In the book – The First XI Winning Organisation (2007) revisited by G, Hubbard of the University of Adelaide identified The Macquarie Group as one of 11 of Australia’s long-term top-performing organisations. The company saw an increase in share price between from $A24 in 2002 to $A75 in 2007.

Deutshe Bank research analyst Ross Brown back in 2004 had this to say “Their strategy is unique,” in Sydney. “They’re very entrepreneurial — they’ll do anything that makes money and do it almost anywhere’. So what is the magic formula, you ask? Their strong desire to be valuable to its clients and a being a marketing leader aka nurturing a niche.

The Macquarie Group has made no secret of the strategy. They concentrated on specific niche of products and innovation only. Put simply, it sticks to products and services it does well and concentrated on doing them better. In its own words from the 1986 Annual Report “This strategy was totally opposed to the concept of a financial super market”.

The group has repeatedly stated that they “intend to concentrate only on the offering that they had a leadership position in or that they can develop one in”.  There were also a number of principles that the company adhered to. These included hiring the best people, maintaining a profit sharing arrangement with them and encouraging people to be creative with new business ideas. This stuff makes me drool! It almost cut as many products and services it created.

Macquarie handed out incentives to employees as part of a drive towards product innovation including a share in the profits scheme.  They saw this as business decisions being made by those who were in the marketing ecosystem, dealing with the clients.

The DataMonitor 2008 Company Profile of MG sighted its smaller size comparison of other international players a major disadvantage. Furthermore DataMonitor says “its revenues are very

low compared to other players in the market…..these competitors have larger scale of operations and also brand awareness when compared to Macquarie Group”.  So to some analysts, being a niche player is also seen as a negative.

In an article called Macquarie goes Mainstream back in 2004 (Chris Leahy) Nicholas Moore, head of Macquarie’s investment banking group is quoted as saying “We don’t want to go out and fight a battle in the areas where others are big and strong…..We try to find areas where others are not so strong”. Indeed very little has change about the organisation including the steadfast determination to provide value to the end user.

Leahy goes onto comment “Macquarie has steered a profitable course, avoiding head-on confrontation with global competition through niche strategies”.

Right from the beginning, Macquarie has based their product evolution on the needs and want of a specific target audience.  Right back in 1969, then Hill Samuel already knew what thousands of people  now talk about every day being a Niche. They saw “a shortage of sophisticated advice and services for companies wanting to expand”.

There were also three major questions it asked itself of all of it offerings:

• Did it earn the respect of the current and potential clients to the superior value and quality of its products?

• Did it generate superior financial returns and growth over a period of time for its shareholders?

• Did it maintain the highest prudential and ethical standards?

Indeed, if it didn’t win a deal it was considered the firms fault and an in depth analysis of the reasons why it was lost would take place.

More recently, according to the 2009/2010 Annual Report, the company “reported a consolidated after-tax profit for the year ended 31 March 2010 of $A1,050 million, an increase of 21 per cent on the previous year’s profit of $A871 million”.

They have mastered the art of staying competitive and remained wholeheartedly focused being innovative and determination to provide maximum value to their clients.

image via flickr by aussiegall

Despite all the talk about having a niche, many businesses still operate without one. Your must have something that sets you apart from anyone else either in product, distribution or promotion at all times. Doing this type of regular activity, protects your business from competing on price.

Now do not over think this. It does not have to be a new invention. It can simply be a new feature added to one of your current offerings. This is strategy to the core!

So below are three methods of uncovering your niche:

1. Call your top 6 clients.

They know what they want and need. Take detailed notes during the conversations and follow up on a least one idea that comes out in the conversation within a month. Keep the client involved in the progress too!

2. Do a ‘documented’ competitive analysis.

In a 3 column table, the headings should read ‘Unique Differences’ /’Risk Low -1 High -5′/ ‘Action’. List your competitors unique differences, the level of risk to your business and the actions you will take to combat them. Do a separate table for each client and review for possible feature combinations and brainstorm.

3. Compare against leaders in other industries.

If you are an IT company compare your product offering to a business in the restaurant industry or any category killer for that matter. It sounds odd, but list out all of your product or services for both you and them next to each other. You will be surprised how quickly a new offering idea can come to you and how creatively satisfying this can be.

Do this every quarter or half year and also pop it in your business plan.

If this is the first time you have done this, it will be a much needed reality check. I get to do this for clients all the time and it is quite scary how long they operate without a niche and wonder why is always comes down to price.

It is also advisable to have somebody outside of your business do this on your behalf and provide a report back to you. Business ‘owners’ and ‘founders’ in particular make ill judgements about the products or services and they never know that they are doing it