even though they want to do that at some point. They sell used appliances. They were doing quite well. However, they then decided to open a restaurant before getting all the systems in place and a really strong organization for the used appliances.

They were getting close to opening the restaurant when they had the opportunity to get involved with wholesaling used appliances. They were warned about losing focus. The restaurant had delays with permitting and other issues and took a lot longer to open than planned.

The wholesale appliance business didn’t pan out. The appliances that they received were mostly junk and they had to sell most for scrap metal, losing money on each one. Then there were salaries on top. They lost a lot of money, fell behind on paying rent and employees for the retail used appliance business and are in danger of going out of business.

Annapolis Clean Carpet meanwhile has stuck to what it knows and gradually expanded the area it services, choosing to grow by increased penetration and market share and developing a repeat customer base and by slowly expanding the geographic range.

Creative Competition

Posted on by adminton

You can go head to head in a competition. But it can be better to be creative and come up with a new product or method that no one else has and possibly get a monopoly on it.

Fosbury Flop

A sports example is the Fosbury Flop. Dick Fosbury was a high jumper who came up with a new way of doing it. Up until that point everyone went facing the bar and threw their leg up and turned sideways and rolled over the bar. Although he started using it in 1965, everyone became aware of it when he won gold in the 1968 Olympics. No one could compete with him because they all used the older style that was less efficient. Now all high jumpers use the Fosbury Flop.

Post-It Notes – A Flop?

3M’s Post-It Notes has a similar story. It pays for companies to allow creativity and to take advantage of unintended consequences. A 3M researcher, Dr. Silver, was trying to create a super strong glue. Ironically, on one of his attempts he came up with a glue that wasn’t very sticky at all. It is called a low tack glue because it isn’t very tacky or sticky.

You may think that 3M immediately capitalized on this discovery but you would be wrong. No one could figure out what to do with it at first. In fact for five years, Dr. Silver kept talking about it at various company meetings. He felt like there was something worthwhile to be made with it but couldn’t figure out what.

A Light Bulb Goes Off But a Market Flop

Finally, another 3Mer, Art Fry, thought it would be great to use on a book mark so the bookmark wouldn’t fall out of the page it was supposed to be marking. So they came out with the first Post-It Note but it was called Press n Peel. It flopped in the few stores they tried it in because no one had ever heard of it and didn’t know what to do with it.

New Solution Results in Flip Flop

So they put on their thinking caps to come up with a solution. They did a test market in Boise, Idaho and instead of putting it in stores, they gave them direct to consumers to try out. Almost everyone liked them and said they would buy more. Thus, a product was born. It was relaunched as Post-It Notes and this time was a success.

Lessons Learned

There are several things to note in this story. First, Dr. Silver realized the failed glue had potential even though it didn’t have the properties he was looking for. He didn’t give up on it for years. Then when it initially flopped in the market, they didn’t give up on it, they figured out a different way to introduce it which was successful. And 3M was smart enough to allow its employees to work on side projects like this that were not part of the jobs they were doing day to day. They have created many new products this way, although few as successful as Post-It Notes.

So 3M got a unique product that was protected by patents and they basically had a monopoly on it for the life of the patent and had no competition. Much nicer than competing with another company and only having small margins because of that.