Joint Venture

“Scotts Miracle-Gro Co. has long sold weed killer. Now, it’s hoping to help people grow killer weed.”

That is the playful opening of an article in this week’s Wall Street Journal about the “unlikely move” by Scotts Chief Executive Jim Hagedorn to explore “targeting medical marijuana as well as other niches to help boost sales at his lawn and garden company.”

Peter Drucker had little to say about medical marijuana (although he was a skeptic of the “war on drugs”). He did, however, have something to say about specialty markets. Miracle-Gro is far from the only plant food available to customers, so its advantage must lie in subtle ways of appealing to certain markets.

“The specialty market is found looking at a new development with the question, What opportunities are there in this that would give us a unique niche, and what do we have to do to fill it ahead of everybody else?” Drucker wrote. “The traveler’s check was no great ‘invention.’ It was basically nothing more than a letter of credit, and that had been around for hundreds of years. What was new was that traveler’s checks were offered . . . in standard denominations. And they could be cashed wherever Cook or American Express had an office or an agent. That made them uniquely attractive to the tourist.”

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[EXPAND More]The task, then, for Miracle-Gro’s executives is at once complex and simple. Drucker describes the following requirements for carving out a specialty market niche: “systematic analysis of a new trend, industry, or market; a specific innovative contribution, if only a ‘twist’ like the one that converted the traditional letter of credit into the modern traveler’s check; and continual work to improve the product and especially the service, so that leadership, once obtained, will be retained.”

And what if Miracle-Gro takes center stage in a medical-marijuana market that balloons to massive size? That, according to Drucker, would actually be a danger to Miracle-Gro. “The greatest threat is when the specialty market becomes a mass market,” Drucker warned. That’s because a mass market brings on a host of new competitors that can cause the original company to lose its footing—or, perhaps in this case, its high.

What do you think? Is Miracle-Gro taking the right approach in eyeing the medical marijuana market?[/EXPAND]