{"id":48782,"date":"2025-01-28T09:37:34","date_gmt":"2025-01-28T14:37:34","guid":{"rendered":"https:\/\/hingemarketing.com\/?p=48782"},"modified":"2025-01-28T09:37:34","modified_gmt":"2025-01-28T14:37:34","slug":"to-specialize-or-not-to-specialize","status":"publish","type":"post","link":"https:\/\/hingemarketing.com\/blog\/story\/to-specialize-or-not-to-specialize","title":{"rendered":"To Specialize? Or Not to Specialize?"},"content":{"rendered":"

A few months ago, we wrote about positioning the undifferentiated firm<\/a>. In that article, I described the benefits of specialization. Today, dear reader, we’re breaking into the vault (please don\u2019t tell my colleagues!) to share a bit of data that doesn\u2019t appear in the 2025 High Growth Study Executive<\/a> Summary\u2014and explore specialization from a different angle.<\/p>\n

In the chart below, High Growth firms assessed their level of specialization across five categories on a 0\u201310 scale, where 0 is the least specialized and ten is the most. The numbers are averages of those scores.<\/p>\n\"\"\n

The thing I noticed right away is that most High Growth firms view themselves as specialists. This isn\u2019t all that surprising. Year after year, we see data correlating specialization with greater growth and profitability. But we wanted to understand how these firms were narrowing their focus.<\/p>\n

Let\u2019s explore each item in this chart in turn.<\/p>\n

Specialize in a service.<\/h4>\n

Firms that take this approach provide expertise in a narrow service. For instance, providing business valuations or CEO training. Prospects looking for a specific service are more likely to perceive a specialist\u2019s expertise in that area as more valuable\u2014or can be delivered more quickly and accurately\u2014than a less-focused firm that provides a vast array of services. When you want good bagels, you go to a bagel shop, not a grocery store.<\/p>\n

Specialize in a type of problem.<\/h4>\n

These firms appeal to clients that have a particular challenge. For example, one company might need to solve its supply chain problem. Another might have trouble retaining talented employees. Many prospective buyers are going to seek out a provider that has a great deal of experience solving these problems. When you need an appendectomy, you want an experienced surgeon performing the procedure, not your general practitioner.<\/p>\n

Specialize in a role.<\/h4>\n

Many professional services providers address a specific role in an organization. HR consultants are a classic example. So are executive coaches. And cloud computing architects. These firms target particular functions or job titles across a wide range of industries. They are experts in a specific field, but their target audience is also narrow, giving them an advantage over generalists. If you are a competitive ice skater, wouldn\u2019t you seek out a specialist to sharpen your skates?<\/p>\n

Specialize in an industry.<\/h4>\n

Focusing on an industry or group of related industries is a straightforward way to develop a specialty\u2014and the one we use at Hinge. One client we work with specializes in providing interior design services to country clubs. Another offers accounting services to multi-location restaurants. This is the only specialization approach that comes with a built-in marketing advantage. Firms that focus on a single vertical only have to market within that industry. They can ignore all the others. It\u2019s comparatively easy to get in front of one industry\u2019s associations, attend key events and become a firm that many in the field recognize. When you want the ultimate in family entertainment, don\u2019t you think of Disney first?<\/p>\n

Specialize in a location.<\/h4>\n

These firms become the rock stars of their field in a specific city or region. They can boast of being the largest Washington, DC-based law firm. Or the biggest construction management company in Kansas. If they aren\u2019t the biggest, they can compete on some other dimension, such as reputation or local knowledge. When you want the best cheesesteak sandwich, you have to go to Philadelphia.<\/p>\n

These are all viable ways for a firm to specialize, though sometimes a single area of focus isn\u2019t narrow enough to avoid a raft of competitors. That may be why many of the firms that participated in our survey specialized in more than one of these categories. By combining areas of focus, they have fewer (and often no) other firms that do exactly what they do. That fusion gives them a competitive advantage.<\/p>\n

\n

Download the Differentiation Guide for Professional Services<\/a><\/p>\n<\/div>\n

