I read at least 2 newspapers a day—within the last several day I read an article—but I can’t recall where.
in the article–the author quoted an economist , I think, that had been doing studies that showed that diversification leads to failure.
I think he specifically said something to the effect that according to their studies—the moment a company commits to diversification, it’s failure is assured.
did anybody else read the same article-any idea of the author,the economist, or the study
I presume the reference was to actual businesses of a certain size–and not to the mom and pop operation most of us muddle with.
I imagine it has to do with your “circle of competence”— not referring to a company that does, kitchens AND Baths,AND additions, AND decks
Stephen
Replies
They mean Big Box Hardware Stores offering new products like appliances and installations of kitchens and decks.
Or banks and insurance companies turning into casinos,
Or governments doing what banks are supposed to
L
GardenStructure.com~Build for the Art of it! Decks Blog
I don't know if that was it- Usually I read the paper and jot down a note of something I want to look into further however- i think I was reading the paperAND watching Meet the Press AND listening to my wife rattle on about one of her problem students and I missed the gist my sense is that it had something to do with say---corporations merging--- like a beer brewer buying up a chain of resteraunts-or a manufacturer of lightbulbs--and then later having to spin the aquisition off. again- i can't quite put it together or remember where i read it-and I want to look into it further.
stephen
Or like an automotive company starting it's own bank/leasing company?
There's lots of examples.
We all need to figure out what we do well.. and do it a lot.
LGardenStructure.com~Build for the Art of it! Decks Blog
>>"Or like an automotive company starting it's own bank/leasing company?"Actually, I was thinking more of an automotive giant tackling the world of computer hardware and software services -- like GM tried with EDS. (And, IMO, failed miserably.)
Politics is the antithesis of problem solving.
You would have a hard time finding anything any of the big 3 did that could go onto the positive side of the chart.
Its like Jeremy from top gear when he received his new Ford GT and the next morning it wouldn't start.
I'd have sold it out of the driveway.
The new Dodges are GORGEOUS, but I don't trust it any more than the present economy...
The root of the evil in my mind is the built in flaws--they couldn't get enough profit from making the car, so they low bid every part and ended up making profit on the service side due to poor workmanship.
If a carpenter bought all his materials, door hardware and floor vents from HD, he would suffer the same fate as the auto companies within a few years because he would be known as a second rate builder.
I for one got sick of 25k brake jobs, washer pumps every 3 weeks and oil leaks and manifolds shattering from carrying a load.
What a hypocrite I am having 2 toyotas in the driveway, but like a crack habit, I fear getting rid of them. I don't want to fix my cars. I don't want to have to call the client telling them it needs another brake job so see you tomorrow maybe.
I most certainly don't want to watch my 3 old american cars get towed to the repair shop all together because all of them wouldn't start. (I was very practical at one point--and that did happen).
I want the big 3 to survive. I want them to thrive with abundant profit for shareholders.
"Brilliant Designs contain efficiencies and most of all simplicity"-Fewer Parts, Higher Quality, Less to Fix, Less to break, less to power, less to carry.
Did you know that a 57 chev with a 283 got 28 mpg?
Why do they have a hard time getting that out off a small v6 that weighs half of what the old 57 did?
L
GardenStructure.com~Build for the Art of it! Decks Blog
My wife has a 97 Saturn (with over 150K on it) that has given us virtually no trouble. Similarly, her prior 84 Chevy Cavalier gave us virtually no trouble until it rusted out after 17 years (after, I'm thinking, 180K). Our (1982?) Chevy Citation before that wasn't quite as perfect but was a good, reliable vehicle. Detroit (or Tennessee or wherever) can build good cars given half a chance.Our 89 Chrysler minivan, OTOH, was a POS.
The mark of the immature man is that he wants to die nobly for a cause, while the mark of a mature man is that he wants to live humbly for one. --Wilhelm Stekel
You folks don't drive much.
I do a lot of mileage. - 60-70,000 miles a year.
15-20 years ago you could still buy good cars that would last well without repairs killing you in the near term.
I wouldn't know what to buy aside from the aforementioned saturn... kind of hard to pull into an estate to sell an 80,000$ pergola in a 10 year old Saturn Coupe... though I would love to see the reaction.
