Why Singapore companies should be thinking Narrow-Deep-Broad and not Broad-Shallow-Narrow

An irresistible phenomenon has been looming large over all developed countries and, given the size of Singapore, its effects are likely to be felt very sharply here over the next few years.

The phenomenon is supply: or more accurately the size of supply when compared to basic demand.

Today anything we wish to purchase, from office consumables to professional services, from insurance cover to a cup of coffee…I'd like to guess there are an abundance of sources to choose from. And many look very similar and cost about the same. That's potentially bad news for many companies.

Thanks to falling manufacturing costs and the rise of supply-chain efficiencies, the overall cost of producing and delivering just about anything has been declining and thanks to exponential rises in technology, it will continue to fall.

Another impact on business will be the estimated 1.4 billion people who will have joined the Internet during the current decade to the year 2020. These participants will be potential consumers; however, before they can consume, they must produce…adding yet more to supply! Where will they want to supply to? Markets like Singapore and others.

If all that sounds like doom and gloom, it need not be. We can still win at the game of business but we have to understand the science of demand much better than we have done in the past.

The mistake of Broad - Shallow - Narrow
Broad: Many companies characterise their target customers with a general description, which may also include a demographic of some sort. For example, "We provide accounting services to small companies." That might have sufficed 20 years ago, but today many firms could claim exactly same thing – and at the same price or cheaper. The appeal is too broad and there appears to be no real reason anyone should deal with you.

Shallow: In each sector of business the firm services there is also likely to be shallow penetration: a few clients from manufacturing, a few from retail, a few from I.T., etc.

Narrow: Lastly, many companies only do business in their home country: their focus geographically is too narrow. Competition is tough here already and it's getting more severe.

The Solution of Narrow - Deep - Broad
There has to be a compelling reason why customers should do business with you and pay the price you charge. One of my favourite examples comes from the book Hidden Champions of the 21st Century by Hermann Simon. Winterhalter were selling high-end dishwashers to a variety of markets: hospitals, schools, restaurants, hotels, companies, and other organisations. Here's how they achieved their dominance in a particular sector today.

Narrow: They realised that the demand from only one sector – hotels and restaurants – was something that they clearly were able to differentiate themselves around. They further narrowed it down to large chains of hotels and restaurants.

Deep: If a dishwasher in these environments breaks down, it's a serious issue and utensils and plates must both be clean and look clean. Because of these factors, they provided a 100 percent solution including water conditioners, detergents, and on-site support.

Broad: In their narrow niche of large chains of hotels and restaurants they do business worldwide. As evidenced by their presence in McDonalds, KFC, and Four Seasons Hotels.

The result: 65 percent market share in their sector.

The days of appealing to a wide variety of clients are rapidly disappearing under the weight of an abundance of supply: There is just too much competition. We need to ask the question: what exactly does a customer demand from us? What are they actually buying from a logical and emotional standpoint?

When you can truly grasp this, there is usually a market sector which is naturally attracted to you and prepared to pay the price you charge.