We are in the presidential primary season. This round, only the Republicans are having a serious primary, but there is an important lesson to be drawn from either party’s primary that’s valid for corporate management.
During the primaries the base agitates for an exciting “pure” candidate, regardless of their electability, forgetting (or not caring) that winning elections is ALL about winning swing voters. The right strategy of course, is as it is in business: to start with your objective and work backwards. In politics the objective is to win the election, so–duh!–only electable candidates should be considered on the first pass. Once the field has been swept clean of unelectable candidates, then the right place for any sort of “purity” filter is with those who actually stand a chance of winning a general election.
You’d think that this would be obvious, but passion runs wild over reason much of the time in politics. We see management making a similar mistake quite often when they make new product and/or market decisions.
The concept of “core competence” is one that goes back a couple decades now in the management literature. [However the articulation of it there was really – like so many academic notions that have value – simply a description (not a prescription) of what well-managed companies had been doing for a long time.] The strategic concept of core competencies is that companies are very good at doing some set of things (often these things aren’t obvious) and their competitive advantage comes from them. The corollary is that companies are at best OK, and sometimes outright suck, at doing other things. Where management often goes wrong is that when their core products become uncompetitive, or their core markets move away from them, they reflexively want to chase the competitors that are making the products that are eating their own market share, or chase the new direction in which their market is moving. Sometimes this instinct builds on a firm’s core competencies, and other times the right thing to do is to re-orient what a firm is good at towards new product or new market directions.
Because a sure recipe for failure is to get yourself into a business that you inherently suck at.