Innovation vs. Focus: Can You Actually Have Both?
How to grow, evolve, and stay profitable without burning your whole business down.
At Ballast, we’re not strangers to a good debate. And one of the messiest, most persistent ones inside our own firm (and for many clients we advise) is this:
Should we focus on scaling what already works?
Or chase new ideas and innovate?
Spoiler: there’s no clean answer. But there are tradeoffs. And understanding them is the first step toward not losing your mind or your margins.
Two competing forces: innovation vs. focus
We’ll start by naming the tension:
Innovation means launching new service lines or products, entering new markets, or experimenting with new delivery models.
Focus means doing what you’re great at, over and over again, more efficiently and at higher scale.
Both can drive growth. Both can kill your business if handled poorly. And both require wildly different people, processes, and decision-making.
Why innovation feels so necessary
We’re all haunted by the slow decline of once-great companies: Blockbuster, Kodak, Sears. The lesson drilled into our heads is “innovate or die”.
And that fear is valid. Businesses that never evolve eventually lose relevance. Plus, most of us started our companies by doing something different – offering a smarter, better version of what already existed. Innovation is in our DNA.
But fear-based innovation is a trap. Just because you’re doing something new doesn’t mean it’s valuable, sustainable, or profitable.
Why focus is so powerful
On the flip side, focus is how you scale. It’s how you drive margin, build repeatability, and create a team that knows what the hell they’re doing.
You’ve read the stories:
Ford standardized the Model T and reduced its price by 60%.
Southwest ran all its operations on one aircraft model (the 737).
Apple cut its bloated product line by 70% to catapult a comeback.
Focus lets you invest in tooling, streamline delivery, and spot inefficiencies faster. It’s not sexy, but it’s how a lot of really successful businesses make money.
So which should you choose?
We don’t have a silver bullet. But we’ve helped enough businesses (and fought about this internally enough) to map out a few paths forward. Each has pros, cons, and risks.
Approach 1: Monogamy
Pick one. Live with the consequences.
Choose either Focus or Innovation and commit. Get really good at what you’ve chosen, and protect yourself against the weaknesses of what you’re giving up.
If you choose Focus:
Standardize, scale, and go deep on process.
Your moat is margin and quality.
Accept that growth may feel slow or boring.
If you choose Innovation:
You have to monetize every new idea fast.
No “we’ll make money later.” That’s how you die.
Sell the idea, sell the project, or sell the IP. Then move on.
The monogamous approach works best for firms with strong conviction and clarity around who they are and what they’re best at. But most firms (and founders) aren’t wired for full monogamy.
Approach 2: The Sandbox
Carve out space for innovation. Don’t let it disrupt the machine.
Split your business into two tracks:
One runs the scaled, profitable core
The other experiments and innovates
Sounds elegant, right? In practice, it’s often quite messy.
The risks:
You need significant scale to fund innovation without tanking net profit and absorbing all cash flow.
Shared resources = sand in the gears. (Ever tried sharing ops folks between two business models? Don’t try it unless you love pain and angry employees.)
Clean financial reporting is hard. So decisioning becomes exceptionally difficult.
Culture clashes can happen between the “builders” and the “operators”.
If you go this route, put tight guardrails in place. Separate systems, separate budgets, and clear rules about who plays in the sandbox and who doesn’t.
Approach 3: Seasons
Focus hard for a while. Then innovate. But then go back to scaling.
Instead of running both strategies at once, switch between them.
Example:
2 - 3 years focused on scaling what works
6 - 12 months of experimenting, launching something new.
Then shift back to scaling again.
This is probably the most realistic option for mid-sized companies with limited resources. But you’ll still need to:
Bring in innovation-minded folks temporarily (contractors, consultants)
Prepare your team for the context switch
Accept that not everyone can flex between “build” and “run/scale” modes
Acknowledge the margins that come with this approach: the season of scale means higher net margins, the season of innovations means lower net margins.
