Even eBay sheds staff – but that’s a good lesson to business

The online auction giant eBay has announced 1,000 redundancies, shedding around 10% of its global workforce. At first sight you might think that eBay has been caught up in the world’s economic turmoil – but you’d be wrong.

What eBay is doing is what most businesses ought to be doing, but don’t. The auction house is focusing on core business. In recent years it has expanded into other areas – Skype for instance – and as ever, that’s not good for a business. One of the reasons many banks are in trouble is because they have expanded into non-core areas. The new boss at eBay is changing the course the company has been steering for the past few years – and they are not alone.

As businesses grow the people running them get excited about all the possibilities. The success of the initial business opens their eyes wide and before you know it the company expands by acquisition or by reaching out into new areas. Every time this happens, at some stage in the future, the company has to roll back to core business. You would think that people would learn, but they don’t.

Focus is the principal reason for success. A 100m sprinter, for instance, doesn’t say “hey, I’m good at running, why don’t I do the 400m, the 800m and the 10,000m steeplechase as well?”. They focus, almost always on just one race. World champion waterskiers could also windsurf pretty well, but they stick to the job they know best. Heart surgeons could also do brain surgery, but they don’t – they focus.

By focusing, your expertise increases and your value is raised. By trying to make more money by expanding into other markets and areas, businesses actually devalue themselves. So if you are looking to make more money in this tough economic time, don’t even consider adding new services to your portfolio or trying to expand by taking on a different idea. Instead, focus on your core business, do what you are best at and your long term survival is guaranteed.

It’s a sad day for 1,000 people at eBay, granted, but for the company itself the decision to stick to its main business of e-commerce is the right one.

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