How Focus Can Ruin Your Business
I've had the dubious fortune of getting a ringside seat in a few failed businesses. I don't claim to be any kind of business guru - not by a longshot. But as the owner of a (very) small business right now, I'm trying to learn all I can, particularly from other people's mistakes. With luck, I can learn from them and avoid making the same mistakes. And of course, I've been reading books and websites with "how to" information.

But sometimes the right advice applied in the wrong circumstances can be devastating. Like having focus. Focus is usually a good thing, but only if you are focusing on the right thing - and only if your focus doesn't turn into blinders that hide opportunity from your view.

Sixty To Zero in Two Months
Now, this story is going to be told from a mouse-eyed view. Maybe I have some details wrong. I undoubtably don't understand "the big picture" at the time. Maybe it was all inevitable. But that doesn't stop me from trying to make sense of the fiasco.

I was hired a few years ago as a programmer specifically for a particular project that was nearly a "done deal." The contract was worth a million dollars to the company, which was still small enough that a million dollars was a pretty significant amount of money. We had a month to generate a proof of concept (which exceeded our own needs and expectations, though we were cautioned not to reveal how far we really were along to the client lest they think it was easy). We submitted patent applications (I know, I still feel the shame). We had to draw up a series of business proposals explaining to our executive officers and the board of directors how we could continue to profit from this line of business, and how it nicely fit into our "core" business and would continue to feed & grow that side.

In the meantime, our board of directors had hired a new company president, a Hahvard man with a pedigree and a long list of contacts. He wore a perpetual grin, had bright eyes, and wore cowboy boots with his three-piece suit. The IT department (and some others) called him "Face" and "Captain Charisma" behind his back. He was hired for his contacts and, as far as I could tell, how good he looked on the executive officers page of our website to prospective investors. Since our investors really, really wanted to sell us for big bucks.

The demos and meetings with the prospective client went really well. The contract and check for a million bucks were all but signed. Then the new president shot the deal in the head. "It's not our core competency," he explained. "It would dillute our image. It's bad money." He referenced a couple of books that backed up his position. The deal died. Our potential client took their million dollars and went somewhere else.

A few months later, I sat in the foyer of the county courthouse, watching as the remaining assets of this company were bought at auction to the only bidder for a grand total of something like $20,000. Alas, that sum didn't take care of the back-pay I was owed from trying and keep the company afloat during the last painful months. Captain Charisma had long since abandoned ship. I don't know if the million-dollar contract (and the potential business that would have brought in afterwards) would have staved off the wolf indefinitely, but apparently our "core competency" hadn't been enough to keep food on the table in the recession / depression of 2001.

In fact, it was only about two months from the killing of the deal until management (secretly) skipped a paycheck so that payroll could go through for the employees during the Christmas season. The first of the layoffs would occur in February. Man, a million dollars might have been kinda cool right about then.

What Went Wrong
Dilluting an image (or a brand) is an important factor. You don't want to spread your image too thin. But that assumes you actually have a BRAND. From what I have heard, Bioware was originally formed to create software for medical systems. Now they are one of the strongest PC game brands out there, probably second only to Blizzard (and Blizzard is fast becoming little more than "The World of Warcraft Company."). In our case, we didn't have much of a brand to begin with - we were known to a few companies in our space, and I really don't think showing some expertise in a closely related space would have done anything but helped our brand / image.

Our core competency was a signficant factor. But it goes along with the "bad money" idea. As far as I understand it, "Bad Money" is income valued less than it's opportunity cost. In other words, if we could have been making 2 million dollars with the same staff required to complete this million-dollar project. But if we'd made anything even resembling that kind of money with that staff, I wouldn't have had to sit on the courthouse steps less than a year later.

What it really came down to, I think, was fear, and of management goals being focused on a different goal. Our board of directors was really only interested in up-selling us to a larger set of investors. Our executive officers were obsessed with demonstrating that we were generating "traction" in our core market - presenting an image to prospective buyers. In their minds, stooping to pursue any kind of "distraction" outside of our core (but weakening) market would perhaps have been a sign of weakness. Their top priority was selling us off to some other sucker, I guess, so we could become THEIR problem.

But it didn't work that way. While we weren't a dot-com, when the bubble burst, it took a lot of investors with it. Including the ones the board of directors were looking to sell us to. The ol' trick of putting lipstick on the pig wasn't going to work. The obsession with image didn't pay off.

Applied To Game Development
I do see some indie game developers out there who deliberately blind themselves to all the opportunities out there. I can't second-guess their motives, but I wonder if that same obsession with image is what holds them back.

In some cases, I see indie developers so desperate to appear as "real" game developers, and they restrict their efforts almost exclusively to traditional practices in the brick-and-mortar industry - trying to get that boxed deal. Maybe they are afraid that they will reduce the possibility of being taken seriously by a publisher if they do the "shareware" thing. Nevermind that two of the biggest "shareware" developers of the early 90's are now two of the top independent studios for producing mainstream first-person shooters.

I also see indie studios stuck in some kind of rut trying to repeat the success of indie developers in the late 90's, or focusing exclusively on cranking out casual games for the big portals. I don't know if this is an "image" problem, or just getting so focused on one goal that they wear blinders to everything else. I know it's easy for me to get into the same mode.

The box may stink, but it can get awfully comfortable to stay inside, sometimes.

Well, there's my latest bit of Monday-morning quarterbacking.

Later (probably tomorrow), I'm gonna pimp my current employer a bit as a bit of a counterpoint to this article. And hopefully not get myself fired in the process. But while they originally took the same kind of attitude, they have since discovered enough opportunity to allow them more growth in the last two years than they'd ever experienced in their entire history. I'm gonna call that a good thing.

Labels: Biz, productivity

- posted by The Rampant Coyote @ 10:47 AM (Permalink)