Do you know what business you are in?Remember Kodak? At its peak, Kodak captured 90 percent of the US film market and was one of the world’s most valuable brands.
So what happened? It wasn’t because it failed to keep up with the digital age; Kodak actually invented the first digital camera. It was because the company failed to recognise what business it was actually in.
Had Kodak understood it was in the story-telling rather than the film business, it would have realised that the new technology was not a threat to its current business but rather, an evolution.
However, this was not the case and Kodak essentially orchestrated its own demise by holding back the technology it developed for fear of hurting its existing, lucrative film business.
It seems straightforward. If you sell clothes, you are in the clothing business. If you sell coffee, you are in the coffee business. Right? Not necessarily.
Think about it. Is Kathmandu in the outdoor clothing and equipment business or is it in the business of inspiring us to great adventures. Is Nadia Lim’s My Food Bag in the food business or is it in the lifestyle business – saving us time and encouraging us to live healthy, balanced lives?
It’s all about knowing why your customers come to you.
An American economist and professor famously told his Harvard Business School students, "People don't want to buy a quarter-inch drill. They want a quarter-inch hole!" It’s a common mistake to make – focusing on the product or service, not the benefit to the customer.
This mistake means you don’t understand your customers, and this has severe implications for your business. Avoid an identity crisis by asking yourself these questions to determine exactly what business you are in:
1. Why do your customers come to you?
2. Where would your customers go if your business closed tomorrow?
3. Where are the biggest opportunities and margins in your business?
Knowing what it is about your business that fulfills your customers’ needs will help your business to thrive. You will be well placed to evolve as your customers’ needs evolve, add value to existing products or services, recruit the right people, stay ahead of the competition and recognise potential opportunities.
So, what business are you in?
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