What business are you really in?

A Veracle is our perspective or our thought on subjects that are dear to our hearts and vital to your business. We find fresh ideas on any topic exhilarating because every significant impact and every disruptive change in our world has begun with a novel, simple speck of a thought. However, it is essential that every such viewpoint is passionately discussed, fiercely debated, pointedly questioned, and judiciously accepted only with strong watertight evidence. That is why we would love your comments, questions, arguments, counterarguments, and anything else that challenges our thinking and keeps us on the edge. Your response motivates us!

What business are you in

What business are you really in?

Veravizion No Comment

How do you define your business? Can you tell what business are you really in?

Seriously, do take a moment and complete the following sentence.

I am in the business of ___________________________________.

Why is it important to know what business we are in?

Because it helps us decide exactly what to sell, whom to sell to, and how to sell. Without this clarity, businesses struggle to continue to survive.

Most of us define it based on:

  1. What we do: we print books and brochures; we are in the printing business.
  2. What we own: we own factories and workshops; we are in the manufacturing business.
  3. What products we sell: we sell toys; we are in the toys business.

However, this seller-centric approach is not optimal. What if customers stop using what we do, or stop making stuff with what we own, or stop buying products we sell. We will soon be history.

Then how should we think about what business we are in?

Let us understand with an example.

What business is Amazon.com in?

Amazon.com does packaging and delivery of stuff. Of course, they are a logistics and supply chain company. But they do not earn revenues from trucking and shipping.

Amazon.com owns large fulfilment centres and warehouses to store stuff. Clearly, they are a storage and warehouse company. But they do not profit from rentals and leases.

Amazon.com sells around twelve million products. Sure, that makes them a retail company. Except, they do not make money off the products they sell.

Rather, they make money by earning commissions through sellers. That means they are in asset-light brokerage business, right? But then, they own tons of assets, both physical and digital?!

So, what business is Amazon.com really in?

Amazon.com defines themselves as a customer-centric technology company. They use technology to connect retail buyers and sellers on a unified platform. They use data analytics to understand more about their customers – both buyers and sellers. Amazon leverages these insights so that sellers get more buyers, and buyers get a wider range of selection for cheaper from multiple sellers.

How could Amazon.com have clarity about what business they are in when they do so many things?

Because they do not define their business by what they do, or what they own, or what products they sell.

Amazon defines their business based on what purpose they serve for their customers.

That is the key.

We must define our business by what purpose we serve for our customers.

It keeps us aligned with the customer needs all the time. Moreover, it allows us to pivot with changing customer needs and preferences. Most importantly, it helps us build sustainable competitive advantage and ensures business continuity.

A product does not define a business, the purpose it serves for its customers does.

If products defined businesses, then Sony Walkman cassette player, Ambassador car, Toys “R” Us, Apple Newton, Pontiac, Polaroid camera, Nintendo, Palm Pilot, and many such products would still be around.

Yet, several companies have failed for not developing this clarity.

Kodak helped people create lifetime memories. However, Kodak thought they were just selling photographic films. So, when an engineer (ironically from Kodak) invented a filmless digital camera to achieve the same purpose in a better way, Kodak ignored. Not thinking about what business they were really in, they focused on their product – films. They completely missed the purpose they served.

Blockbuster enabled people to enjoy movies at home. But they thought that they were in the business of video rentals. At the time, Netflix also rented out videos by mail. Yet, Netflix figured out that they were really in the entertainment business. This clarity helped them pivot from the mail-based video rentals to DVD rentals to subscription video on-demand (SVoD).

The clarity is essential

To reiterate, we must define our business by what purpose we serve for whom.

Once we build this clarity, it is easier to articulate it to our customers thereby attracting the right customers and propelling our sales forward.

If you are yet to start your business, then why not do so by answering this question: what purpose of which customer do you want to serve?

Cover Photo courtesy: Mark Fletcher Brown on Unsplash.com

If you liked reading this article, then please subscribe to our blog – Veracles. That way, you can receive interesting insights in email.

Also, please do follow Veravizion on LinkedInTwitter or Facebook to receive easy updates.

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Most Viewed Veracles

Schedule Your Complimentary Session with us Today!

We promise you will come away with insights on utilizing your business data productively and cost-effectively. This session will be free of charge and there is no obligation.