The Case of the Melted Freeway

I’ve been away from this blog for awhile to focus on client work. And some of what I’m seeing – that tempting siren song of losing focus and veering into me-too territory – is making me more determined than ever to get through on why it’s so critical to specialize, especially when you’re not a global behemoth and have limited resources.

Let’s take the case of the melted freeway as a great example of the power of being the best at what you do…

At 3:41 a.m. on Sunday, April 29, 2007, James Mosqueda was driving a tanker carrying 8,600 gallons of unleaded gasoline to Oakland, California.  He ascended the ramp onto one portion of the MacArthur maze a little too fast and clipped the guardrail.  What seemed like an innocuous bump proved too much for the truck to take at that velocity, and over it went. Within 21 minutes, not only had the truck become a fireball, but the concrete and rebar overpass upon which it rested had completely melted and collapsed onto the freeway under it. Poof. A major commuting artery serving 80,000 cars a day in the San Francisco Bay area was gone.  This was an economic and logistical disaster.

The MacArthur maze in the San Francisco Bay area is a complex set of interchanges where several major freeways come together. On a daily basis, it is central to the movement of 280,000 vehicles passing east, west, north and south. The damaged portion was what formerly took cars off of the Bay Bridge from San Francisco or allowed them to move southbound through Oakland. Even without traffic anomalies, gridlock and slowdowns are a way of life in this area. Construction projects of this magnitude are usually measured in years, but in this case, California Department of Transportation (Caltrans) officials knew that every month, if not every day, would count.

They needed to find a construction company with incredibly deep expertise. It needed to have done this exact project so many times before that it could walk onto the job with an extraordinarily efficient delivery mechanism — people with the right skills, established suppliers who were willing to ship as soon as possible, and a proven approach to rapid but safe freeway construction. In short, they needed the Go-To.

In this case, speed and quality mattered more than money, so CalTrans was willing to pay the winning contractor a whopping $200,000 completion bonus for each day it could shave off the already-aggressive deadline.  C.C. Myers Inc., a Sacramento-based contractor with a reputation for making rapid emergency highway repairs stepped up to the plate. Caltrans required a completion time of 50 days. To collect the maximum bonus of $5 million, the firm would have to deliver in 25 days. C.C. Myers Inc. had crews on the job site within an hour of signing the contract and delivered in 17 days,  not for money (there was no financial incentive to beat 25 days), but for pride and reputation. Even still, its profit margin on the project was 50% plus millions in public relations value. The entire Bay Area bowed on its knees in gratitude as C.C. Myers executives opened the new road in time for Memorial Day Weekend. They were heroes.

In contrast to commodity players fighting to preserve their margins, why is it that certain firms seem to command more margin, more attention, and more respect than others? And why is it that they rarely find themselves in competitive situations, clients usually seek them out, and clients will pay almost any price for the privilege of working with them?

It’s because they own their markets. They dominate their spaces. They are Go-To brands in their domains.  C.C. Myers clearly owns “emergency bridge and highway repair” in Northern California. McKinsey & Co. is not the largest in its category, but it owns “boardroom strategy.” Accenture owns “large-scale, high-risk systems implementation projects for large enterprises.” Salesforce.com owns “salesforce automation.” Gartner Group Inc. owns “IT market analysis.” Heidrick & Struggles owns “CEO executive search.” SAP owns “integrated enterprise resource planning (ERP) software” Those firms have defined, committed to and established a unique market position. Anyone else in that space becomes an also-ran. Each is the first name to come to mind in its category. Each is regarded as the de facto standard in its respective markets. Each has survived during severe market downturns while competitors perished. And each is a premium provider that frequently finds itself in the luxurious position of being sought out by prospects, as opposed to having to fight its way through a crowded, time-consuming and expensive request for proposal (RFP) process. It often turns work away. It names its terms. Prospects sometimes even compete for its business, not the other way around.

It’s one thing to differentiate and focus. But taken a step further, it’s incredibly powerful and profitable to take the next step and become the Go-To in your chosen markets. In addition to obtaining sustainable differentiation, your firm will maintain healthy margins and grow revenues over time.