Focus. This is the most underrated term in entrepreneurship today.
Concentrating on your core business – consistently doing what you already do well – may sound easy. The reality is that it’s very hard.
There are always distractions out there. Sometimes, these distractions are disguised as great business strategies or innovative projects. They rarely are. They are follies that suck up time and money and make you and your business less efficient.
I was reminded of the importance of focus recently, when reading about the woes at John Lewis. This is a business that is beloved by customers and employees alike. It’s been going for years, has an incredible track record, and is generally seen as the ‘rock’ of the high street. But suddenly, it’s making losses and posting 1,800 redundancies.
The management has blamed Brexit but I think there’s a different reason. John Lewis has been distracted from what it does best: selling goods that people want to buy to customers who want to buy them.
If you look at John Lewis’ model, it’s become confused in recent years. The business made an investment in Ocado over a decade ago, sustaining losses that – luckily – ended up in profit when it sold its stake in 2011. This once-in-a-blue-moon success seems to have convinced John Lewis that it is a venture capitalist, and it’s been backing lots of start-ups through its accelerator programme, JLABS. In the last year and a half, it has even moved into the service engineer space. It is my opinion that they’ve totally lost the plot there.
Can you imagine British Gas opening a department store? Or Homeserve selling wallpaper? John Lewis has no experience running a home services business. It’s completely foreign to the industry they know.
I think that all business owners, me included, should heed John Lewis’ cautionary tale. It’s easy to get carried away with a new idea. When you have shareholders to please, it’s tempting to keep announcing clever things that lift the share price that day. But it’s nonsense: long-term, the business will suffer.
I do some mentoring through Connect Yorkshire. There have been many times I’ve found myself sitting in front of someone turning over £1.5m, making £300,000 profit, with just 15 employees, who says to me: “I’ve got this great idea to do something completely different with this business.” Why? It’s because we entrepreneurs bore easily, and we love a challenge. But that’s the antithesis of good business practice.
I’m not infallible either. At BigChange, I nearly lost focus recently. A company approached me, offering to add drones to our product set. It sounded so exciting: hi-tech drone deliveries! I was tempted for about an hour but something kept bothering me: none of our customers have ever asked about drones. And I don’t believe in first-mover advantage in business. The pioneers often fail and it’s a later mover that wins the day – the second mouse gets the cheese, as they say.
As an entrepreneur, when you are considering a major move outside your comfort zone, ask yourself three questions.
1.) If the time and money it will require to launch this new idea were instead invested in your core business, listening to customers, and making improvements, would the return be higher?
2.) Have your customers said – explicitly – that they would pay for this new product or service? Not that it would be nice to have, or that it’s an interesting idea, but that they would spend cold, hard cash?
3.) Is someone already doing this better than you ever could?
I’m not trying to squash innovation. We need to be imaginative and keep trying to improve things for our customers. But we need to do that while maintaining focus on the sweet spot: the thing we are good at that customers consistently want to buy.
Right now, we’re selling our software to 25,000 mobile workers in the UK. But the UK market size is an estimated 7m people. That’s our focus, and I shan’t be getting distracted from that.