LGardenStructure.com~Build for the Art of it! Decks Blog
Yeah, I put on the most mileage (on our 2001 Odyssey) -- 20 miles a day to work and back, plus most family trip. No business driving to speak of. About 160K on it now, which works out to about 20K/year. The wife runs into town (25 miles R/T) 3-4 days a week, plus the occasional trip to the Cities or Fargo.Even the Saturn isn't what it used to be. Hers still gets better than 40MPG on the road. No current model will touch that.
The mark of the immature man is that he wants to die nobly for a cause, while the mark of a mature man is that he wants to live humbly for one. --Wilhelm Stekel
You need a hot rod..
Buy a simple 32 Ford cowl and build a woodie body behind it. show off your talents even if you have to get a local cabinet maker to do the work for you and have a local hot rod shop build the car. You can buy all the stuff you'll need right out of various catalogs.
You buy new crate engine and trans and all new chasis componants so the only 1930's piece is the cowl and you can even buy that in reproduction.
Now the pure simple stuff you put into that car should easily last you 250,000 miles before you pull it out and replace it with new.
In the mean time you will havve established A TRADE MARK UNIQUE TO YOU and your business. .. You can't believe how small and economical such a woodie can be.
I've a friend with such a beast and he tells me he regularly gets 28 MPG on Hot rod runs. He's owned it now for a decade and other than oil changes and washings hasn't had to put any effort into it..
Frenchy, you would be right if you could insure one in Canada... pretty expensive. That's all Facility Insurance.
Hot Rod, that's what the Tacoma is.
My W32 olds with 350 hp did 0-60 in 6.5 seconds... mustangs in those days did 7.0.
The pre-runner 2wd tacoma is 6.0 seconds... and it gets 28-29 mpg and it insures the same as a mini van.
I was looking at the cooper-s mini also, but because of the supercharger it is huge money to insure. It is also a full second slower.
Practicality wise... you cannot drive this truck in the winter. Posi Trac, plastic box and dry weight of 3400 lbs with 60 series snow tires means you will get stuck a few times in the snow every year. I'd categorize it as "Not Drivable" on slick roads. I've been sideways at 60 mph in the rain.
LGardenStructure.com~Build for the Art of it! Decks Blog
Since I don't know about Canada's insurance regs I'm in a poor position to state. However the local guy with the 32 Ford buys his hot rod insurance through one of several agencies that specialize in that sort of insurance. He reports that his premiums are 1/4 of the premiums for similarly valued cars.(no mileage restriction) I think it's called stated value insurance or agreed value insurance..
You could check out the insurance companies here that provide that sort of insurance I'm sure they either write such policies or know someone who does.
Please understand that a hot rod/ resto rod/streetrod is a word differant from the cars you mentioned.. To get the benefits of low rates I believe you need to conform to the criteria of Pre 1948 based..
Less than 5,000 miles per year as a collector car policy I think... so it wouldn't work out for me--nor would I waste something so valuable.
I am actually thinking to drive this truck into the ground and then drop in a modified tundra motor and go to the track on weekends... unless I find a nice malibu shell that someone else has already done the chassis work on.
There's something attractive about that sound between burning slick and traction.
L
GardenStructure.com~Build for the Art of it! Decks Blog
Several companies who do this have no mileage limitations at all. Which is the case locally. While he doesn't use it on nasty winter days he does use it when ever the roads are clear and dry. That plus he loves to travel with it. He and the wife have a cabin in Northern Minnesota where they are a lot of time when they aren't going on rod runs and cross country trips etc..
This isn't a clown car built to exagerate some cartoon aspect but a simple reliable bit of transportation that he uses to a magnificent degree..
If however you like the thrill of speed and that's what you really seek may I suggest that it is infinately cheaper to buy a car designed for racing exclusively, not some production car converted to racing but a true single purpose race car..
A dragster if that's your inclination or a formula car if road racing appeals to you etc.
I've known guys who use dragsters for decades with minimal expense and the same applies to formula cars..
If you're the type of person who wants the car to do the work and drivers input is minimal as to the performance achieved then buy the dragster. IF you want to compare your personal driving skills against others then the formula car is the answer..
You get a mid to late 60's pickup, and "restify" it to include one of the Holley bolt on fuel injection systems, and an aftermarket ignition control system. Put a set of newer seats in it, and repaint it in the original color.
