What Business Are You Really In? Here’s Why Knowing Matters

Imagine running a movie theater, but instead of focusing on ticket sales, you realize your profits come from selling popcorn and soda. That’s a real scenario. It’s also a reminder of why knowing what business you’re truly in matters. Many companies think they understand their business, but dig deeper and you’ll often find that they’ve missed the mark. And in today’s ever-evolving market, what you don’t know can hurt you.

The real question isn't about what products you sell, but what value you add from your customer's perspective. Understanding this is key to not just surviving, but thriving in competitive landscapes. It’s about knowing the end-to-end journey where you deliver value, and doing it in a way your customers will happily pay for.

Staying Relevant Is a Lifeline

Knowing the business you’re truly in allows you to remain relevant to your customers, even as their preferences evolve. Your customers’ needs don’t disappear, but how they define and meet those needs will constantly change. If you cling too tightly to a process or product, you risk becoming obsolete, much like the horse-drawn carriage makers who failed to transition when automobiles came onto the scene.

To survive, it’s critical to stay loyal to your customers’ needs, not your processes. What worked yesterday may not work tomorrow. Take the carriage manufacturers who saw themselves as being in the "horse-drawn carriage" business rather than in the "personal transportation" business. Their refusal to see beyond their current offerings made them vulnerable to the automobile revolution. On the flip side, Henry Ford thrived by recognizing the real business he was in—affordable personal transportation—and innovating accordingly.

So, how do you stay relevant? Constantly look for new ways to provide value. Innovation isn’t just about tech advancements; it’s about improving your ability to meet customer needs more effectively than the alternatives. As technology evolves, your ability to adapt is what keeps you ahead of the curve.

Focus: The Key to Thriving

Knowing your business helps you focus. When you understand where you add the most value and who your ideal customers are, you can direct your efforts more effectively. Your focus should be on those customers who appreciate and are willing to pay for the unique value you offer. This clarity prevents you from chasing after every opportunity and diluting your impact.

Netflix provides a clear example of this focus. Instead of seeing themselves in the DVD rental business, they understood they were in the "on-demand entertainment" business. That shift in focus allowed them to crush Blockbuster, which was too slow to adapt, and eventually even dropping DVD rentals.

When you focus on the true nature of your business, you can outpace competitors who remain fixated on their outdated models. Your ability to thrive comes from this clarity and the focus it brings.

Adapt to Crush the Competition

Competition isn’t just about selling more; it’s about understanding your value better than anyone else does. When you know what business you’re in, you can stay ahead of the competition by continuously adding value in ways that matter to your customers. Netflix didn’t just beat Blockbuster because they offered DVDs in the mail—they succeeded because they understood that convenience, access, and digital transformation were where the real value lay.

Similarly, consider how Apple transformed the music industry with iTunes and now Apple Music. They moved from selling iPods to selling access to music. By recognizing that people didn’t necessarily want to own music, they wanted easy access to it, Apple was able to stay ahead of the curve and lead the industry.

Greater Profits Through Value Alignment

Let’s face it: profit is the ultimate business goal. But profit doesn’t come from guessing; it comes from knowing where your customers find value and aligning your offerings with that perception. Understanding your business helps you tailor your marketing and product offerings to emphasize the benefits that matter most to your customers. This makes your marketing efforts more effective, less expensive, and more profitable.

For instance, gas stations don’t rely on fuel for their profits; they thrive by selling convenience items like snacks and drinks. They know they are in the convenience business, not just the fuel business. The same goes for FedEx Office, which capitalizes on convenience while offering copying and printing services. The key to their success? They know what their customers value most and charge accordingly.

Avoiding the Wrong Pursuits

Finally, knowing what business you’re not in is just as important as knowing what business you’re in. It’s easy to get distracted by opportunities that seem good on paper, but don’t align with your core strengths or customer needs. This clarity can help you avoid wasting resources on ventures that won’t deliver value where it matters most.

Imagine if Zip Car tried to shift from car rentals to selling cars. Or AirBnB starting selling real estate. Those moves would be misalignments with their core business, which revolves around providing access, not ownership. Knowing where you don’t belong helps you stay focused on where you can truly excel.

What Business Are You In?

Knowing what business you’re in is about more than just selling products or services. It’s about understanding the value you provide, how you provide it, and why your customers are willing to pay for it. It’s about recognizing that the real opportunity for growth lies in delivering value that meets evolving customer needs.

By understanding this core principle, you position your business to not only survive but thrive in an ever-changing marketplace. So, what business are you really in? And how can knowing that help you stay relevant, focused, and ahead of the competition?

The answer to these questions will determine not only your survival but your path to thriving in the future.

Interested in learning more? Let’s do an innovation keynote or workshop with your team!

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Bob Roitblat

As a Transformation Navigator, Bob specializes in illuminating the path to innovative thinking, a future-proof mindset, and the leadership prowess needed to overcome today's challenges and grasp tomorrow's possibilities. He is a renowned keynote speaker, delivering powerful presentations and interactive workshops at numerous events across the globe. In addition to speaking, Bob writes extensively about organizational change and works directly with clients to implement effective strategies.

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