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You Do What You Do Best – Focus

FocusMany years ago, I remember a retail store on 14th and Main in Kansas City, one block from my family’s store, Dolgin’s. The store’s name was Gateway Sporting Goods.  They were somewhat arrogant and felt as though they could do no wrong.   Maybe they were right in a way.

I believe, if you can identify similarities in your “skill set,” you can transfer the skills to many other areas and venues.  If you understand “best practices of business,” you can transfer them to almost any business.  I have said that a balance sheet and P&L statement are the same, whether you are working on a non-profit organization or profit organization.

But one has to be careful. Gateway, who was strong in sporting goods, thought they could go into the Film Developing Business (remember this is during the era of the 1960’s when I was a youngster), and then they thought they could develop a “trophy manufacturing business.” These divergences of business models caused their senior management team to move from their primary business.  Their primary sporting goods business started to fail.  Their asset base was diluted by the investments in these different business strategies.

On August 30, 2013, GE announced in the Wall Street Journal their plans to move away from a very successful business division, retail lending.  One has to ask: why and how did they get into this completely different business arena to begin with?  How does an industrial conglomerate manufacturer of jet engines, appliances (of past), power plants, and other industrial products find themselves in the lending business?

The real question is not “how?” but “why?” Is it not better to keep your focus on what you know and understand best?  Excess profits and success allow the GE’s to diversify but, possibly, doing what you know best is the best strategic and execution plan.

You ask, “What happened to Gateway?” Their diversification was the beginning of the end.  By departing from what they knew best, they lost their focus and ultimately went out of business.

GE has seen an opportunity to capitalize on their investment and right their direction.  Doing what you know best usually wins out and allows the management team to stay focused.