Something for HR pros to get their business claws into. By Jeffrey Towson, a Professor of Investment at Peking University Guanghua School of Management
I really like cheetahs. I’m not totally sure why. But I have watched every documentary I can find about them. I have studied their biology. I frequently go to see them in the wild in Kenya and South Africa. I just think they are really cool.
And I also recall Berkshire Hathaway Vice-Chairman Charlie Munger talking about how business is an ecosystem like nature. And in both, hyper-specialisation seems to be key for long-term survival and success. For example, giraffes have their long necks to reach the high leaves. Turtles have their protective shells. Birds are singularly evolved for flight. And cheetahs are built for speed and acceleration.
It’s about hyper-specialisation. You don’t evolve to do three or four things well. You don’t have both wings, a long neck and a shell. You evolve to do one thing really, really well. And you give up the other things.
A cool cheetah factoid: They can go from zero to 60 mph in three strides (and in about three seconds). A couple thoughts on cheetahs and how hyper-specialisation benefits businesses.
Organisations that prosper long-term are hyper-specialised in one or two activities. Know what one or two skills you will survive and thrive based on.
What I find fascinating is how most every part of a cheetah’s anatomy is adapted for speed and acceleration. Its claws don’t retract like the other big cats, so they can be used like cleats. Its tail is a counter-weight for sharp turns. And its collarbones don’t attach to the spine, so its stride is longer.
How many businesses can you think of where almost every aspect is specialised toward just one or two key activities? For me, one company that comes to mind is Costco, which is specialised for low costs. They operate as a warehouse – and have basically eliminated the retail step in the supply chain. In their warehouse / store, they load the goods on the shelves while still on palettes (and with forklifts). They even use skylights so they can save money on lights. From top to bottom, the business is hyper-specialised to cheap.
Hyper-specialisation means giving up other activities. Be able to say no quickly.
Cheetahs gave up a lot for their acceleration. They are the lightest of the cats and have limited jaw and body strength. So they are too small to go after zebras (well, not alone anyway). They can only really run for about 17 seconds before they over-heat. They can’t even really roar like the other big cats. They kind of chirp.
I think you have the same trade-offs in business. If you want to be a discount airline, you have to get rid of the expensive hub-and-spoke operations and multiple aircraft types. You have to give up lots of routes. You have to give up certain types of customers. Starbucks resists the idea of selling most anything but coffee. No real sandwiches. No kitchen. A management consultant used to always tell me that you could tell who had a clear strategy by how quickly they could say “no” to something.
Hyper-specialisation is only an advantage in certain situations. Know your niche.
You’ll note that cheetahs focus on gazelles, the one prey that the other big cats can’t catch. Being hyper-specialised is usually only of value if it gives you an advantage over your competitors and against a specific customer or market niche. Being a super-fast cat isn’t really an advantage against rabbits. You can catch them but so can lots of other animals (plus they go into holes). You have to know where your niche gives you an advantage over others.
Even with a clear competitor and market niche, hyper-specialisation still only works in specific circumstances.
The cheetah can only run fast for about 17 seconds. And the gazelle can run fast for much longer. So the cheetah only catches the gazelle if it can sneak in close enough before it makes its charge. Cheetahs succeed in this about 3 out of 4 times, which is pretty high (note: when tigers charge, they only win about 1 in 20 times.).
So the specific conditions matter. For example, cheetahs struggle in the dry season because the grass dies and they can’t sneak in close enough without being spotted. It’s the same in business. You have your specialisation, but you still need a couple specific scenarios to win.
For example, a Costco store needs a certain customer volume before its “unit cost per transaction” drops below its competitors. So it doesn’t work in areas without enough urban density. You have to know your winning situation.
Jeffrey Towson, Professor of Investment,
Peking University Guanghua School of Management
Human Resources magazine and the HR Bulletin daily email newsletter:
Asia's only regional HR print and digital media brand.
Register for your FREE subscription now »