02: Here Are The Best Arguments Against Specialization#

Like any significant change to a system, specializing your business involves effort and uncertainty about whether the change will create the desired result. There are good arguments against specialization. The best ones argue that the effort of specialization offers low ROI (@NOTE: marginal ROI?), the risk is too high, or the execution too complex.

Being a software generalist doesn’t prevent you from making enough money because buyers are very often satisficers, and when demand exceeds supply, they will accept a sub-optimal solution. (When you’re out of toilet paper, you’ll use a paper towel from the kitchen.) Demand has generally exceeded supply in many parts of the tech skills market for the past 30 years or so, with some skill-specific or tech-crash-induced exceptions. This means that generalists can do quite well in the tech skills market, and so the effort and risk of specialization needs to pay off significantly to be worth it. For lots of people in lots of situations, a safe $150,000 salary beats pursuing a somewhat uncertain $300,000.

It is possible to make a bad specialization choice if you mis-apply ideas from outside the world of services, or if you get seduced by appealing-but-risky approaches, or if you get unlucky. There are other business optimizations that, if executed well, can pay off better than a poorly executed specialization. This means specialization may not be the lowest-hanging fruit for your business. @NOTE: more support here? The intro sentence opens me up for that. Hmm…

Instead of specializing in a single tech domain or business problem, you can specialize in running an efficient generalist agency or in labor arbitrage and make good money that way. This form of specialization is somewhat more flexible and unburdened by potential sunk costs because expertise in running an efficient agency-style business is somewhat more portable from one business to another.

When it’s working well, a market position (the outcome of specialization + discipline + time) is a significant business asset, just the way a strong brand can be. When it’s not working so well in an absolute or comparative sense, a market position can function as sunk cost for you, delaying a pivot to something better and accruing more opportunity cost.

(I want to be unflinching in listing all the arguments against, so I have to add that) a book like this attracts people who couldn’t figure it out on their own. A book like this alone can’t compensate for some of the possible reasons you haven’t done it yourself already, or worse, this book might just get you stuck deeper in the mud of indecision or analysis paralysis.

As you can see, there are numerous good arguments against specializing your business. In the real world there are plenty of good, profitable, durable businesses that have specialized, and plenty that have instead pursued an intentionally generalist approach. If you’re susceptible to causal reductionism and you look at a single business that you admire, you can think you’re explaining its success using either the arguments for or against specialization and be no closer to identifying and understanding the multitude of real causes of that particular business’s success.