What is the difference between a mile-wide versus a mile-deep approach to building your business? And why does it matter?
As many companies’ growth has stalled due to Covid-19’s shelter-in-place, unemployment, reduced consumption, workplace protection and other changes and limitations, some are looking everywhere for new businesses, even scrambling to diversify by adding new products and services to sell.
However, before a necessary pivot, it is important to make sure that you don’t fall into the “Mile Wide Trap” as you look to diversify your business.
The Mile Wide Trap
The Mile Wide Trap first starts to ensnare you when you do an excellent job serving a small number of great customers and they ask you to handle more of their DIFFERENT TYPES of work. You keep delivering, and they keep broadening the list of products and services they want you to supply. Your company is wildly profitable serving the expanding needs of this small list of “great customers” so you keep falling deeper and deeper into what eventually becomes “the mile wide but an inch deep” trap.
Pretty soon, you’re an inch deep and a mile wide in offerings and the only person in your company with the depth of industry experience to deliver all of the services is you. But you’re trapped because your expenses have crept up as your revenue has increased – leaving you dependent on the sales you get from a small group of demanding customers. And the chase never ends.
Another example of the Mile Wide Trap is when there is a disruption in the market, and you look to capitalize by doing something your company has not done before. This may be particularly attractive during this time of economic upheaval caused by Coronavirus.
A Mile Deep is Better Than a Mile Wide
Instead of selling more things to a few customers, first concentrate on understanding your company’s core focus – the intersection of your passion and your expertise, then sell a few things to a lot of customers.
In order to scale up a company, employees, not owners, need to be able to execute work with quality and speed. This is much easier to accomplish repeatedly when the company operates within its core focus where everyone is already trained to do their best.
As an extreme example, Ferrari represents a high-performance racing type automobile. Ferrari’s core focus is: “We build cars, symbols of Italian excellence the world over, and we do so to win on both road and track.” They are a mile deep in what they do – high performance Italian cars. They know that the gold is buried deep. One might think they could go wide and diversify into high performance motorcycles, snowmobiles or even airplanes, however, they stay close to their core focus and avoid the Mile Wide Trap.
When the markets seem to be in turmoil, it is easy to fall into The Mile Wide Trap that will eventually choke off your growth. Do pivot when necessary, but more often than not, doubling down on your core focus will provide the long term, scalable growth you are looking for.
If you’re curious to benchmark your company on growth potential and the other seven factors that drive your company’s value, take 13 minutes and get your Value Builder Score here: https://bit.ly/36nPCKn
=================================================================
At Executive Forums Silicon Valley, selected business owners and leaders work together to gain clarity, insight and accountability to ignite their leadership engines, grow their businesses and improve their lives. If you are interested in learning more about Business Owner Advisory Boards, Entrepreneurial Operating System (EOS), Stages of Growth, Value Builder System or becoming a member at Executive Forum Silicon Valley, please contact gperkins@executiveforums.com or call 408-901-0321. For more information visit http://www.execforumssv.com/ .