The conventional wisdom in manufacturing has long favored size. Bigger companies have more purchasing power, more engineering resources, more marketing spend, and more staying power through downturns. For much of the twentieth century, scale was the primary competitive advantage in industrial markets.

That assumption is under pressure.

A growing number of smaller and mid-size manufacturers are outperforming their larger competitors on the metrics that matter most to customers: response time, customization flexibility, delivery reliability, and total cost of doing business. And the mechanism behind their outperformance is increasingly traceable to a strategic choice that larger companies struggle to replicate, operational focus.

What “Focus” Actually Costs Larger Companies

Large manufacturers are structurally disadvantaged when it comes to concentration. A $2 billion division cannot easily exit the bottom 30% of its customer accounts when those accounts represent $200 million in revenue. It cannot rationalize its product line from 500 SKUs to 150 without navigating layers of internal resistance. It cannot redirect 80% of engineering resources to its three highest-margin product lines when eighteen product lines each have an internal champion.

A $50 million manufacturer has no such constraints. The decisions are visible, the tradeoffs are clear, and the organizational will to execute can be built quickly by a single leadership team.

This is the structural advantage that a well-designed transformation framework can unlock, and it explains outcomes that would otherwise appear counterintuitive.

Todd Hagopian, a Fortune 500 executive who has led transformations at Berkshire Hathaway, Illinois Tool Works, Whirlpool, and JBT Marel, documented exactly this dynamic across three manufacturing case studies in his Karelin Method framework. One case involves a custom manufacturer that increased revenue by 67% and operating margins from 27% to 40%, by deliberately exiting 30% of its customer base and concentrating resources on the customers who valued their expertise most.

The full framework is detailed here: The Karelin Method for Rapid Business Transformation.

The Regional Competitive Advantage

For manufacturers in regional markets, this dynamic has a geographic dimension worth understanding.

Regional customers, contractors, distributors, industrial buyers, increasingly prefer suppliers who can respond quickly, who know their business, and who treat their account as meaningful rather than routine. A mid-size regional manufacturer serving a targeted customer base with exceptional responsiveness can outcompete a larger national supplier on value delivered, even when it can’t compete on price alone.

The Karelin framework’s documentation of an industrial scales manufacturer illustrates this precisely: the company created sustainable competitive advantage not through price cuts, but by responding to quote requests in 24-48 hours versus the industry standard of 7-10 days. That operational capability was only possible because the company had concentrated resources on its highest-value customers and streamlined its decision-making process to move faster.

For regional readers evaluating local manufacturers, as customers, employees, investors, or suppliers, decision velocity and customer concentration are among the most meaningful signals of an organization’s competitive health.

The Four-Phase Approach Any Business Can Follow

The Karelin framework is organized into a four-phase implementation sequence that applies regardless of industry or company size:

Phase One (Months 1-2): Establish decision architecture. Define who makes which decisions, create a regular leadership alignment rhythm, and build a cultural tolerance for making decisions quickly with incomplete information.

Phase Two (Months 3-6): Apply extreme focus. Analyze the product, customer, and initiative portfolio with honest accounting, not revenue, but margin contribution. Exit or reprice the bottom tier. Concentrate resources on the activities that create genuine competitive advantage.

Phase Three (Months 7-18): Drive efficiency on the concentrated activity set. Standardize processes, automate routine work, develop skills targeted at the highest-leverage capabilities.

Phase Four (Months 19+): Selectively increase intensity. With focus established and efficiency built, strategic volume increases, in sales, production, or service delivery, produce multiplicative rather than incremental results.

The sequencing is deliberate and critical. Organizations that attempt Phase Four first, more volume, faster hiring, accelerated production, without establishing focus and efficiency typically see performance plateaus and accelerating burnout.

What This Means for Communities Dependent on Manufacturing

Manufacturing’s revival in regional economies depends significantly on the health of mid-market manufacturers, the $20 million to $200 million companies that employ hundreds rather than thousands, anchor supply chains for larger industrial customers, and generate the stable employment that sustains regional communities.

These companies are not going to compete with global giants on scale. They are going to compete, and win, on focus, responsiveness, and the quality of relationships with a carefully selected customer base. The frameworks that enable that kind of performance deserve broader awareness in the business communities that depend on manufacturing’s health.

About the Author

Todd Hagopian is a Fortune 500 executive and business transformation specialist who has generated over $3 billion in shareholder value across Berkshire Hathaway, Illinois Tool Works, Whirlpool Corporation, and JBT Marel. He is the author of The Unfair Advantage: Weaponizing the Hypomanic Toolbox and the creator of multiple proprietary transformation frameworks used in manufacturing and industrial organizations. Learn more at stagnationassassins.com/author-bio/.