MIT did a study of 500 International Companies looking to figure out the key ingredients to success in the global economy. The results of this study were summarized in a book by Suzanne Berger called How We Compete: What Companies Around the World Are Doing to Make it in Today's Global Economy.

The book itself makes interesting reading, if you like this kind of literature, and I highly recommend it. For those that don't go in for that sort of book, let me summarize the key findings.

Figure out what your company does best - and then figure out how to do it better.

If only that were easy!

Companies of any size have a relentlessly tough time figuring out what their core business really is. This problem isn't confined to the for-profit world, ministries and charities face the same dilemma.

Let's deal with a real-world example to illustrate how a company can lose focus. At one time, I worked for Computer Associates (now simply known as CA). CA made its mark in the world in core mainframe systems. In the late 90's, however, the company saw the amazing growth of the Internet and decided it wanted to cash in on that trend.

So, what did CA do? It took a bunch of software application divisions that it owned, bunched them under one umbrella corporation, and gave them the catchy name interBiz.

With a small letter at the beginning. Get it? I mean, how high tech and trendy can you get?

There were a few problems with this approach. First of all, none of the applications bunched together under that name actually had anything to do with the Internet. They were all just hold-over applications which CA had gotten in various corporate acquisitions. They didn't fit the core competency of CA at all. In fact, the division I worked for did mainframe banking applications. We were called interBiz Banking, but didn't have a single application which actually ran on the Internet.

CA should have done the rational thing and sold off all of these non-core applications when it acquired them. Instead, it tried to pretend that all of these applications (most of whom were actually mainframe) were somehow slick, market-leading Internet apps.

It didn't work.

CA lost a bunch of money.

Nobody bought the hype, and a bunch of senior managers eventually went to jail for falsifying earnings reports.

CA eventually sold off all of these applications anyway, but only after harming its core business through loss of focus.

In strategic managerial terms, we refer to this kind of thing as following a ‘rabbit trail.' A rabbit trail is a business development path that splits off from the main trail, looks like it could go somewhere cool, but then ends up landing you in the middle of nowhere.

I stop my own company (Corfun) from doing the same thing all the time. We are a Web services company, which means that building a Website is super, super easy for us. This also means that we have to be really, really careful not to build a Website just because we can.

I'm an Orthodox Christian and I have a background in finance, technology, and international relations (undergrad and post-graduate work). That's a varied background, but it doesn't begin to cover everything. My partners have different backgrounds from mine which lends us breadth, but there are huge, huge areas in which we just don't have any organic expertise within our company.

So, when one of us comes up with the next Whizbang idea for a Website, we have to be really, really cautious in our evaluation of the proposal. Just because we can do a given project, doesn't mean that we should do that project. We always have to ask ourselves, if we build this internal project - can we manage it? Can we write for it? Can we add value in that market space with our efforts?

Everyone in business, profit or non-profit, should go through a similar evaluation process. There is some need that your charity was created to address, some market space that your company was founded to fill. You have core competencies, the key to success seems to be identifying what those are and focusing on improving them, rather than tearing off in all directions following any trend that you think might make you money or get some publicity.

That doesn't mean you can't broaden your product line. Dell started with PCs but then got into servers and peripherals. However, all of these lines of business played to Dell's strength, which was delivering quality hardware goods at a reasonable price. Dell didn't suddenly go out and decide to offer its own operating system to compete with Windows, or to market its own gaming platform. Dell doesn't do this kind of software. It doesn't have the development infrastructure to get into those spaces, nor does it have the marketing muscle to compete if it did. It's just not what Dell does. So while other companies may be printing money in those spaces, it isn't a good fit for Dell.

That kind of discipline is needed in all enterprises. First of all, identify your core competencies. What is it that you do well? Second, when an opportunity presents itself, always examine it in light of your core competencies. Does this fit with what you do well? If the market potential involves breaking new ground for your organization, then be very cautious about investing in it. Look at the project as objectively as if it were being pitched by an outside firm looking for investment dollars. Don't assume just because you are part of the project that an otherwise doomed enterprise is destined for success.

One last thing - don't go to people for advice who will profit financially from your mistakes. For example, don't ask a Web Design firm, that will make thousands off your project, if you should do that project. The answer is always going to be, "Yes!" It's the same thing with asking a construction company whether you should build a new production facility, or your stock broker if you should buy more stocks.

I try to be extremely realistic with potential customers about their possible success, but I'm one of the exceptions. Most people in my business are focused on the sale, and don't necessarily care what happens long-term to the customers they service. That's why you owe it to yourself to know what you do best, and stay focused on finding ways to do it better!

Glen Chancy is CIO for corfun.com and publisher of Orthodox Biz. You can contact him here .

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 [How We Compete - Online and Off]

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