Warren Buffett and Secrets of Management - 58
In reference to investing, Buffett always believed that those that were overly diversified didn't really understand what they were doing. "On the other hand if you are a know-something investor able to find five to ten sensibly priced companies that possess long-term competitive advantages," he said, "conventional diversification makes no sense to you".
When you translate this into managing a business, you see that this is a mistake made by many business owners or managers as well.
Coca Cola (KO) doesn't get into making furniture because they think that the beverage business is slowing down. It wouldn't make sense. Yet at the same time they would be foolish to offer only the one drink called "coke" as well. They do have a wide range of products within their circle of expertise.
In a rush to please everyone, I've seen many managers make the mistake of offering too wide a range of products or services that went far away from the core purpose of the business. The result was that there just wasn't a flow to the business that was there before instituting products outside of their experience and the workers never really got a handle on how to service the offering.
It became time consuming, frustrating and customers weren't given the best answers, as many times things offered were complex in nature and would have taken a full-time worker that specialized in the field. Sales usually can't justify the expense.
Like I remember a mentor saying one time: Keep to your knitting. Sales should come from growth within your core purpose, not from spreading out into all types of unknown fields that will certainly cause your business or department to suffer. Dell (DELL) found this out when even within their expertise they offered so many products that their service people couldn't answer more than a few of the questions and so would have to bounce customers from person to person to find out who had the answer.
Think of the problems that come from going beyond your expertise and spreading products and services too thin. We need to stick to what we know and build our businessess based upon things directly connected to that.
Other Buffett Resources:
MSU students have special visit with billionaire Warren Buffett
Sticking to what you know Core businesses
Remember to Sign up for my feed, bizzbite and digg this!
Sponsored link: The outsourcing every manager requires - Tampa Locksmith
Comment Preview