The Art of Ruthless Focus

Today’s entrepreneurs and business leaders must tread a tightrope through a universe of distractions. Information pours into our brains in a relentless, never-ceasing deluge. A rising army of companies across the globe competes for our customers using "new and improved" business models and practices that lead us to second-guess ourselves. Meanwhile, social and economic turbulence threaten to shake apart what we’ve built. In the eye of this hurricane, it’s all too easy to let something very basic yet very crucial slip away. That is focus.

That’s right. The ability to focus—ruthlessly—in the midst of chaos is what separates the companies that grow steadily and successfully from the ones that get distracted, trot down the wrong side path, and find themselves lost in the forest.

You’ve heard the phrase "Do one thing and do it well?" That’s how companies that succeed over the long term do it—they concentrate on doing one thing better than anyone else. They block out the external noise and stick to their proverbial knitting until the strategy they’re following just doesn’t work anymore.

Chico’s is the perfect example of what happens when a company focuses ruthlessly—and when it loses that focus. The clothing franchise is known for selling stylish but comfortable clothing to women from 35 to 65 in upscale households. Everything it does, from its Passport Club to its unique "0 to 3" sizing system, is meant to make Baby Boomer women feel special. When Chico’s sticks to that simple formula, it thrives. When it gets sidetracked or seduced by other things—marketing to a younger crowd of shoppers, changing its product mix, or expanding into other brands—it begins to flounder. Its stock prices have risen and fallen, predictably, as it veers away from its core strategy and then returns to it again.

Define Core Strategies

So what is a core strategy, anyway? If you’re thinking it has something to do with complex planning exercises that end in piles of binders, you’re wrong. A good strategy is simple and useful. It boils down to how you answer two questions:

• How are we going to beat the competition?
• How are we going to make money?

We have identified five basic strategies you can use as models for your business. Here’s a simple and straightforward overview.

Opportunity

Implementing an opportunity strategy means doing something different from what everyone else in your industry is doing. Think "game-changer." You take bold action that transforms a business or the way a business is run. Take a look at the retail office supply giant Staples.

In 1985, when interviewing for the CEO position at Makro, a European warehouse-type store, Staples founder Tom Stemberg visited one of the company’s stores. The store sold all kinds of merchandise, including clothing, electronics, food, and toys. But what caught Stemberg’s eye was the fact that the store’s office supplies were flying off the shelves.

The idea for Staples was born. Stemberg and his business partner, Leo Kahn, would create (as Stemberg calls it) the "Toys ‘R Us" for office supplies.

Staples began administrative operations in January 1986. The first store opened on May 1, in Brighton, Mass. In May 1989, Staples went public. By 2000, Staples had delivered 12 consecutive years of more than 30% growth in sales and earnings.

Technology

Companies following this strategy use technology to transform a market. (This is not to be confused with using technology to magnify the strategy you do follow—îa practice that applies to almost every company.) Very few companies use technology as a core strategy. Consider Amazon.com.

Most people think of Amazon as a bookseller that happens to sell online. But that’s a misconception. Amazon isn’t a "bookseller." It isn’t even a retailer. It’s a business that uses different kinds of technology that create a multitude of profit streams.

In 1994, Amazon founder Jeff Bezos read that the internet was growing at a rate of 2,300% per year. Bezos knew there was opportunity in anything growing that fast. So he left the firm he was working for to start his own business. Bezos knew that technology was going to allow millions of people to go online and buy things. But he wasn’t sure what the best online business would be. However, he kept coming back to books.

Amazon opened for business in July 1995. It sold more than $12,000 worth of books the first week. By the end of the first month, Amazon had sold books to people in all 50 states. By the end of 1996, Amazon had revenues of $15.7 million. Amazon went public in May 1997. By the end of the year, share prices had risen over 200%. In 1998, Amazon was still growing, but it was still a books-only and U.S.-only business. By 2000, it would be doing business in 20 countries; more than half of the 2000 revenues came from products other than books.

Amazon’s ruthless focus on technology has made the company a trailblazer. It developed some of the basic tools of e-commerce. It developed the software that makes recommendations to you when you visit the site. It developed some of the first "Wish Lists" and the first one-click ordering system. Most recently, it developed the Kindle e-reader. Amazon leverages its technology. As it develops software and expertise, it uses those to start new businesses.

