Sales and profitability are twin essentials for business success. Your ability to concentrate your limited resources and energies on your greatest potential opportunities for sales and profitability is key to your success.
A business usually begins with a single product or service for which it sees a need that is not currently being satisfied in the market. Often, the entrepreneur believes that he can offer a product or service that is superior to the competition. In each case, the ability to concentrate single-mindedly on producing and vigorously selling a superior product is essential for victory.
The opposite of concentration is diffusion of effort—a tendency to offer too many products and services to too many types of customers, in too many ways, with too many different price points. This inevitably leads to loss of energy, overextension, excessive costs, and the diversion of key talents away from the areas where great success is possible.
The Citadel Strategy
In the days of walled cities, a city was often built with concentric walls, like the rings of a target, from the outside to the inside. If the enemy breached the first wall, the defenders retreated to the second wall. If that wall was breached, the defenders retreated inward to the third wall. The highest and most defensible part of the city was called the redoubt, or the citadel.
The citadel represented the last stronghold of defense. When all was lost, the king and his family, the key people in the city, and the royal guard withdrew to the citadel where they attempted to hold out until they were rescued by a neighboring power.
What is the citadel in your business? If the sales of your products and services dropped dramatically, on what few products or services would you concentrate and focus all of your efforts in order to survive? Whatever your answer, this is your core business. This is the most important product or service you offer. This is where you must continually mass and concentrate your forces to achieve and maintain sales and profitability.
Your core business is made up of those products or services that you produce and deliver in an excellent fashion. These are the products or services that your customers like above all others. These are also your most profitable products and services. They represent the essence of what you do, and they are the major reasons for your profitability and growth up to now.
In Chris Zook and James Allen’s book Profit from the Core, they show that businesses succeed when they concentrate on their core, and they fail when they get too far from their core. If, for any reason, your business is not as profitable as you would like it to be, the solution is usually to get back to doing what you do best and most profitably. Get back to your core.
Gary Hamel and C. K. Prahalad, in their book Competing for the Future, emphasize that the key to strategic success, both in the present and in the future, is to identify your core competencies and then focus on getting better and better in those key areas. Your core competencies are the special skills and abilities that enable you and your company to produce excellent products and services and even to dominate your market. Your core competencies are the foundation of all business success. No business success is possible without essential core competencies developed and deployed at a high level. What are yours?