Excerpt from an article published by Markus Weishaupt on the “Tharawat Magazine“.
Diversification brings success – it’s a business advice mantra repeated often enough it verges on the platitudinal.
While not entirely untrue, what the statement fails to address is the fact that many companies find success through extremely focused models. By concentrating financial and temporal resources, businesses can manifest incredible penetrating power. Academic Hermann Simon’s theory of concentration points to this quality as the defining factor in the success of so-called “hidden champions”, companies that are not necessarily well-known but are among the top three in the world market.
The fact that concentration characterises some the most successful family-owned companies is reiterated by the results of “Radically Different: the DNA of Successful Family Businesses,” a survey of over 200 entrepreneurs from Switzerland, Germany, Austria and Italy. However, while a concentrated approach is made apparent by the findings, it is less clear exactly what the focus is. Do they have specific products, outstanding services or their own processes or procedures? Are there certain skills, methods or technologies in place?
For example, Flexi is the world market leader in telescopic dog leashes, Berhalter builds unique machines to package pet food, Durst photo technology designs giant printers that print on every conceivable surface including tiles, Beyer Chronometry is the oldest watch manufacturer in Switzerland, and Wollsdorf Leder is the world market leader for the manufacture of steering wheel covers. Their concentrations are explicit. However, what makes these companies specialists? In “Radically Different,” this concentration is an indication of their core competencies.
Continue reading the article here.