Great Companies Sometimes Have to Change Their Focus

Posted by Chuck Kocher
On November 6, 2012

Companies don’t get to be great without good planning. And it’s impossible to do good planning without a clear focus on what your company’s objectives are. Where some companies get in trouble, however, is when their plans become “Holy Writ” and are, therefore unchangeable. Business plans are built on facts and assumptions. If those facts or assumptions change—your business plan had better change as well.

A while back, retailing giant Macy’s recognized that their centralized approach to retail wasn’t working as well as it could—particularly when it came to critical holiday sales. Macy’s had a long, successful retailing history, but they took a kind of a “one-size-fits-all” approach to things. That changed when they introduced the My Macy’s merchandise localization initiative that put more control in the hands of regional managers. It allowed stores to purchase and promote inventory according to the demands of their local markets—rather than according to national trends.  The result was that all of the company’s top 12 markets in sales growth leaders came from districts that implemented the My Macy’s initiative.

Macy’s wasn’t the only large retailer to change the focus from national to regional. Home Depot and Best Buy also introduced similar efforts that allowed local stores to custom-fit what they offered to their local markets.

Changing your focus and challenging your business assumptions isn’t easy. And sometimes, it’s painful.  Just ask the folks at Federal Express (by the way, we’ll take a look at the entrepreneurial genius of Fed Ex founder Fred Smith later this month).

In 1984 Federal Express was flying high. Their overnight delivery business was a huge success. They had radically changed the way businesses functioned, and they were ready to do it again with a new service called ZapMail, which would allow guaranteed delivery of documents in two hours. That became their new focus.

Federal Express assumed that businesses would embrace this new “fax” technology and use the service they were providing. Part of their assumption was correct. Businesses embraced faxing, but instead of using Fed Ex’s services, they all went out and bought their own fax machines. The real business opportunity was in selling these relatively inexpensive machines—not an on-going “service” that businesses could now provide for themselves.

After two years and hundreds of millions of dollars in investment, Federal Express quietly shut down ZapMail and refocused on their core competency. Sometimes changing your business focus means doing something completely new. And sometimes it means getting back to what it is you do best. Did changing focus hurt Federal Express? Sure, but they learned from it, and a lot of companies would love the “pain” of being ranked #73 on the Fortune 500 list!

What’s your focus? Does it need to change to change? What’s your biggest challenge when it comes to clearly defining what your focus should be?