The rapid escalation of global competition has brought a new round of hyper-specialization. The concept of specialization is nothing new; the division of labor has been a key tenant of economics since the birth of capitalism. Sites like Guru and Upwork have propelled specialization to a new art form, where one can access specialists from around the world in any conceivable competency in a matter of minutes.
Specialties that don’t require special education (other than what is readily available on the internet) such as graphic arts have quickly commoditized. You can hire a graphic artist online for $15 an hour. In cases where greater technical aptitude is required, specialists still out-earn generalists. Internists in the U.S. earn $176K per year on average, while cardiologists earn a median of $403K (some make $800K or more). If you had a heart attack, which would you see?
Perhaps the most common strategic blunder within entrepreneurial companies is a penchant for addressing overly broad targets. Seeking the largest audience, marketers cast too wide a net. In their need to satisfy the largest number of prospects, they become de facto generalists. Instead of addressing a niche market with specific solutions, they try to satisfy a greater audience with a multitude of products and services. At some point, the value they can provide suffers from diminishing returns.
The more crowded a space, the more difficult it is to differentiate, and the greater the need for expertise. Before its bankruptcy filing, General Motors attempted to sell within every segment from sub-compact to Hummer. GM experienced what is often referred to as the peanut butter effect; the wider you spread something, the thinner it gets. GM’s branding was diluted and ability to control quality constrained.
Many small businesses may employ generalists because of their lack of talent depth. To have one IT professional manage a network, build the company website, select an ERP package and repair all the desktops is an archaic paradigm worthy of recalculation.
Specialists are worth more than generalists because they have a deeper subject matter expertise that drives:
Quality– Processes replicated over time promote less deviation, less defects and fewer errors. The specialist thinks deeply about an area in which they have experience, and is less likely to make mistakes.
Speed– Specialists don’t need to reinvent things. Cycle time on proposals and product delivery is faster. If a company offers 50 stock products instead of 500, they can manage less inventory and ship items more quickly. For every new project outside the boundaries of a company’s expertise, there is a resource-draining learning curve that costs time and money.
Relationships– As the specialist is highly respected, their opinions are sought after by the media and people who want to know them, hire them and refer them to others.
The realities of outsourcing and off-shoring are driven by these phenomena. It is inherently inefficient to participate in activities that aren’t within a firm’s core competency and do not directly contribute to the bottom line. Industries such as manufacturing have to find very finite niches where they can win.
The entire concept of the corporation with its multiple functional departments (accounting, sales and marketing, design, operations, engineering, manufacturing, etc.), is under attack. Social norms around our working environments are shifting quickly and enabling greater specialization. Collaboration tools make the world of work more virtual, which will continue to feed the frenzy.