If you look closely at the world around you, you will notice that although many new technologies aim to “converge” several different uses into one machine, we somehow always end up buying more specialized items, or “divergent” products. Let me give you an example:

Ovens

Ovens have been around throughout the ages, in one form or another. Many years ago, a wonderful new product came out on the market - the first toaster oven. People would place all sorts of food in there to “toast” it, and even placed slices of bread in the hopes of toasting it. Only a few years after that someone came out with a great idea - why not create a smaller oven, which is made especially for toasting bread - a toaster. This seemed like a great idea, and before you knew everyone and their mother had a toaster.

The Principle in Action

Before I get you lost in thoughts of toast, let’s analyze that marketing reality. What’s the lesson here? It’s the “Sharp Knife Through Soft Butter” principle in action. If you create a product that is successful, there will be many divergent products which specialize at least some of the uses of the original product, and apply it to a niche. In our toaster example, the toaster was created for people who loved toast, and needed it made quickly and perfectly every time. As time went on, the market for quick, perfect, toast grew, and so did the profits of the companies that made toasters.

Why did I choose the name “Sharp Knife Through Soft Butter”? Simple. When you take something very sharp, like a knife, and apply it to something large, it generally cuts right into it, as if the object were soft butter. Marketing is the same. A specialized product can cut right into the profits of a popular general product.

The Future of Small Business

For those of you who constantly wonder if there will still be a place for small businesses 10-20 years down the road, there certainly will, but the successful ones will focus on sharpening their knives against large companies like walmart.