Posted on January 10, 2012
Filed Under Entrepreneurship |
Focus. That is the secret to building a successful company. Most every VC and entrepreneur will tell you that. Focus. Focus. Focus. When successful entrepreneurs are interviewed about the secrets of their success, they always mention Focus. But I have always found Focus a bit elusive. The minute you ask someone to explain it in more detail, it usually breaks down. Focus is one of those terms like “integrity” or “collaborative” that sounds nice and has everyone agreeing at the surface but when you did into the specifics you sometimes find that two people who think they mean the same thing are actually worlds apart.
My goal with this post is talk about Focus and what it really means. I will address some of the issues that cause different people to disagree on Focus and propose a way to think about Focus that I think may be helpful.
To set the stage, I want to use the company I know best, Backupify, as an example of why defining Focus can be elusive. Every CEO has to define what their company stands for, but this can often be done on many levels. When I define Backupify to investors, I talk about the long term future. I talk about building the defining data management and protection platform for cloud data. I talk about the data graph, all the things you can build on top of the platform once you understand how the disparate data sets for a company are all connected in a single data store. But I wouldn’t say that Backupify is “focused” on that. At the moment, we backup a handful of SaaS services but almost all of our revenue comes from Google Apps backup. If I want to define our Focus, I could do it at many different levels.
For example, maybe building a SaaS data management platform is too broad, so I will Focus and just build a SaaS data backup application. But that’s too broad as well, so maybe I will Focus more and just build a Google Apps backup application. But maybe that is too broad as well, so I will Focus even more and build just a Gmail backup application, ignoring the rest of the Google Apps suite. But then I could Focus even more and build a Gmail backup application that only targets companies with 100 or more employees. Then I could focus even more and add an upper limit, and build a Gmail backup tool that only targets companies 100 - 200 employees. Then I could Focus even more and build a tool that only backs up the last 10 days of email for companies with 100 - 200 employees. At first it starts sounding smart to Focus, but the mantra that more Focus is always better breaks down at some point and sounds ridiculous. You eventually Focus to the point where you just have partial product functionality or a very very small market.
And of course, outside of product dimensions and customer segment dimensions, there are other business dimensions where focus could come into play. Are you focused on revenue? On reaching cash flow breakeven? On market share? Or on sticking with your vision and your core product in your core market. These decisions matter. It seems like every B2B company will eventually face the dilemma where a large client representing significant revenue wants to buy their product, but wants some special feature or customization. Whether or not you do the deal depends on Focus. If you are focused on revenue first and foremost, you might. If you are focused on cash flow breakeven, you might, if the contract helps you get there. If you are focused on the long term, on owning your market segment, and this customer doesn’t fit your market segment, you will probably pass. So what’s the right answer? Are you focused? It seems like Focus can be interpreted to mean nearly anything. And the truth is, Focus is highly context dependent. So how do you know if you have Focus?
I think about 4 criteria when I think about Focus. What people really mean when they say you should Focus, is that you should Focus at the right level, in the right context. If your activities match up to these 4 criteria, I think you are probably focused. Here they are:
1. Goal Alignment - Your company should have some sort of goal or goals. Depending on your size and maturity, they may be short term goals or they may be longer term goals. If your activities are all moving you towards your stated goals, that is one step in staying focused.
2. Resources - Focus is highly dependent on level of resources. If you are Apple, you can be focused while attacking multiple markets with multiple new products simultaneously. If you have $1M in seed funding, you can’t. If you have Focus, you have a product scope and customer segment scope that is appropriate for the level of investment you can make.
3. Value Chain Consistency - Businesses are built around value chains, which are basically the way that you do things - the way you take inputs and turn them into outputs. Your value chain should be consistent. What I mean is, your overall strategy has to tie together and be reflected in the decisions you make at various points in your value chain. If an activity fragments your value chain, you probably don’t have Focus. For example, if your goal is to differentiate yourself in the market by having crazy good fanatical support, then activities/products/customer segments that you engage where support doesn’t matter or fanatical support is hard to deliver, etc, then you probably aren’t focused in those situations. On the flip side, if you serve one customer segment, and almost everything is the same to go after another customer segment because buying behaviors, price and packaging expectations, support expectations, etc are all the same, then you can probably still have Focus while going after more than one customer segment because your value chain remains the same.
4. First Things First - Peter Drucker says “Do first things first and second things not at all.” If you are engaged in activities that are moving your “first thing” forward, then you are probably focused even if, to an outsider, you don’t seem to be.
If your activities meet these 4 criteria, then in my opinion, you are probably focused.
The problems with understanding Focus are that it means different things to different people. It is also highly context dependent, and has a lot to do with available level of resources. If you are a first time entrepreneur, everyone will inevitably tell you that you need Focus. You will think you are. They will tell you that you aren’t. If you really think about it, you will start to get confused about how you know if you are focused. Some companies that seem to be all over the map are really quite focused. And some that seem to be very straightforward and focused are actually all over the map when you look behind the curtain. The key is to think about what the right level of Focus is for your company, in your context, with your level of resources, with your stated goals. It can be a little slippery, and Focus will inevitably change, particularly in the early days. But think it through, then stick to it, and reap the rewards of Focus.