Maximize or Optimize

Companies have the habit of “satisfying the whole market” with just one item. They forget to segment and identify the particular needs of a very diverse consumer market, which can therefore lead to their downfall.

A new analytical instrument to test chemical reaction is being introduced, for instance. At first its market is quite limited, let’s say to industrial laboratories. But then university laboratories, research institutes, and hospitals all begin to buy the instrument, but each wants something slightly different. And so the manufacturer puts in one feature to satisfy this customer, then another one to satisfy that customer, then another one to satisfy that customer, and so on, until what started out as a simple instrument has become complicated.

The manufacturer has maximize what the instrument can do. As a result, the instrument no longer satisfies anyone. For, by trying to satisfy everybody, one always ends up satisfying nobody. The instrument also has become expensive, as well as being hard to use and hard to maintain. But the manufacturer is proud of the instrument; indeed, his full-page advertisement lists sixty-four different things it can do.

But what the manufacturer thinks is his very strength will be turned against him. The newcomer will come in with an instrument designed to satisfy one of the markets, the hospital for instance. It will not contain a single feature the hospital people do not need, and do not need every day. But everything the hospital needs will be there and with higher performance capacity than the multi-purpose instrument can possibly offer.

The newcomer will then bring out a model for the research laboratory, for the government laboratory —and in no time at all the newcomer will have taken away the markets with instruments that are specifically designed for their users, instruments that optimize rather than maximize.

Summing-up: Successful entrepreneurs should learn to optimize their resources to come up with different offerings rather than investing on one technology across all markets.

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