Strategic Advisory Services
Growing Up, and Growing Out
November 12, 2021

Most companies (and brands) begin life by focusing on a specific customer and need, finding success by creating a product that addresses that need better than existing options.  As growth slows, the challenge becomes how to build upon that success with existing customers, versus broadening the range to attract other consumers (and competition too.)

A recent study by Michael Hannan of Stanford explored the implications of long-term specialization and its impact on adaptability.  He found that the longer a business specializes in their market, the more difficult it becomes to adapt when customer needs change or new competitors enter.  The longer the specialization lasts, the better the business gets at perfecting the offering for their target’s distinct needs, and the worse they get at addressing the needs of new customers.

This balancing act is a challenge for managers:  remaining adaptable while also deepening advantage in your current market.  As your business grows, create systems to keep your eyes on the broader market, competitors and customer needs.  Not only can it help you remain more adaptable, but it can provide inspiration for additional ways to better serve your core customers too.