A company’s driving force is typically based on its origin story and answers why the company is formed—what is its reason for existence, the purpose it serves?
The concept was originally formulated by Benjamin Tragoe and John Zimmerman in the 1970s and shared in their book, Top Management Strategy. I bleed from the eyes when people start going on about “strategy” this and “strategy” that, but the driving force concept provides insights into much of what ails organizations today. Strategy consultants help, or did help, or tried to help, big companies focuson one of these driving forces to grow and thrive. Here are the nine:
|9 DRIVING FORCES|
|Products Offered: You were born to build and deliver product|
|Production Capability: You have a new or different way of producing stuff|
|Market Needs: You’re focused on a particular market segment|
|Natural Resources: You exploit what’s from the Earth|
|Technology: You invent|
|Method of Sales: You have a new or differentiated means of selling|
|Method of Distribution: You have a new or differentiated means of distributing|
|Size/Growth: Your size and growth are your primary points of leverage|
|Return/Profit: Your return on investment or profit margin is your primary point of leverage|
Some examples will help illustrate the driving force concept.
- When Amazon started selling books online, it leveraged a new method of sales, selling direct via the internet. It went on to disrupt publishing via its method of distribution and production capability. It also leveraged its size and growth to squeeze small business suppliers, extort cities, and price products lower than anyone else. It probably has a billion patents, but it’s not really an inventor.
- 3M is an inventor. It creates new technology first and products second.
- At inception, Johnson & Johnson produced virtually any product for doctors to perform sterile surgery, including a how-to book. It focused on market need. It has evolved, primarily by acquisition, into other healthcare industries, but mostly still with market need as a driving force.
- As a network effects business, Facebook leveraged size and growth to crush competition and along with Google, create a monopoly in online advertising.
- Over the course of its existence, Apple has been a technology inventor, leveraged a new method of sales and distribution, and succeeded most when focused on a specific kind of user (market need.) When Sculley took over, he came from a product company, Pepsi. He tried to change Apple into a product company by creating a suite of products and models to be all things to all people. It floundered and reverted to market need when Jobs returned. Samsung, its closest competitor, is a company that successfully competes in the same market—with the product as its driving force.
Startups have one driving force. As the company evolves, its strategic focus might change to a different driving force, as Apple did. To succeed long term, startups usually must return to the original founding driving force. Companies that have lasted half a century or more often have multiple divisions or subsidiaries with different driving forces. Sometimes, businesses completely convert from one to another, but this situation is rare. It’s more likely they change from one area of focus to another, but use the same driving force.
Acquisitions work best when following the latter example—in other words, companies acquire other companies with the same driving force and same focus (expansion of existing) or same driving force with different focus (diversification). If the same driving force ethos can be applied to the acquisition, the likelihood of success increases. Acquisitions of businesses with different driving forces can succeed, but are typically run as independent entities.