In 1759, Arthur Guinness leased a disused brewery in Dublin and began producing beer for the local market. Like most brewers of his time, he produced a variety of beers to meet a variety of tastes. But by the late 1770’s, Guinness was becoming known for his porter. The dark beer that used roasted barley to produce a deep brown color and rich complex aroma had become quite popular, especially among the dockhands in Dublin. In 1799, faced with a shortage of capacity, Guinness made the bold decision to discontinue production of his various other ales and focus exclusively on the porter – the beer we know today as Guinness Stout.
This historical tale underscores one of the most powerful and difficult challenges of strategy – focus. Remember that strategy is about choice and that strategy starts with understanding your differentiation – being able to leverage the small number of things (capabilities or strategic assets) that you can do systematically better than your competitors. Conversely, if you try to do everything, you will spread your resources too thin and very likely not be the best at anything. This is why a strategy has to be more than just a roll-up of department-level improvement plans.
This simple truth seems obvious, but can prove extremely difficult for companies, because focus means not doing some things that might seem attractive. Focus means placing bets – a focused portfolio is less diversified and that can make some managers uncomfortable. And focus means killing some projects that may still have fans in the organization or among your customers. For example, there must have been some Dubliners who preferred the taste of Guinness’ other, long-forgotten brews.
In our work at Amphora Consulting, we help clients overcome this by concentrating not on what they can do, but what customers want them to do. From the critical and objective view of the market what really differentiates their offerings? Where can they truly be the best in the world, and which customers value this difference? That is the essence of what we call your strategic ‘sweet-spot.’
Importantly, focus does not mean giving up on growth and innovation, it just means being more disciplined about where you look for adjacent opportunities. Again the Guinness story is instructive: in 1901, Guinness built its first technology center to advance the science of brewing. Throughout the 1950’s Guinness was at the leading edge of transitioning to stainless steel and aluminum brewing vessels to improve quality and consistency, and in 1959 they introduced the dispensing process still used in pubs today utilizing nitrogen in addition to carbon dioxide to produce a consistent creamy head.
In 1988, Guinness introduced the ‘widget,’ a patented packaging system that allowed the experience of Guinness Draught to be enjoyed in a can – delivering the same combination of gases to the beer as the can was opened.
After seven generations of family ownership, Guinness PLC was sold to Diageo in 1997, and today Guinness customers enjoy more than 10 million pints per day in more than 150 different countries.
So, the next time you celebrate the end of a workday with a proper pint, and admire its perfect one centimeter of dense creamy foam, consider the power of strategic focus and the lasting impact of understanding and building upon differentiation. What could it mean for the future of your business?
Source: Guinness Archive, GUINNESS STOREHOUSE®, St. James’s Gate, Dublin 8; as well as significant personal research