Consistent, moderate growth and profitability can be boring to some. But what some great, sustaining companies do is remain focused on the successful, core elements of their business. They wash, rinse, repeat (and improve) basic functions of their business model and cautiously add to the business model. Costco is a company I admire because they offer great merchandise at good deals. I pay $100/year just to shop there. But what I get is great merchandise at competitive prices, friendly staff, and risk free return policy. Costco manages to a smaller number of skus and product categories than other large retailers. If they followed some of the bigger retailers, I expect their focus would shift and risk the core customer engagement they have built over decades. Costco has customers that emotionally connected to the brand.
I had dinner in Chicago last week with a leader from an online infrastructure company. Our dinner conversation included a small business office supplier. This office supplier started in retail and is well known for excellent customer service and product selection. The type of customer service that people repeated positive stories about how well they were treated. As this office supplier moved into online commerce, the core successes became impacted by trying to copy online competitors. So the office supplier started to execute many processes poorly instead of a few core tasks exemplary.
Why does this happen to good companies? As company’s growth rate slows (economic conditions, competitive shift), business leaders look at competitors or industry metrics as their premier yardstick. Changing your yardstick can risk focus on internal core functions and when customers notice, your existing business revenue is at risk. Too often business try and convince themselves that dialing back customer service or product quality will not make a difference with customers or just a few customers will notice.
Before you change your focus, ask your customers why they choose your company over a competitor or substitute.