Thursday, June 13, 2013

Find Your Focus

Standard Oil Refinery No. 1 in Cleveland, Ohio
Standard Oil Refinery No. 1 in Cleveland, Ohio
Most people know that John D. Rockefeller started Standard Oil which grew to be the largest company in the world at the beginning of the 20th century.  Fewer remember that Rockefeller did not start out by drilling for oil or owning gas stations. Standard Oil started as a refinery of kereosene for lighting.

By keeping the primary focus on refining, the company was able to continually improve its processes and acquire other refining companies until the company eventually refined over 90% of the oil in the United States.

Standard Oil did acquire oil wells later and operated gas stations. But it was the intense focus on refining that made the other businesses possible.  At the time it was broken up in 1911 by the Supreme Court for violations of the Sherman Anti-Trust Act, it controlled 70% of the refined oil market, but only 14% of the crude oil supply.

While diversification has some advantages, concentration is usually more successful.

How intense is your focus?

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