As the fable goes:
A Fox was boasting to a Cat one day about how sly and wily he was. I’ve got all kinds of tricks the Fox said. “For example, whenever I hear the dogs coming, I know a hundred different ways to escape
The cat was impressed and humbly said, your cleverness is amazing. As for me “I have only one way of escape and that is to climb up a tree. I know it’s not as exciting as all your ways; “but I can generally manage with that.” “Maybe someday you could show me some of your different escape routes”.
The fox smiled smugly, “Well, friend, perhaps I’ll have some free time one of these days, and I can show you a trick or two”.
Just at that moment they heard the cry of a pack of hounds coming towards them, and the Cat immediately scampered up a tree and hid herself in the boughs.“This is my plan,” said the Cat. “What are you going to do?”
The Fox thought first of one way, then of another, and while he was debating the hounds came nearer and nearer, and at last the Fox in his confusion was caught up by the hounds and soon killed by the huntsmen.
Miss Puss, who had been looking on, said: “Better one safe way than a hundred on which you cannot reckon.”
The moral:One good plan that works is better than a hundred questionable ones.
Management Perspective: According to Noonan; Companies invariably strive to grow by moving into new areas of business. The options can be as numerous as the fox’s paths of escape. Expanding into new areas or taking a company down new paths, whether related or unrelated to the core businesses, carries inherent risks, especially if it causes the company to neglect its main line of business and profits.
If there are any doubts about the planned expansion, it’s usually better to stay focused and true to the “one path” that has provided success and then build on that success. Take the case of Dunkin Donuts.
Noonan citing the book; “The Winning Performance”, Donald K. Clifford Jr. and Richard E. Cavanagh describes how the highly successful coffee company went wrong for a while. Founded in 1950 by William Rosenberg in Quincy, Massachusetts, U.S.A. The company was still thriving five years after inception, building new donut shops each month. Then the company decided to expand into new areas. Dunkin Donuts started a drive-in hamburger chain called Howdy’s. it began providing food to institutions and stocking vending machines. It went into fish and chips, and thought seriously about hats and educational programs – in effect, any type of business that could be franchised.
The diversification began to fail. For five years, the company neglected the all-important coffee business, and profits suffered. The company went back to basics; they sold off all the businesses except coffee – the path that had always worked for them before. Dunkin Donuts focused on becoming the best at serving coffee and donuts.
The company set out to provide, to management’s thinking, the best cup of coffee in the world. Dunkin Donuts has a twenty-three page specification of what it requires in a coffee bean. Beans are to be used within ten days of their delivery; if they are not, they are returned on the next Dunkin Donuts supply truck. Once the coffee is brewed, it can be served for only eighteen minutes; after that it must be thrown out. And the coffee must be brewed between 196 and 198 degrees Fahrenheit exactly. By 1984, the company had 1,350 shops around the world. Today it has over 11,300 (Wikipedia).
The most profitable businesses over long periods of time are single-product businesses in the right product, the IBMs, the GMs, observes Peter Drucker in Managing in Turbulent Times. 21st Century businesses that are single product based also include; Microsoft, Apple, Google, Face Book, and Amazon.
A conglomerate, on the other hand, being an assembly, under one management of a wide diversity of businesses without a common core of unity, cannot expect superior results and performance in the long run, and especially not in turbulent times.
Business Moral: Don’t be distracted from what you do best
Noonan, David. Aesop & the CEO: Powerful Business Insights from Aesop’s Ancient Fables. Nelson Books