THE STORY
Imagine, if you will, a man who is trying to find the ideal woman to marry. We’ll call him Bob.
Bob does a great deal of research into determining the characteristics of a great wife. Then he does research into where to find women with these characteristics. Finally, Bob applies “proven” tools for approaching these women.
Unfortunately, Bob has absolutely no luck in convincing any of these women to become his wife. In frustration, Bob complains to one of his friends, “I don’t understand why I am not having success finding the ideal wife. I’ve done all the research and used all the accepted techniques. I found the great women, but none want to be my wife. What am I doing wrong?”
Bob’s friend answers, “Take a look at yourself. You are obesely overweight. You are unemployed. Your personality is rude and obnoxious. You are sloppy and ugly. Until you fix up your own act, no woman will be interested in you.”
“Hmmmm,” says Bob. “I’ve spent so much time looking for the right woman that I never spent any time looking at myself.”
THE ANALOGY
Looking for great business opportunities can be a lot like looking for that perfect spouse. You can do all the research (like Bob did) to determine what the characteristics of a great opportunity are (like high growth, large demand, good margins, low competition, etc.). Then you can do the research to find out where those types of opportunities exist (like emerging economies, or social networking businesses, or green technology). And then you can apply proven techniques to try to get into those great business opportunities (acquisitions, alliances, etc).
And you can still fail miserably, just like Bob.
And the failure may have nothing to do with all that research you did. The problem may be that instead of focusing entirely on looking for opportunities, one needs to occasionally focus on one’s self. Look in the mirror at your own business. Do you have the proper qualities to make the deal work? What are you bringing to the opportunity which adds value? Does your company look to others like Bob—totally undesirable?
It takes two to make a great marriage. Don’t forget your part in the deal.
THE PRINCIPLE
The principle here has to do with strategic fit. A supposedly great deal may actually be a terrible deal if there is no strategic fit. Even if the opportunity has all the characteristics typically associated with success, it can still be a miserable failure in the wrong hands (no strategic fit). Therefore, when making strategic assessments of potential opportunities, do not look at them in isolation, but in the context of their fit with your organization.
This point was driven home to me in a recent study issued by the Corporate Executive Board. Their report said:
“Despite strategists and senior managers having spent decades on emerging markets strategy, they still spend too much time trying to understand the market and not enough on understanding whether their firm is ready for that market. Our research on over 1,000 market entry examples shows that this mistake is made over 70% of the time.”
In other words, right now emerging markets are the pretty girls that the guys want to marry. But just because the woman looks attractive to you doesn’t mean that you look attractive to the woman. This may seem obvious. However, since businesses are making this mistake of going in ill-prepared over 70% of the time, the idea must not be as obvious as I think.
I’m not saying that these companies are failing because they are bad companies. They just aren’t ready for the opportunity because of a poor fit.
Jigsaw puzzle pieces aren’t inherently good or bad by themselves. What makes them good or bad is whether or not they properly connect with your puzzle piece. If the pieces fit together, everything is good. If not, then the piece is not useful to you—even if it is very useful to someone else.
So what can we learn from this?
1) First, Look In The Mirror
Before going on a strategic quest for the ideal new opportunity, take time to first look into a mirror. Research yourself before researching others. Until you know what you look like, you won’t know what opportunities will fit. Ask yourself questions like these:
a) How can I add value to an opportunity?
b) What is causing me to be successful in some of my current businesses? Is it a particular skill I bring to the marketplace or is it a particular type of characteristic of the marketplace itself?
c) What is causing me to have problems in some of my businesses? Is it the lack of a skill or is it the wrong type of marketplace?
d) Where can I succeed better than others? (Differentiated Skills, Competitive Advantage)
e) Where does my expertise lie? Am I better at a particular stage of a lifecycle (start-up vs. growth vs. maturity)? Am I better with particular value positions (low price vs. high service)?
f) What is the best cultural fit for me?
Based on the answers to these questions, you can now know what are the right criteria to look for in new business opportunities.
2) Don’t Get Seduced By the Hot Fad
At any point in time, there are hot fads in business investments. “Common Knowledge” tells everyone that these are the places to be, so businesses flock to them. As the Corporate Executive Board points out, a current hot fad is getting into emerging markets (like China or Brazil).
Yes, a lot of money will be made in these hot markets. It is also true that many companies will lose a lot of money going after these hot markets. In fact, most companies will fail. Only a few companies (like Amazon) succeeded in the first dotcom bubble. Most died a horrible death.
So just because a market is “hot” does not mean that success is a given. Hot markets can also burn the company that is not prepared or not a good fit.
Therefore, do not get seduced into thinking that you have to pursue particular opportunities just because they are the hot place to be. Don’t think that just because all of your peers are pursuing a particular strategic path that you have to do the same thing.
Instead, look for the opportunities which fit well with what you do. Perhaps your best opportunities lie far away from the current fad.
3) Make Yourself Presentable Before Diving In
Sometimes, an opportunity might have great potential for you, but you are not ready yet for that opportunity. If Bob was going to lure a great wife, he was first going to have to lose some weight, get a job and improve his personality. Your company may need to do something similar.
When McDonalds was beginning to grow internationally, they ran into a problem. They wanted their hamburgers and french fries to have the same quality and taste as in the USA. However, these other nations did not have access to the proper types of cattle and potatoes to make that happen. Therefore, before they could build their restaurants, McDonalds had to spend a great deal of time working with the local agricultural infrastructure. They had to convince the local farmers and ranchers to use McDonalds-style cows and potatoes and raise them in the proper manner.
Until McDonalds got the infrastructure in place, they were ill-prepared to build their restaurants globally. If they had just rushed in with the restaurants (before fixing the infrastructure), they may have failed.
If you find a great opportunity, determine what you need to be successful with it. Then look at what you have to offer. If you are missing something (as McDonalds was with infrastructure), then work on filling that gap before diving into the opportunity. Don’t be like the 70% in the study who fail to spend the time to become appropriately prepared.
SUMMARY
A key aspect of strategic planning is to find future growth opportunities. As important as this is, don’t become so focused on looking outward for opportunities that you fail to look inward at yourself. The best opportunities are the ones that fit with who you are (or who you can be). Preparing yourself to win can be more important than finding a so-called “winning” opportunity.
FINAL THOUGHTS
The more you strengthen your core competencies and skill sets, the more places there will be where you can find additional opportunities to succeed.
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