In our last blog we introduced the concept of being Best In World. We noted that too many firms, that were moderately good at a wide range of things, are going out of business. They are being destroyed by global competitors who have a laser focus on small slices of their business and then cut away at their clients and their revenues.
The essential components of being Best In World are:
• Doubling down on a product or service
• Selecting a very tight market niche
• Identifying and or designing the differentiators
• Processes that inculcate continuous improvement
So how do you decide upon which product to double down?
A product is not ‘best’ in isolation. It will need to be best for a particular type of client and so choosing your best will be an iterative process. You may have a service that sells really well locally but won’t stand up globally. And the products you have today may not yet be gold standard so you might need to improve your offering to become Best in World (BIW).
So let’s talk about products / services.
Most companies follow Pareto’s 80/20 split in terms of revenues - 80% of revenues come from 20% of their offerings. Your BIW offering will likely come from within that 20%. Your BIW will also need to draw on your core competencies and be consistent with your core purpose as a company.
As you narrow down your candidates, think about any dependencies you may have. Do you have any supply constraints, do you need to work through channel partners to deliver end user value. Will these dependencies make you stronger or will they make you vulnerable when highly focussed competition comes in? Your product or service is only as strong as the supply chain you are part of. As I write this the Covid-19 situation is disrupting supply chains all over the world. How strong is your supply chain?
Is your product power based on technology? If so, is it replicable by others? How long will it take others to catch up? Patents are easily worked around (or infringed) and they expire eventually. Chinese manufacturers invested heavily in manufacturing equipment and now build some of the highest quality products in the world.
Do you understand exactly how your clients derive benefit from your offering and what that benefit is. Can you follow that benefit chain all the way to final consumer. By understanding his better than everyone else, you can create a BIW product. If you are selling baby food to wholesalers the downstream benefits are distinct for each user: retailer, parent, child, land fill.
As you become Best in the World and demand heats up how quickly will you be able to scale up your offering? Nature abhors a vacuum (and so do my dogs) and the market will draw in other suppliers to satisfy the demand.
Naturally, you’ll need a product or service that provides solid margins. However, as volume increases, your costs will shrink and, interestingly, the better you become the more your offering will be valued – top line increases, and the expense line decreases. Happy days.
And speaking of happy days, whatever product or service you focus on it should, in the words of Marie Kondo, bring you joy. As business owners we get to choose what we do and if you don’t enjoy it, pick another product or service with which to become Best in the World!
Thanks for reading,
Andrew Penny
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