The Epistemist

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What business are we in?

January 15th, 2009 · No Comments · support

My boss said that he had been thinking about this question a lot lately – “What business are we in?” This is a seemingly simple question but getting the answer right can make or break a business.

Theodore Levitt in his classic 1960 HBR article Marketing Myopia has several great examples:

•    The railways almost failed because they thought they were in the railroad business but in fact they were in the transportation business, and their competitors were cars and buses, not other railways.

•    Hollywood film companies were almost destroyed by television, because they thought they in the movie business, when they actually were in the entertainment business:     ” ‘Movies’  implied a specific, limited product. This produced a fatuous contentment that from the beginning led producers to view TV as a threat. Hollywood scorned and rejected TV when it should have welcomed it as an opportunity—an opportunity to expand the entertainment business” (Levitt, Theodore. 1960.  Marketing Myopia,  Harvard Business Review 38, 45-57).

My boss was thinking about our business unit as a whole, but it made me think how to define the business my team was in. We provide support to the customers of our product, so are we in the business of fixing customer problems? No, this is too narrow a definition. Are we in the business of improving customer satisfaction and increasing loyalty? This is better, but still not quite it – something is missing, the unique value that we are adding.

I think we are in the business of helping our customers achieve full benefit of using our product, so they can be more productive and successful. The key difference here is that this last statement looks outside, at the benefit we add for the customers, not just for our company. And if we make our customers more productive and successful, they will, in turn, be more satisfied and loyal, and then they will keep coming back to buy more of our products.

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