The generalist tries to be all things to all people but who do they truly serve in the end? How can they? How does an analyst deliver value when the coverage extends so widely that there is little underneath the surface? This was long a complaint about (some) financial sector types who were considered to have “expansive superficial” knowledge. But the same can hold true for the industry side types who kid themselves into thinking that they can address multiple and unrelated sectors and still provide useful analysis for clients.
That is called being in denial. Maybe it is driven be economic necessity or perhaps it is a lack of respect for the markets they cover. The former can be addressed through drilling down deeper into a market whereas the latter shows professional deficiency and that is a trait that customers should avoid at all costs.
Why? The person/firm cares more about making money rather than offering value and for those that offer real value they will ultimately prosper anyway.
One of the keys to success in the analysis field is being able to offer unique contributions that are based on knowledge, connection to the fundamental issues of a market and a relationship with the supply chain that meets the standard of mutually beneficial in all interactions. The only way to manifest this success is through commitment and focus. That simply cannot happen if you are doing a market drive by looking for a few dollars.
And, this focus and ownership is yet another way to distinguish your firm from the multitude of report factories that are operating offshore and at a fraction of your cost. How can someone chunking out reports on healthcare, IT, software then renewable energy have anything insightful to offer? Conversely, how can you compete against these firms in producing volume when their cost to produce a report is $5-$6K?
There is a need for a reality check though.
- Can you generate revenue from a market to merit the time and resources to work within it?
- If the opportunity is limited, is it at least tangential to what you do?
- Can your sales people successfully support the segment? Or are you just chasing revenue that distracts from the mission? (Big issue!!)
- Is it something that your core customers need but limited to them?
- What opportunities are you missing out on by holding on to areas that no longer fit the reality of your firm or practice?
Focus matters. It offers competitive advantage, it creates pathways to excellence and allows providers to charge higher premiums for services. Great businesses are started by targeting a single opportunity and growing it out to owning their space. That’s not to say that an analyst firm is going to become the next Google, or other industry titan but the premise still holds.
Be good at something. If the opportunity is there and you have the correct offering there is no need to chase dollars while leaving your flank exposed to competition.