It’s easy to become a prisoner of your point of view.
Two very smart people from two very different worlds made this crucial point in different ways. Not surprisingly, one was Steve Jobs. In a 2005 interview with Fortune magazine about companies that were (or weren’t) on top of the move to digital music, he noted: “Some companies are prisoners of their point of view.” (Typically Jobs: small statement, big point of view. That’s just one reason he’s already missed so much.) Ted Levitt made more or less the same point in “Marketing Myopia” a renowned Harvard Business Review article published in 1960. In it, Levitt argued that corporations (and sometimes entire industries) are held prisoner by how they define their market.
Early train and bus companies, for example, defined their business in terms of trains and buses rather than transportation and thus missed out on flight. Similarly, old film studios defined their business as movies instead of entertainment and missed out on television. More recently, Barnes & Noble and Borders defined their business as mere bookstores for far too long and were “Amazoned.”
No doubt Jobs had an ulterior motive for his statement (didn’t he always?), in that he needed consumer electronics manufacturers and others to jump on the let’s-make-great-entertainment-products-that-run-off-the-iPod-brain bandwagon. But that doesn’t mean he wasn’t right.
Kids today find the idea of buying and carrying around plastic containers filled with CDs remarkably quaint. They also increasingly find the physically buying and renting of movies to be curious behavior. Music and movies will stay digital, and a very large industry is growing up around their storage, discovery, delivery and consumption. Companies that embrace this transformation will prosper, while those in denial will fail.
Blockbuster defined its business as “physically rented movies.” Despite the sheer size of the franchise at its peak, that definition still put Blockbuster on a very short runway to oblivion. On the flip side, if MGM (the casino and entertainment MGM, not the film studio) had limited itself to gambling instead of branching out into other areas of adult entertainment, it would be a much smaller and more vulnerable business than it currently is.
So be careful. The seemingly simple act of defining the business you’re in can have a profound impact on your strategy- from the business model all the way through to brand and marketing strategy. Defining your business serves to define your competitive set. Most people have a tendency to define their business, and therefore their competitive set, too tightly. They then pay the price when their business is “disrupted” by someone they didn’t even consider competition.
Spend time on this most basic question and spend that time early. Don’t wait for a crisis and never leave it to others to determine when you get around to addressing it. Bring in outsiders for the express purpose of torturing the logic of your market definition.
Finally, if you created an apparently successful strategy and you’re still around because it’s been working, task a couple of young Turks to show you why it’s all wrong. I speak from experience- it’s a case of losing objectivity through strategic ownership. Like it or not: if you’re the author of a strategy, you can also become a prisoner of it.
Define your business, and define it carefully. But consider that definition malleable and invite others to challenge it. Listen. Then create an organizational environment where people are rewarded for challenging the status quo. If someone successfully challenges your status quo before an unseen competitor does, he or she may well save the company.
Tune in for the next installment on shaping your brand strategy from Austin McGhie, head of Sterling Strategy