Implementation

The implementation strategy is built on superior execution. Success in this strategy lies in executing the details effectively and efficiently every time. You have to work for continuous improvement in the basics and make sure you do them better than anyone else. That’s the case with Walmart.

In 1948, Sam Walton opened "Walton’s Five and Dime" in Bentonville, Ark. Business was soon thriving, and he opened store after store. Before long, he had 16 variety stores scattered across Arkansas, Missouri, and Kansas. Walton had a winning formula, offering low prices in clean stores that were open at convenient times. He could make money doing that because he bought in quantity, bargained hard, and tried to make everything as efficient as possible.

By the early 1960s, Walton was riding high. He was the largest independent variety store operator in the country. He decided to capitalize on the suburban sprawl that was taking place in the country at that time. The next few years would see a number of discounters come and mostly go. In addition to Target, Kmart, Gibson, and Walmart, there would be names like Woolco, Ayr-Way, GEM, and Fisher’s Big Wheel.

Walmart became the giant. In 1979, Walmart had $1 billion in sales for the year. By 1993, it was doing $1 billion a week. In 2001, Walmart had billion-dollar days. By 2008, with revenues of $405 billion, it was averaging more than a billion dollars a day.

A retailer with a "lowest price" value proposition can make money with a ruthless focus on only two things. You have to pay attention to the business basics. With low margins you’re always running close to the edge. And, you have to maintain a ruthless focus on operations. You have to drive cost out of them. You have to improve them and make them more efficient.

Differentiation

The differentiation strategy defines a niche that companies can exploit and defend. Companies that use it as a core strategy are looking for more than competitive advantage. They’re looking for "sustainable" competitive advantage. They focus ruthlessly on doing the things that help them not only stand out, but stand apart. Difference is not enough. You have to give the customer what he or she wants. If you don’t accomplish this, it doesn’t matter how different you are. That’s the case with Publix Supermarkets.

Publix is the largest employee-owned company in America. Its success begins with founder George Jenkins. Jenkins had already owned two successful grocery stores in Winter Haven, Fla., when he opened the state’s first supermarket there in 1940. Jenkins called it a "food palace," but named it Publix Supermarket. After the war, he bought a 19-store chain of supermarkets and refitted all of them to match his "food palace."

In 1956, Publix achieved $50 million in sales. In 1959, it became the largest supermarket chain in Florida. In 1970, sales hit $500 million. In 1974, they hit $1 billion. In 2009, Publix opened store number 1,000 in St. Augustine, Florida. Today the company operates stores in five Southern states.

Part of what makes Publix a success is a ruthless focus on making the customer experience great. This goes far beyond "customer value." It extends to the entire experience from parking to store design, to the selection and quality of the food, to the check-out experience.

Outside of every market, you can read the company’s slogan: "Publix, where shopping is a pleasure." The entire culture at Publix—one where people work hard in a supportive, upbeat environment—supports that slogan.

Acquisition

The acquisition strategy calls for companies to create growth and development by acquiring other companies. This can be dangerous, but companies that master the process are among the fastest growing in the world. The theory behind an acquisition strategy is based on two concepts. First, the company should be able to spread general administrative costs over several units and consolidate resources in a way that improves profitability. And second, an acquiring company can reduce the risk of doing business in a single market by spreading the risk over several markets or locations. This is a similar argument for diversifying an investment portfolio.

One company that has mastered this strategy is computer networking giant Cisco Systems. Since its first acquisition in 1993, a small switch maker named Crescendo Communications, Cisco has gobbled up more than 100 companies. Where other tech companies may use R & D (research & development) to come up with products, Cisco uses A & D (acquisition & development).

Cisco has received a lot of good press for its "acquisition playbook," but it’s doing the same thing that other successful acquirers do. It has learned how to do acquisitions right by doing enough of them to climb the learning curve. Now Cisco has managed to standardize the process so it can repeat success.

—Tom Hall has spent most of his career advising clients on growth as well as growing companies himself. Hall has been a guest lecturer at the University of Florida, the University of Central Florida, Florida Southern College, and the University of Tampa. Wally Bock, based in Charlotte, N.C., is a writer, speaker, and consultant who specializes in learning and sharing how leadership and strategy combine to create successful companies. He writes the award-winning Three Star Leadership Blog. Their book, Ruthless Focus: How to Use Key Core Strategies to Grow Your Business, is published by Dog Ear Publishing, 2010. Reprinted with permission and edited for this publication.