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What Business Are You In?

What business are you in? It seems like a simple and innocent question to answer but how you answer that question has profound implications on your company’s ability to compete successfully in an ever changing and competitive business landscape.

In 1960 Theodore Levitt published the seminal article “Marketing Myopia” (Harvard Business Review), and introduced the famous question, “What business are you really in?” He starts the article by saying:

“Every major industry was once a growth industry. But some that are now riding a wave of growth enthusiasm are very much in the shadow of decline. Others that are thought of as seasoned growth industries have actually stopped growing. In every case, the reason growth is threatened, slowed, or stopped is not because the market is saturated. It is because there has been a failure of management.”

Levitt describes the failure of the railroads (at that time) was due to top management’s inability to frame the realities of the business from a product perspective to a customer perspective. Had the railroad executives seen themselves as being in the transportation business rather than the railroad business, they would have continued to grow.

 “The view that an industry is a customer-satisfying process, not a goods-producing process, is vital for all businessmen to understand. An industry begins with the customer and his needs, not with a patent, a raw material, or a selling skill.”

How do some of the most successful companies today see their business? Do the best frame their business in terms serving customers first or in terms of providing product offerings?  Let’s take a look by examining mission statements of notable innovative firms.

Side note: I thought I’d look at mission statements as a proxy to how companies frame “what business they are in.” It’s a reasonable starting point, but I discovered some of the best don’t have mission statements per se, or they are extremely buried in the corporate communication.

So how inspiring are the mission statements of the best known innovators. Let’s start with the big dog:

Apple:  “Apple is committed to bringing the best personal computing experience to students, educators, creative professionals and consumers around the world through its innovative hardware, software and Internet offerings.”

Not exactly what I would expect from Apple. Maybe Apple doesn’t put much stock into powerful mission statements? Perhaps their core values and beliefs are well understood throughout the organization and a mission statement is redundant (whatever they are doing is working to be sure). But I did come across this excerpt from Tim Cook’s statement during Steve Job’s leave of absent that some consider to be Apple’s true mission:

We believe that we’re on the face of the earth to make great products and that’s not changing. We’re constantly focusing on innovating. We believe in the simple, not the complex…”

Now that sounds more like the Apple we have come to know and love. There is more to Tim Cook’s statement worth a quick look (http://www.quora.com/What-is-Apples-mission-statement).  Cook’s statement is well thought out and inspirational. Perhaps not an official mission statement – but an effective definition of “the business were in and our purpose.”

Dell Computer on the other hand:

“Dell’s mission is to be the most successful computer company in the world at delivering the best customer experience in markets we serve.”

Where’s the snooze button?  That mission statement worked great when the PC industry was a growth industry, but times have changed and Levitt’s advice rings true. Does Dell need to “think different?”

Here are some more mission statements from companies I believe took Levitt’s advice to heart:

Amazon:  “Our vision is to be earth’s most customer centric company; to build a place where people can come to find and discover anything they might want to buy online.”

Google:  “Google’s mission is to organize the world‘s information and make it universally accessible and useful.”

Starbucks: “Our mission: to inspire and nurture the human spirit – one person, one cup and one neighbourhood at a time.”

Steelcase: “For a better day at work” …it’s not a shallow mission statement or a contrived marketing phrase, but a direction that sparks the efforts of every Details employee. We do our best to develop, market and deliver the finest ergonomic solutions because we believe that peoples’ everyday work lives can be improved with the use of our products.  Innovative products, smart thinking and energized employees… the recipe for making your day just a little bit better.

So what business are you in? Perhaps today your industry is growing in leaps and bounds, but it won’t last forever. The list of companies who failed to define their business in broader terms outside their current products and industry is long. Don’t become one of these.

Think different,

 

Kevin

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