What is Focus?
Great post from Matt Blumberg of ReturnPath on Buying Back Your Own Left Leg. You see this a lot where a big corporation drifts in its focus and ends up having to pay exorbitant equity prices for what could ahve been purchased with (relatively) inexpensive development dollars.
I think one of the toughest questions a CEO faces is:
"What is and is not in our business?"
For example, here’s Pixar’s most recent 10-Q:
“Our results for the quarter and nine months ended October 1, 2005 included worldwide home video revenue, continuing international theatrical revenue, television licensing, merchandising, and ancillary royalties from The Incredibles, as well as continued worldwide home video revenue, television licensing, and merchandising from Finding Nemo and our library titles.”
That’s a lot of different revenues streams, so it is not multiple revenue streams, per se, that lead to missed opportunities, but Disney’s (Eisner’s?) omnivorous appetitive and subsequent inability to marshal resources in any one of them.
One could argue that Pixar’s business is computer-animation and they should just stick to that, but more properly understood, their business is entertainment. And there is no hard and fast rule to tell them where to draw the lie – it’s much more difficult than that: it requires judgment – and knowing that they shouldn’t get into Toy Story branded soda but should get into Toy Story stuffed toys is a judgment call.
Every CEO, and management team, faces these difficult decisions on whether, and where, to allocate the company's comittment; based on existing resources, bandwidth, market penetration, and, very especially, management time.
