Management

Entrepreneurial Strategies
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trical and lighting systems makers are. Once attained and properly maintained,
the specialty-skill niche protects against competition, precisely because no automobile
buyer knows or cares who makes the headlights or the brakes. No automobile
buyer is, therefore, likely to shop around for either. Once the name Baedeker
had become synonymous with tourist guidebooks, there was little danger that
anybody else would try to muscle in, at least not until the market changed drastically.
In a new technology, a new industry, or a new market, the specialty-skill strategy
offers an optimal ratio between opportunity and risk of failure.
THE SPECIALTY-MARKET STRATEGY
The major difference between the specialty-skill niche and the specialty-market
niche is that the former is built around a product or service and the latter around
specialized knowledge of a market. Otherwise, they are similar.
Two medium-sized companies, one in northern England and one in Denmark,
supply the great majority of the automated baking ovens for cookies and crackers
bought in the non-Communist world.
There is, I am told, nothing very difficult or particularly technical about baking
ovens. There are literally dozens of companies around that could make them
just as well as those two firms in England and Denmark. But these two know the
market: they know every single major baker, and every single major baker knows
them. The market is just not big enough or attractive enough to try to compete
with these two, as long as they remain satisfactory.
The specialty market is found by looking at a new development with the question:
What opportunities are there in this that would give us a unique niche, and
what do we have to do to fill it ahead of everybody else?
There was nothing particularly advanced in the early baking ovens. What the
two leading firms did was to realize that the act of baking cookies and crackers
was moving out of the home and into the factory. They then studied what commercial
bakers needed so that they could manufacture the product their own customers—grocers
and supermarkets—could, in turn, sell and the housewife would
buy. The baking ovens were based not on engineering but on market research; the
engineering would have been available to anyone.
The specialty-market niche has the same requirements as the specialty-skill
niche: systematic analysis of a new trend, industry, or market; a specific innovative
contribution, if only a “twist” like the one that converted the traditional letter
of credit into the American Express travelers check; and continuous work to
improve the product and especially the service, so that leadership, once obtained,
will be retained.
And it has the same limitations. The greatest threat to the specialty-market