Why Dominating Your Category Can Be a Flawed Strategy

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This article originally appeared in Harvard Business Review on February 7, 2018



Of the many contributions Jack Welch has made to business wisdom, one of his most famous was “Be #1 or #2 in every market.” That advice served GE well in shaping its portfolio of businesses and its strategy for many years, but it’s not clear to us that it is as relevant any more. It may, in fact, be a dangerous strategy in today’s business environment.

Take the cereal business, for example. General Mills actually grew from #2 to #1 in market share the last few years. But the cereal category declined $4 billion dollars from 2000 to 2015, so it didn’t matter. In fact, total sales at General Mills has declined for 15 of the last 16 quarters.

General Mills highlights three things that are the root of the problem of the axiom “Be #1 or #2 in your category.”

 

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