In any business you will have areas where you perform well, areas where you perform OK, and areas were you perform bad. In a franchise, this could be different levels of performance from individual franchisees. It’s probably going to be a normal distribution, with a few bad ones, a bunch of OK ones, and some really good ones.

Invest in Top Performers

So where should you invest your resources? The natural and most logical answer is to invest in your bad performers to try to bring them up to speed. But this isn’t the right answer. The right thing to do is to invest in your top performers. 80% of results come from 20% of your assets. You get the highest rate of return from your top performers, so this is where your resources should go. If you invest in your bad performers, it may help get them up to speed in the short run, but they will eat up those resources and eventually fall behind again requiring even more investment. Studies have proven that money invested in top performers can have a rate of return many times greater than the same investment in poor performers.

Grow Your Personal Strengths

The same goes for personal growth. The focus of your efforts should be in improving areas you are already good at. You can improve your personal value much faster if know your natural strengths and specialize than if you try to bring your weaknesses up to the level of your strengths. This is the concept of competitive advantage on a personal level.

Maximize Your Strategic Advantage

The concept of competitive advantage also applies to business strategy. If you want to be competitive, you have to know what you do best and do it even better. You can’t be all things to all people. As Michael Porter suggests, you should maximize your competitiveness in the areas you have a natural advantage, and minimize the rest.

Tags: competitive advantage, improving rate of return, stregths
Categories: Lesson, Bachelor of Commerce, Entrepreneurship, Business