When One Focus Isn\u2019t Enough<\/h2>\n

One firm we work with is a perfect example. The AIM Institute<\/a> is a training and consulting firm that specializes in helping B2B companies conceive, develop and launch new products. Arguably, that\u2019s two or three specialties right there. But they also are extremely effective at teaching engineers how to talk about and \u201csell\u201d the products they produce. The AIM Institute even teaches these individuals how to become effective in-house coaches themselves! That\u2019s the power of multiple, interlocking specialties.<\/p>\n

Should All Firms Specialize?<\/h2>\n

For a mature $300 million full-service firm with hundreds of loyal clients across a range of industries, trying to specialize just isn\u2019t practical. Or a good idea. Sheer mass and momentum keep most mid-size and large firms from changing course very quickly. It\u2019s elementary physics.<\/p>\n

In fact, when a firm reaches a certain size, there is an expectation that it will offer more services to more kinds of clients. That\u2019s why the biggest firms in every industry seem to do it all. In the marketing and business development process, they can point to their broad expertise, turnkey solutions and extensive portfolio past performance. And they only grow bigger and more diverse. Titans like Deloitte and Accenture have such an extensive range of services they can handle virtually any challenge a company can throw at them. They have so many \u201cspecialists\u201d they have become undifferentiated.<\/p>\n

There are, however, notable exceptions.<\/p>\n

Giant Firms Can Have Narrow Niches<\/h2>\n

Populous<\/a> focuses exclusively on designing sports and entertainment venues and events. In 2009, global architecture and engineering firm HOK sold their sports practice to its management team, launching Populous. Today, they are the premier global player in their niche. Nobody else comes close. From signature NFL and Premier League arenas to Olympic stadiums to the Las Vegas Sphere, they are true innovators and leaders.<\/p>\n

Another example is Blackbaud<\/a>. This tightly focused software developer is the leading provider of fundraising, accounting and organization management platforms for nonprofits and schools. They dominate the industry and have a market cap of $3.6 billion.<\/p>\n

Adobe<\/a> (design and marketing) and Salesforce<\/a> (sales enablement) are two more wildly successful examples of focus at scale. Each of these companies specializes in a type of problem (design & marketing and sales enablement, respectively) rather than an industry. And both have become world-famous brands.<\/p>\n

But these firms didn\u2019t slim down after years of wearing XXL t-shirts. They established their wasp-waisted focus early on, when it\u2019s far easier to build a reputation upon a single idea. Believe me when I say maintaining that focus took serious<\/em> discipline. It\u2019s so easy to say, \u201cOkay, we\u2019ve done well in this narrow market. Now let\u2019s add another one.\u201d Instead, these firms said, \u201cLet\u2019s get even better at what we do\u2014so we become our market\u2019s default choice forever.\u201d<\/p>\n

This last group of specialists provides a model for small and small-to-medium sized firms that are still finding their way. A narrow focus in any of these five areas\u2014or a combination of two or more\u2014can deliver extraordinary opportunities to grow and build a leadership position. Of course, you need to look for a niche that isn\u2019t already dominated by a strong competitor. Nor do you want one that is too small to support the growth you want to achieve.<\/p>\n

And if you are in the too-large-to-specialize category, don\u2019t fret. Many firms have taken that course and thrived. They just had more friction along the way. That\u2019s why a common growth strategy for organizations in this category is to acquire smaller firms.<\/p>\n

Do you specialize? What\u2019s your angle?<\/p>\n

\"\"<\/a>
Free Resource<\/h6>

The Differentiation Guide for Professional Services Firms<\/p>\nDownload Now<\/a><\/div><\/div>\n","protected":false},"excerpt":{"rendered":"

A few months ago, we wrote about positioning the undifferentiated firm. In that article, I described the benefits of specialization. Today, dear reader, we’re breaking into the vault (please don\u2019t tell my colleagues!) to share a bit of data that doesn\u2019t appear in the 2025 High Growth Study Executive Summary\u2014and explore specialization from a different…<\/p>\n","protected":false},"author":151,"featured_media":48784,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"om_disable_all_campaigns":false,"footnotes":""},"categories":[1],"tags":[389,397],"class_list":["post-48782","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized","tag-high_growth","tag-research"],"acf":[],"yoast_head":"\nTo Specialize? 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