Sunday, July 17, 2005
To focus or not
To rephrase as a question: Assuming that specialisation is a necessary ingredient to greatness, is it possible for a specialist to stay focused in a market lacking strong competition?
Should the specialist attempt to dominate the market instead of focusing on a single aspect, or continue specialising and build a reputation that is easily transplanted to other markets?
Think of ‘specialist’ and ‘market’ in various scenarios: the individual and the organisation or profession, the consultancy and their clientele, or the non-profit alliance and their supported cause.
Should the specialist attempt to dominate the market instead of focusing on a single aspect, or continue specialising and build a reputation that is easily transplanted to other markets?
Think of ‘specialist’ and ‘market’ in various scenarios: the individual and the organisation or profession, the consultancy and their clientele, or the non-profit alliance and their supported cause.
Anonymous — Jul 17, 2005 4:14:34 PM — # ↩
Kiran Jonnalagadda — Jul 17, 2005 4:23:31 PM — # ↩
frozenaftermath — Jul 17, 2005 6:37:56 PM — # ↩
It is not impossible, but not always required.
Should the specialist attempt to dominate the market instead of focusing on a single aspect,
It is generally a good idea to cover all your bases, but in a single player scenario, it often boils down to costs that are seen to be affordable. In such a scenario (spend x, get back y; no complicated stuff like undercutting and etc involved) there is not a lot you stand to gain anyway in terms of adding more to your bottom lines.
or continue specialising and build a reputation that is easily transplanted to other markets?
Diversification, does not always have much to benefit from an existing, but unrelated product's reputation, can be totally new mountain to scale.
Caveat: I am not even a quasi marketing or biz chap, so these are just my weird thoughts.
Kiran Jonnalagadda — Jul 17, 2005 11:37:40 PM — # ↩
Suppose you are a specialised vendor of hobby aviation goods, easily the best in Bangalore, with a reputation that makes people from other cities come to you, and you decide to open a branch in Bombay (where there is no similar provider), then that is a new market but not diversification. Domination of that market will come easy.
On the other hand, if you think hobby aviation is too small, and you also do hobby railroads because no one else is selling that in Bangalore, and then you go to Bombay and find that hobby railroads is big there and your investment is going to be wasted unless you specialise in hobby aviation, then competition is forcing you to specialise.
To look at a recent real world example: Discount airlines like Air Deccan and SpiceJet specialise in the business of getting you from point A to B, no frills, using only one type of aircraft (Air Deccan, two), keeping it in the air as much as possible. They eschew the generalists' range: multiple types of aircraft, multiple classes, multiple flying schedules that are not always flying full (or as full as possible). The specialists are quite clearly causing a stir, and in markets like the US, are thriving while the generalists go bankrupt.
So why didn't one of the existing generalists see it coming and turn specialist and continue to dominate the market? (We have to assume that the generalists are generalists because it didn't make sense to specialise at an earlier time, possibly owing to an underdeveloped market -- which in a free market is the only time when there's no competition.)
This is the thing I'm trying to figure out. Given a market without competition, where do you draw the line on how much to specialise so that it doesn't cause future pain? Or, if you choose to generalise first and specialise as the competition sets in, how do you shape this growth? Would be really fascinating to study this, don't you think?
It's easy to find case studies in the US, which is already a very competitive market, but I'm more interested in how this sort of thing would play out in present day India.
frozenaftermath — Jul 18, 2005 8:09:38 PM — # ↩
On second thoughts and after a couple of readings I would like to point out a few things.
a) The airline example involves massive price undercutting, in the hope of economies of scale working out in their favour if they can keep it going for a long period of time. Of course, it also helps that they have a population as huge as India's to toy with and probably the entire Ist and IInd class rail passengers as potential targets.
b) Being secure where you are often leads you to not innovate at all; just same the thing that had happened with Gmail and often the admittance that things can be done at a lower price often is seen as shooting themselves in the foot when it comes to pricing the other products. Both ToI and HT made the same mistake when they introduced 'light' editions in Delhi after claiming that their main papers had too much of information. The actual deal that ToI's ploy was to essentially wreck HT's plans is another story.
c) Even if you are someone as huge as Microsoft or Intel you have to specialise to the degree that covers all your visible/invisible bases. When you are a giant it is not often the greatness of your product, but the swiftness with which you can kill the competitor's product, that can make all the difference. If the big ones were smart enough, they'd have pummeled down the prices or started even cheaper airlines by themselves ONLY IF they deemed it worth the effort.
It actually depends on how much do they see a threat these players are becoming to them, since if, like they claim, it is the premium rail passengers that they are trying to target, then the premium players don't have much to worry about because the cheaper ones are actually fighting over a market which is not essentially of much interest to them. Moreover, the margins are so tight in that segment that unless they see a major threat in them, they would not even bother to start countering them.
Well, if I knew how it would play out in India I would not be living in a shoe box apartment and still specing out CMSes, work flows and still hunting for the vanishing race called as good copy editors for the new jig. Market segments in India and mastering them is a black art not known to many.
Not quite related to this issue, but you might want to read this take on a somewhat similar topic, the Intel vs AMD battle. It is a bit long and drifty in parts, but quite worth a read.
themadman — Jul 24, 2005 4:29:08 PM — # ↩
Just because you have a lot of money (or even a lot of smart people) doesn't mean you'll always make the right decisions. History is full of dumb products and services from companies. From big companies with billions in the bank.
Also, never underestimate the damage that corporate ego can do to good sense.
themadman — Jul 24, 2005 4:34:24 PM — # ↩
examples:
http://airdeccan.net
http://flykingfisher.com
frozenaftermath — Jul 25, 2005 1:59:17 PM — # ↩