Approach 4: Acquisition
You focus on scaling. Let someone else innovate and then buy them.
This is the pharmaceutical model. Let others take the R&D risk, then acquire the innovation once it’s proven.
It’s expensive. But sometimes it’s cheaper than doing it all yourself (especially when you factor in all the failed internal experiments no one wants to suffer through or talk about).
Just be careful:
Most acquired products are less ready for scale than advertised
Culture clashes post-acquisition can be brutal (and brutally expensive)
You’ll likely need to turn over the team that built the innovative product in the first place
Integration is a full-time job
But if you’re great at scaling and terrible at building from scratch, this might be your best bet. (Or, if you’re amazing at innovating and terrible at scaling, start prepping now to be bought.)
Choosing what to prioritize
If you're trying to decide where to focus your time, money, and team capacity, we’ve used the following two frameworks to help. The idea behind these frameworks is just to kick off discussion, debate, and further consideration.
The ‘Flywheel’ Framework:
This model helps you assess each service line by two factors:
Volume of opportunities
Profitability per internal hour
service Line Revenue Framework
You end up with four quadrants:
Flywheel Work: Highly profitable, scalable, core to your business. Keep it running.
Opportunistic Work: High margin, but inconsistent. Or it could be an engagement that you feel is a worthwhile test. Take it when it comes, but don’t build around it.
R&D / Innovation: Not profitable yet, but potentially essential to stay relevant. Fund it intentionally.
Intensively Unprofitable Work: Kill it. Now.
This framework is most relevant for a professional services type business. Innovation can live in both the Opportunistic Work quadrant and the R&D/Innovation quadrant.
And it’s worth noting that just because a framework exists doesn’t mean it can provide you with a black-and-white answer.
What you have to remember when using this framework:
If you’re using the ‘Flywheel’ Framework to think through whether to prioritize innovation or focus, be sure to review the risks involved in the Sandbox and Seasons approaches that we discussed above.
There’s no perfect way to cordon off different types of work in your business unless you have a specific structure designed to do so.
So this framework can’t make an innovation vs. focus decision for you – but it can help you think through where most of your work lives right now, and whether or not you’re being intentional about it.
‘How Valuable is a Dollar of Revenue?’ Framework for Services Businesses:
Full and open callout that this framework was originally designed and explained to us by Luke Hohman, with Applied Frameworks. Full credit to him and his team. Our intent here is NOT to take his framework, but instead distribute it to others so that it might help more business owners and operators.
This model helps you decide what services to invest in, based on:
Whether the market is asking for it
Whether it's core or non-core for you
Whether it’s profitable
Again: four quadrants. Only one is truly ideal.
Dollar of Revenue Framework
What you have to remember when using this framework:
If you’re using the framework as another way to approach the innovation or focus debate, be honest with yourself about what you are best at and what the market is really asking for.
A lot of business owners love the process of innovating. It’s exciting and opportunistic. (This is one of the reasons it comes up often at Ballast.) But if you aren’t honest with yourself about where your money is made, you can easily tank your business. This typically occurs when a leader of a company is a ‘product’ person or they grew up (professionally) in development.
Another group of business owners LOVE making clients happy, so they’ll do darn near anything the client requests. This typically occurs when the leader of an organization is a dyed-in-the-wool sales person, or they came up professionally through the sales ranks.
What this framework can help you do is get your arms around where your core business lives so that you can know where you need to focus if you choose to. (Or where the money to fund new innovations will actually come from.)
Final thoughts
You can’t scale chaos. You can’t innovate by accident. And you can’t have it all – at least, not all at once.
Every business needs to wrestle with the tension between innovation and focus. The key isn’t to eliminate the tension. It’s to manage it intentionally, with clarity, data, and the guts to pick a lane when it counts.
If you want help figuring out what to scale, what to kill, and what to try next – or if you just want to talk through what’s going on for you in your business – we’re here. We work through this often with our clients and we’re all ears. Reach out.
