What Business Are We In?

What business are we in?”?is often the starting point of a business school case study discussion. The answer seems obvious at first. We make cars. We sell diapers. We are lawyers. Soon the discussion turns to,?“What is the customer buying from us?”?That is often a more challenging question to answer.

My published article,?What Business Are We In?, looks at why that is a powerful question and how to take the next step of understanding what your customer is buying from you. In the article, I develop profile examples of leaders who drive their business by matching their business model to their customer’s unmet needs. Download my article?HERE .

The late Harvard Business School Prof. Clay Christensen examined McDonald’s attempts to increase sales of their milkshakes. Adjusting the flavor, topping the shakes with whipped cream, and changing the cup sizes had no impact on sales. A team working with Christensen watched customers buying the milkshakes and asked why. Many of the milkshake sales were before 9 AM. The purchasers were often alone in a car buying a shake rather than a donut, banana, or bagel.

The customers were hiring the milkshake to be their companion on a lonely drive to work and to keep from getting hungry until mid-morning. With that understanding, McDonald’s made buying the shakes faster and thickened the drink so it would last longer in the car. Sales improved significantly.

The success of all companies depends on having a clear understanding of the business you are in and what customers believe they are buying from you. Clay Christensen would say that understanding “what your customer is hiring your product to do for them” is essential to success and even long-term survival.?Download ?the?complete article.