The year is 1910. It's the age of the transatlantic steamer--big, fast, beautiful ships carrying the rock stars of the day, the Astors and the Morgans, across the Atlantic to Europe and back again. The dominant companies in this business are Cunard and White Star. If you ask their leaders what business they are in, they would respond: the transatlantic shipping business, of course.

As logical as that sounds, the definition sealed their demise. Locked into a worldview that the future was about bigger, faster ships, these companies were furiously innovating, trying to create ships with bigger engines, more funnels, and iceberg-proof hulls (emphasis on trying). Yet, only a few years later a disruptive technology came along, sinking the transatlantic shipping business and the White Stars and Cunards of the world without a ripple: the airplane.

But what if White Star and Cunard had defined their business just a tiny bit differently--not the transatlantic shipping business, but the transatlantic people moving business? Things might be very different today.

Imagining What Could Have Been

The transatlantic people moving business has grown every year since the early 1600s--and it will continue to grow for the foreseeable future. Had Cunard and White Star defined themselves this way, they would not have viewed the airplane as competition, but for what it really was: a massive business transformation opportunity. In fact, Cunard and White Star could have pumped R&D into airplanes from the very beginning. The first powered flight could have happened at White Star Labs in Dorsett England. Chuck Yeager could have broken the sound barrier in the Cunard X15. The world might have paused for a moment of collective awe as the first White Star 747 rolled down the runway. The rock stars of today, the Gagas and the Hovas, would be flying Cunard or White Star airlines to their gigs in Europe. Instead, these once-great companies are a faded memory.

An Identity Crisis

The inability to be crystal clear about what business you are in causes wasted efforts in innovation in other ways as well -stretching too far in your drive to open up new markets. The results of these over-reaches are often confusing to consumers and in retrospect somewhat comical (unless you're the executive responsible, then I assume they are scary and painful). Colgate toe-dipped into the frozen meals market in the early 80's. Lego candy was a brief and liability-fraught fiasco. Remember the VW Phaeton? An attempt by the Peoples Car to become something its DNA just would not support: exclusive. All of these distractions might have been avoided by scrupulous attention to a razor sharp business definition.

But today, by far the lion's share of these innovation mistakes still come from companies funneling their efforts into extending the life of some existing platform, instead of spending time getting clear on what business they are really in and then constantly looking for opportunities to apply that definition to new technologies and new markets. Companies that do this will grow robust businesses that can be hard to describe in conventional terms.

Defining Your Business--The Right Way

Nike isn't in the shoe business. Nike is in the business of inspiring the athlete in all of us. It started by making shoes, but today it is an incredibly diverse product and content company that makes, for instance, the number one health app in the world. Tesla is not in the car business. Tesla is in the business of electric mobility. It makes cars but it is also builds the infrastructure that will support EV mobility of all kinds in the future. Red Bull isn't in the energy drink business. Red Bull is in the business of helping us live our lives to the absolute extreme. Red Bull makes a well known energy drink. But it also invents new sports like the Red Bull air races, creates films like The Art of Flight and arranges spectacles like Red Bull Stratos.

Today we see so many opportunities for businesses to ask themselves this one hard question and in getting to a clear answer, unlock potentially huge new growth. Is Volvo in the car business? Or in the family safety business? Is Kellogg's in the cereal business? Or in the health and wellness business? Is Apple in the computer business? Okay, we know the answer to that one. Apple dropped the word computer from its name five years ago -the telltale of a company waking up to the business that it is truly in.

So, what business are you in? Are you sure?