The Strategy Paradox
A balance between surviving and thriving is a key element for determining where the real risk in business lies. To illustrate, Michael Raynor's book, The Strategy Paradox, shows that while companies with a high degree of focus appear to outperform their more generalist rivals, these same single-minded companies also have the highest number of business failures. Since the failures are no longer business entities, they drop from the performance statistics, giving the appearance that a high degree of focus is a better strategy for success. So when business consultants take measure of hte most successful companies and compare what they do differently from average performers, the consultants may not take into account the full picture.
A recommendation to overly focus efforts in business could be akin to recommending that a person quit his or her job, fly to Hollywood, and start a career in acting. Successful movie stars certainly make much more than the average person, but considering the high failure rate among movie star hopefuls, is this truly a wise recommendation? Raynor's idea carries over into patents, considering that while focused companies may score big-time with a hit product in their chosen field, they will also have diminished flexibility to address changing environments. The focused companies have less diversity in their patent portfolio to draw from should the environment change. In a world of opposites, between being completely focused or totally diverse, a healthy in-between position needs to exist in most organizations.
This blog post is excerpted from my new book, Outpacing the Competition: Patent-Based Business Strategy.
