Companies that are around for decades rarely keep doing the exact same thing. But, they tend to survive because they know what business they are really in as opposed to what business they appear to be in.
Let's look at a few examples of businesses that didn't know what business they were really in and paid the price for it.
Blockbuster thought it was in the video/DVD rental business, but really it was in the business of delivering affordable, easy-to-access home entertainment. Failing to recognize that the physical means of entertainment delivery had nothing to do with its real business, the company is now gone.
I'm cheating a bit with Ericsson because the company is still around, but their mobile phone branch has long since disappeared. Back in the '90s, though, Ericsson was a big player in the mobile phone market. It was like the Samsung of its day.
In terms of mobile phones, Ericsson thought it was in the wireless communication business, but really it was in the business of providing a convenient, stylish, innovative platform for communication that would also act as a status symbol. Ericsson (along with all the other '90s mobile phone giants) failed to keep up with the "innovative" part and they became less convenient, less stylish and the wrong kind of status symbol. Eventually, Ericsson just sold its mobile arm to Sony and got out of the phone business altogether.
The name Polaroid is still around and is even making a comeback, but the company has been dismantled, kicked around, auctioned off and relaunched more than once. It's really just a brand name at this point. Polaroid's downfall came from thinking it was in the camera business, when really it was in the business of providing people with a fun, instant and physical keepsake. Had it realized this earlier, it may not have been trounced by digital photography. Luckily for whoever owns the brand name now, nostalgia is strong and Polaroid pictures are cool again.
No matter what product you sell or what service you provide, you need to know what business you are really in. Even if you run something as straightforward as a high-end restaurant, you're not in the restaurant business. You're in the ambiance provision and memory making business. If you sell specialty hair clips online, you're not in the hair accessories business, you're in the self-confidence boosting business.
3 steps to discover what business you are really in
- To figure out what business you are truly in, start by asking yourself: Why does my business exist and what is its core purpose?
- To narrow it down, focus on the "need" and "desire" of the customers you serve, and ask yourself again: What is the core purpose of my business?
- Eliminate any specific technology, product or service from that core purpose and then ask yourself again: What is my business' core purpose?
This should leave you with the answer of what business you are really in.
Let's do a practice one together with a nutritional snack bar brand designed for kids.
- When you initially start, your core purpose answer could be: To provide delicious and nutritious snack bars for kids aged 7 to 14.
- Now, focus on the "need" and "desire" of your customers and answer it again. To provide delicious and nutritious snack bars to help kids eat well, grow healthy and make parents feel better about their kids' nutritional intake.
- Let's eliminate any specific technology, product or service from that core purpose -- the actual nutritional bars in this case -- and answer that question one more time: To help kids eat well and grow healthy so their parents can feel good about their kids' nutritional intake.
The change in this core purpose takes "nutritional bar" from your company's core purpose and instead makes the bars a starting point for helping kids to eat healthier, which is what your company actually does.
This might sound like a simple mind game, but it is the kind of mind game that will shift your perception about different options and opportunities. If you believe you are just a nutritional bar company, you may not consider yogurt, drinks and other snacks when your company has matured and you need to make changes to stay relevant. When nutritional bars become less popular, and kids move onto different forms of snacks, your company will be threatened, but your initial instinct will be to keep trying new things to make the bars popular again.
On the contrary, if you believe you are in the business of helping kids eat healthier, than market change is far less of a threat because you will be ready and willing to innovate by offering other snack alternatives.
Discovering the actual business you are in will help you succeed and survive by preparing you for market changes that will inevitably come.