Size Counts

I’ve learned many things from Mitch since I joined CMG in 1999, but perhaps the one nugget I remember most often is his insight that “the essence of strategy is to grow faster than the market, because all markets stop growing eventually…and when they do it gets very ugly for the small players.”  In other words: size counts.

We’ve seen this for decades in the saying (and the reality) that “no one ever got fired for going with IBM”.  While IBM may not, at any given time, have the latest or the best technology, you were sure that 1) they would be around years from now, and 2) that their solution was going to be backwards compatible with their previous products (with some exceptions, of course).  Contrast that with the dozens of hardware vendors, and hundreds of software vendors, who had the greatest technology for a time but who are no longer with us.

It’s true on a local level, too, and in low-tech companies.  I have always bought my heating oil from the big player in my area.  I know that I might save a few cents a gallon by shopping around, but the big vendor has the biggest service organization.  And on those -20 degree weekend days when my oil burner flat-lines (it’s happened twice in the last 17 years), I want to know that I can get a technician to solve my problem that day.

You need to know what your market growth rate is, and you need to grow faster than it.

Ralph

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