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Specialization or Generalization?
Perhaps no piece of unsolicited business, marketing, or sales advice is more common than "specialize or die". It seems so obvious, but it's incredibly hard to do.
Egos drive us to compete in every market that we consider to be our expertise, which are often too numerous. The reality is that there is likely only one discipline (maybe two) in which any company could truly consider to be an expert.
The theory of specialization states that specialized services compete favorably against generalized services. So, when competing in the right market, specialized services will always perform better. The secret, then, is really two-fold. First, you need to have specialized services. Secondly, you need to know of, and compete in, the right specialized markets.
Determining Your Specialized Service
The first step in determining your specialization is to do a thorough business review of the services your company provides. What are the most profitable? What are the services that your company or company leader is known for?
Reviewing past jobs is a first start to figuring out what your specialty should be. Projects that are exciting and easy to sell, but completely unprofitable, do not qualify. Look for projects that are sought after in the market and can be sold at a price that affords a comfortable profit for your company.
Secondly, poll your current customers and warm prospects. How do they perceive your company? For what types of services do they consider you the top vendor? You may not be surprised at the answers, but you likely will.
The ultimate goal is that you find that one sweet spot where profit meets expertise.
Determining Your Specialized Markets
The second step is to determine your specialized market. The questions to ask in determining this are very similar to those to ask when determining your specialty. In what market does your (now) specialized service thrive? In what market is your company considered an expert? What markets have the greatest need for your service? What markets are historically more profitable? Where is selling easiest?
Which is Right for You?
Specialization seems like a great idea, but is it right for your company? There are arguments on both sides.
The generalist's criticism of specializing is that, while the specialist might win in specialized markets, there are too few such markets. By the time you combine enough specialized markets to make the business worthwhile, you may as well be a generalist.
The specialist's reply is that there are many more such specialized markets than you might think. Furthermore, the sales process is so compressed, and the results so much better, that it easily is worth it. The specialists' customers are already savvy to the services or solutions that the specialist provides, so there is very little discussion that needs to take place before closing.
Conclusion
There isn't one simple answer for every situation. Different services and markets create a different set of circumstances, but specialization tends to yield the most positive results. A laser-like focus on one market with one specialized service will create the perception (and eventually reality!) of market leadership. This puts your company in a better position and, with diligent work, becomes a self-fulfilling prophecy.
