2. Strategies for Generalists, Specialists, and Ditch Dwellers

This chapter examines the different categories of strategic firm groups that come about during the convergence to the Rule of Three and describes the most optimal strategies for each group. Number 1 generalists have the option to be fast followers or focus on growing the entire market. The #2 generalist has the choice to co-exist or challenge the leader; the best strategy depends on the market share of both. Number 3 businesses are often the most innovative and they should try to dominate a market segment to insulate themselves from being pushed out into “the ditch” by #1 and #2. For niche players, common strategies include becoming supernichers or selling to generalists. Optimal growth is achieved by creating new specialists without oversaturating the markets. For companies in the ditch, downsizing and merging through consolidators are the most viable strategies. There is concrete empirical evidence that being stuck in the ditch is so common that it can be characterized as a law-like empirical generalization.