Customers don't usually care it the truck is new. Only that it is well maintained and doesn't look like a junker. I had a grading and underground sub, that ran nothing but old trucks. Did inexpensive paint jobs on them every year. A turquoise, with copper colored trim. Did it to all of his trucks, including the dump trucks, and the fueler's truck. Even his trailers, and the cargo boxes. It gave his crews a distinctive look ,and the repaints were a write off on the taxes.
Works really well if you can tell them it was Dad's or Grandpa's.
For a tradesman I agree whole heartedly. I restored an 87 heavy half ford with a straight 6 and it ran trouble free for years. Changed all the seals and it was low mileage so no oil leaks on driveways (which is a consideration).
Even gave it big helper springs... it would snap the wheels off before it would squat under a load.
L
GardenStructure.com~Build for the Art of it! Decks Blog
"Why do they have a hard time getting that out off a small v6 that weighs half of what the old 57 did?"
You can blame it on several things, the primary two being crash safety and emmissions. That '57 Chevy Bel Air was a light weight- 3159 lbs curb weight. My 4 cylinder 2wd Ford Ranger regular cab with a cap (topper for Minnesotans) actually weighs more and I think you'll find that true for most vehicles.For a time emmission controls hurt effienciency, mpg, and performance- for gas engines that's no longer true (diesels are a different story). We're on a steep learning curve but in my view there's some great vehicles being built ( and yes, that includes domestics).
"The inherent vice of capitalism is the uneven division of blessings while the inherent virtue of socialism is the equal division of misery" Sir Winston Churchill
Businesses fail when the management goes outside their knowledge base.
It can be a small underground contractor that has been in business, for years, deciding he is going to buy three new excavators, and hire three new crews. He has done fine for years managing one crew and made a decent living, but now he has to manage, three crews, and think ahead for twelve guys and not three. He is now way outside his knowledge base, and fails, in two years.
It can be a multinational construction company, (one of the worlds largest contractors), that after the two founders die, the board hires a herd of MBA's to run, instead of promoting the Engineers, and Construction Managers, that have been there for years to run the company. The company has some electric mine cars that need rebuilt. There isn't anyone who does it, so the MBA's decide that the company needs a subsidiary that rebuilds mine cars. They then decide to start manufacturing mine cars, and electric locomotives. They decide that they should start rebuilding their own heavy equipment, instead of buying new, another subsidiary is born. They decide build their own, Rock Trucks, (like Cat, Volvo, HaulPack, and a herd of others aren't already there doing it), another subsidiary is born. They decide to go into the design build side of things, and buy up an engineering company.
In the mean time, they neglect the core business of moving large quantities of mass earth, pouring concrete, paving roads, and burying things. In only fifteen years, they are in bankruptcy, and one of their subcontractors buys them out. The subcontractor then proceeds to divest themselves of all the things the MBAs had diversified into, and put them back into the black, as a construction company.
The company was there, and making money. There wasn't anything wrong with their old fashioned business plan, and the "diversification", that the MBA's led them into did nothing to enhance the profit, or move the company into areas that would be on a different economic cycle than the core business.
Guy in the office next to me is a foundation guy. Been at it since 1990. 3-4 crews going.
Couple years ago he started bulding a house here and there. Then 3 at a time. Sure enough the market caught up to him. (and everyone else)
He is filing bankruptcy soon
that sounds like a familiar company, can you please tell us (me and anybody else who is curious) who it is?
Oh, you mean like Sears who went into insurance and banking and went from the largest retailer to not even in the top 5?
Except that Sears was in insurance (at least) for 20-30 years before they began to slip badly.I suspect that the real truth is that companies tend to have a life cycle, and if they don't "reinvent" themselves occasionally they die of old age. You can always look backwards from a failed company and, with a little "confirmation bias", come up with a "post hoc ergo propter hoc" argument for for any number of "causes" of the company's demise.
The mark of the immature man is that he wants to die nobly for a cause, while the mark of a mature man is that he wants to live humbly for one. --Wilhelm Stekel
Allstate was spun off from Sears about the time Sears started having problems.
I thought about you and the diversification = failure thing when I went to the PO today. I get a letter from The Home Depot trying to get me to buy . . .
wait for it . . .
AUTO INSURANCE!
AND HOME INSURANCE!
Got me "The Home Depot Insurance Advantage" card with a PIN and everthin'
Sheesh - think they're hurting?
Forrest - not gonna' do it
No one company can do everything the best.
The best way to insure success is to do one thing better than anyone else, or one thing that no one else does and market your company that way.
Stick with what you know.