Baseball Hall of Famer Ted Williams is arguably the best hitter of all time. He finished his career with a lifetime batting average of .344, a .483 on base percentage, and 2,654 hits. He was also the last player to bat above .400 for a season. This was all accomplished despite a five year disruption to his baseball career during which he served in World War II and the Korean War.
In 1971, Ted Williams co-authored a book called the Science of Hitting, in which he explained the methods he used to become a great hitter. The essence of his strategy was to break the strike zone down into a 7x11 grid and assign a probability of hitting the ball to each of the sections in the strike zone. Using this process, Williams was able to identify a “fat pitch” – the one that gave him an above-average chance of getting a hit. He then applied a great deal of discipline and only swung at those pitches.
When we work with companies on their business strategy, we find that many have not clearly identified their target markets and the customers whose economic characteristics fit their business model. Most private companies don’t have a cost advantage over their much larger competitors. For this reason, they have to take a value-added position in the market. Yet many have not fully defined their business model and are focused instead on casting a wide net to attract as many sales as they can. As a result, they end up competing solely on price. This blurry strategy usually manifests itself in unstable or shrinking margins.
The most successful companies create strategies that are centered on the markets, customers, and product mix that make the most economic sense and are consistent with the company’s position. Just as importantly, these companies have the discipline to follow through on the strategy they have put in place, which means knowing when to say no to opportunities that aren’t the right fit.
As you think about your own business strategy, consider:
- What is our core competency; what are we really great at?
- What markets/niches allow us to take the greatest advantage of our competencies and offer the most value to our customers?
- What are the characteristics (economic and non-economic) of a great customer for us – one that we can serve in an above-average way?
- What product/service lines have above average economic characteristics to support our business model?
- Do we have the discipline to say no to customer opportunities that don’t fit our model?
Answering these questions should not be an overly complex exercise. Some of the best businesses have reduced this to one sheet of paper or they know it intuitively because it is so engrained in their culture.
Remember, it’s your choice who you want to do business with, what you will sell them, and on what terms. You get to decide on your own business model just like Ted Williams decided which pitches gave him the best chance to get a hit.
So what is a “fat pitch” for your company?