Why Growth Is So Hard And What To Do About It
There is a simple question that when deeply considered, can change your business instantly.
It is a question that enormous companies usually get wrong and small companies often get right.
It is a question central to many of the world’s most profound innovations.
The question is this: “What business am I really in?”
If you answer too quickly or are a leader of a historically successful company or industry, you probably just mumbled the wrong answer.
It’s a classic question
Harvard business school professor Theodore Levitt, back in 1960, captured one of the major challenges most companies face today. His now classic article Marketing Myopia begins this way:
Every major industry was once a growth industry. But some that are now riding a wave of growth enthusiasm are very much in the shadow of decline. Others which are thought of as seasoned growth industries have actually stopped growing. In every case, the reason growth is threatened, slowed, or stopped is not [emphasis in the original] because the market is saturated. It is because there has been a failure of management.
This failure is caused by what Levitt called “marketing myopia,” which he defines exactly as you would expect. It’s what occurs when company leaders define their mission too narrowly; it’s a form of business nearsightedness or shortsightedness.
I believe most seasoned executives are often asking important but limiting questions. Their questions typically are about cutting costs, how to beat the competition, and what to do to make improvements to existing products. Eventually these questions lead to parity (and often parody) because they are the same exact questions their competitors are asking.
And even if they (and unfortunately the “they” often includes you and me) can bring themselves to ask a seemingly obvious question like “What business are we in?” they are too used to doing what they have always done and thinking the way they always have to muster a novel perspective. Using Levitt’s language, we all become myopic.
Levitt offered what are now a few classic examples.
|Industry||Myopic Purpose||The Broader Purpose|
Here are two more related examples worthy of consideration because they represent shifting industries that, despite being incredibly important, are missing obvious opportunities to innovate:
|Industry||Myopic Purpose||The Broader Purpose|
|Hospitals||Treating the sick||?|
|Health Insurers||Medical Costs||?|
(I left question marks to make a simple point: If you are not in the hospital or health insurance businesses, you are more likely to see great possibility here. After all, for you there is no risk in suggesting an idea that runs contrary to the existing business model.)
So some 50 years after Professor Levitt wrote his article, what’s our takeaway? I think it boils down to this: We must stop thinking about what we sell and think more about whom we can sell to.
Who are the people we can help?
Which assets at our disposal are currently underutilized?
What do these people REALLY need that can be provided by us?
Could we produce a new product? A new service? A new business model?
Let’s use a simple example that came from my colleague Maria Ferrante-Schepis.
Insurance companies, when you really think about it, are not just in the protection business. They are in the “lifestyle continuity business”—keeping the lives of individuals, businesses and families intact when the unexpected happens.
You can see that by simply broadening the business definition; it helps companies in the insurance industry potentially expand beyond what is offered today to create new possibilities and innovations for the future.
So what possibilities open up for the insurance industry? Here’s an example that may not be as silly as it would have seemed 20 years ago: Pet Products. Boomers are humanizing their pets. They are treating their pets like they used to treat their kids. And the amount of disposable income spent on pets, everything from toys to health care, is mind-boggling. Spending in this category, which has been climbing at double-digit rates in recent years, is now estimated at $55 billion annually just in the U.S. Is there a way for insurance companies to consider pets a part of the family?
Want to grow? It is time to stop thinking about your industry the way your competitors do because they likely won’t be your competitors for long—more likely it will be the entrepreneur who knows how to see your business differently.
Instead, start with the benefits you deliver to your customers and consumers. For example, you may say you are in the informed-solutions-education-providing-qualified-options-quick research-packaged choices-thought leadership-business. If you are, you are in good company. When you Google these words, you’ll find that as defined by benefits delivered, you’re in the same business as Blue Cross Blue Shield, Orbitz, Amazon, Angie’s List, WebMD and Edmunds.com. What could you learn from leaders in these businesses about innovative products and services?
So it turns out that a simple question—“What business are we in?”—can provide the growth answers you are seeking. When you are able to take a fresh, consumer-driven look at the business you are in, it creates a world of new possibilities to innovate.