Profitably Expand the Scope and Concept of What You Do Now

A young married couple, Mr. William and Ms. Dorothy Hustead, bought a small pharmacy in a tiny town near the South Dakota Badlands. From 1931 to 1936, they struggled through the Depression serving the town’s 326 impoverished residents.

One day in 1936, Ms. Hustead, bothered by the sound of cars on the nearby highway heading for Mount Rushmore, persuaded her husband to expand their business to serve these travelers. Mr. Hustead put up signs on the highway to draw visitors to their store, making a unique appeal. The signs said, “Free Ice Water . . . Wall Drug.” In the days before automobile air conditioning was common, that offer was an irresistible appeal.

Beginning from this humble expansion of its customer base, Wall Drug now serves more than 20,000 visitors a day during the summer in its Wall, South Dakota, store and many more on its Web site.

Let’s look more closely Wall Drug in the 1930s to explore expanding a for-profit business’s scope and concept. People heading for the Black Hills also needed services.

Wall Drug’s employees could have checked car radiators to see if they needed more water and could have helped tired travelers make motel reservations, plan side trips to little-known attractions, obtain referrals to South Dakota physicians and dentists, and acquire local towing insurance for their cars.

While the free ice water was welcome to hot, tired travelers, Wall Drug failed to appreciate that such travelers were primarily trying to enjoy a nice vacation and would have welcomed many reasonably priced, vacation-enhancing services. Wall Drug could have offered some of those services for free to the travelers by relying on commissions from motels, attractions, and insurance companies.

While checking the radiators, Wall Drug would have found plenty of cars that needed gasoline, oil, filters, windshield wiper blades, spark plugs, and other minor items that could have been provided after the radiator water was checked. The Husteads would have benefited by realizing that they were also in the business of improving vacation travel, rather than only selling pharmacy items.

Nonprofit organizations are also often too narrow in their thinking. I have visited many food distribution centers for needy families, but don’t recall ever seeing such a center that provided a way for the unemployed to find work.

While families wait for the groceries, a separate set of volunteers could be helping match people to available jobs in the area. Volunteers could help those with limited reading and writing skills to explore lists and fill out applications. Cellular phones could be shared to make job interview appointments.

These centers should see their role as helping the needy to be able to provide for their own needs. As the Chinese proverb says, you do more good teaching someone to fish rather than just providing a fish for today’s meal.

As an example of how more can be accomplished by thinking about other ways to help, Habitat for Humanity found that it could multiply its global efforts by encouraging national organizations to send one-tenth of the money they raise to other countries.

While a new home in the United States might cost $50,000 to build, an African home might cost only $500. By sharing 10 percent of the money they raise, a U.S. affiliate can increase the number of families served by their funds as many as 10-fold.

In addition, the Habitat families and volunteers learn to build homes, take care of the homes, and help others build their homes. In many cases, the families and volunteers can then find work in home building and related trades. As the no-interest mortgages are repaid, poor families in the homes are also providing funds for other poor families to use.

What’s missing to have the right scope and concept? Organizations are focused on providing more of what they do today rather than considering what those who receive the products and services really want and need. Naturally, organizations need to concentrate. Adding the wrong additional products and services can create havoc with the economics of a business or nonprofit organization and leave everyone worse off.

Copyright 2007 Donald W. Mitchell, All Rights Reserved