Small-i ROI as Applied to Strategy

by Jamie Flinchbaugh on 08-20-10

Entrepreneurs and small business owners are all in search of a big return on their investment. How best to maximize my ROI? Many investing are looking for the big-R, the giant market. Where is there billions of dollars of opportunity? Surely, with billions on the table, we can grab a slice of it. There are many huge markets available – cell phones, automobiles, healthcare. But just because it’s big doesn’t mean it’s the best market to go after.

Earlier this week I wrote about the fallacy of focusing just on the big return in Increase ROI by Focusing on I, not R.

When it comes to your strategic choices, sometimes this means focusing on a niche, but one where you can dominate and master. Some examples:

The healthcare industry is huge, and getting bigger continuously. You could open a hospital, yet many small hospitals are closing and many more still are unprofitable.

logo.jpgBut there are plenty of smaller niches, large in their own right, but not as large as the industry as a whole. Nurse Next Door is a great example – a franchise that is quickly becoming a dominant force in the home healthcare slice. It has embraced lean in how it functions, and with strong processes adding to its franchise model, it can build a brand that people can trust.

Some of you know that I am a principal in Cobra Motorcycle. Cobra is focused on youth off-road race motorcycles and ATVs. That’s a small slice of a large market. There are no aspirations of knocking off Honda, who makes everything with a motor from a car to a generator. But go to a national youth race, and Cobra will be the most dominant brand at the starting line, and because of the product performance, own the podium. That’s what focus can bring.

Even might Wal-Mart thought in this way. Where are there big markets to go after many customers for retail? New York, LA, Chicago…but this is not where they focused. They focused on small rural markets where they were the only game in town, and they dominated.

Whether in problem solving or strategy, often finding ways to maximize the return on your investment, in anything from dollars to your time, means that you find ways to go after small investments. Build on those small investments to make another one through learning, through success, one step at a time.

How does your organization approach strategy, going after the big R or truly maximizing your return? How do you approach it personally?