When organisations go beyond their levels of competence, that’s a move fraught with danger. But it’s even worse when they then make promises to customers which they can’t deliver.
This has been DHL’s very public pitfall with their new KFC contract, leading to all the inevitable lost chicken jokes now circulating.
At its heart DHL is a courier company. Although they have successfully expanded across the world of logistics, delivering perishable produce is clearly presenting them with challenges which they can’t currently meet.
Similarly, Carillion was a construction company at heart. But the move, like many of their competitors, into facilities management would appear to have overstretched them. It’s not their core competence.
In the advertising world, which I was brought up in, the current promise from multiple agencies to clients is that they can deliver anything within the mix. But can they really be good at everything? Of course not.
We all know the reasons for this. The relentless pursuit to expand into other seemingly more profitable sectors and to increase shareholder returns.
There’s nothing wrong with diversification. It just needs to be managed in ways so that brands aren’t overstretched and promises to customers can be kept.
Larger corporations need to take a leaf out of the way smaller organisations diversify. Being more nimble, they can collaborate more effectively with others who provide the necessary skillsets to meet the needs of different customer types. Virtual teams are frequently created to achieve this.
Of course these outside parties must all be paid to provide their slice – so this may feel like a costly way of diversifying.
But the alternative of trying to go it alone without the right competencies in place can be far more costly.
As failing to deliver can wreck reputations, wreck customer loyalty and wreck the bottom line.
And as my dear old Dad used to say: ‘Be true to yourself’. Overpromising certainly falls foul of that.