Companies Don’t Die But Suffocate

At conception ‘Industry’ and ‘core business’ are both sensible terms to frame and communicate the purpose of a business. But they are limiting. Especially when it comes to maneuvering or adapting the course of the business – as customers, markets and society demands alterations and redesigns.

– Core Business –
“Companies get stuck over-concentrating on their core business and fail to react on huge business opportunities and threats lying outside this narrow perspective.”  – Gary Hamel

Gary Hamel, recently ranked the worlds most influential business thinker by the Wall Street Journal, uses the example of IT giants HP, Dell, IBM and Microsoft; who all failed to react to the mobile shift that was rolling out in the mid 2000s – because mobile was outside of core business.

– Industry –
In 1960 Theodore Levitt published his quintessential HBR article: Marketing Myopia. Arguing ’that businesses will do better in the end if they concentrate on meeting customers’ needs rather than on selling products’. Using the question; “What industry are you really in” Levitt prompts business leaders to rethink their role and goal in the market place.

Link: Marketing Myopia, HBR.org

– Customer Perspective –
From a customer perspective neither ‘industry’ nor ‘core business’ matters – of course – why should they lose sleep over corporate strategy?

Customers care about the jobs they are doing in their lives (a job is a task, situation, activity etc.) and furthermore how to solve it – with what outcome.

Link: Finding The Right Job For The Product, MIT Sloan

Jack Immelt CEO of GE on the Outcome Economy:

 

– Technology –
The fundamental truth about technology is; that as it is introduced into the market customers start to alter its function and use. The technology gets redesigned and customers continue their repurposing. In the end the technology will most likely help customers with something different than its initial intention(Example: The telephone was intended to communicate musicals across the US or as an aid to people which were hearing impaired).

– People –
It is in peoples’ nature to adapt and change. Especially as society around them changes and as technologies influence new habits and behaviors.

Change is an unavoidable consequence of life and technology, and the markets companies accommodate live and breath this change. Gary Hamel asks:

“How can we manage companies that change faster than change itself?” – Gary Hamel

– Suffocating –
Terminology like ‘industry’ and ‘core business’ lock a company’s thinking to its core initial business idea – conceived at the firms conception. Rooted and cemented in top management. When employees see or experience new opportunities or ideas – these can too quickly be brushed of as incremental or fringe – even if they potentially represent a major opportunity if you look at the business from a customer perspective.

Eventually this leads to a strangling of the customer and product pipe as consumers find other providers and niche businesses which offer products with a better design or fit – to the current version of the job. 

Which is what I am trying to illustrate in the next few images:

From the presentation: Companies Are Designed to Keep Customers Out.

Subscribe to Blog via Email

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Join 58 other subscribers

HelgeTennø_NDR_200x200 Written by:

Be First to Comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Comment Spam Protection by WP-SpamFree