Should you be customer-focused instead of product-oriented?

What business are you in?

Most people are convinced they have the answer to this question.

“Well, Kyle, I build and sell aftermarket automotive parts; I am in the performance auto parts business,” or “Kyle, I help companies get found on the internet; I’m in the SEO business.”

The thing is, that isn’t the business you are in; it’s just the product or service you sell.

The true value of your business is the consumer's problem that you resolve.

Many companies focus on a thing. They want to be the best at that thing. They truly believe that thing will be their defining feature, that their product will be so great that it will be truly differentiated and will sell itself.

It won’t. Focus on the consumer.

Learning from multi-billion dollar profits-and-losses

Google makes just over 90% of its revenue for from Advertising, but do you think they would describe themselves as “in the Advertising business?” I wouldn’t.

On Google’s about page, their business description reads, “Google’s mission is to organize the world’s information and make it universally accessible and useful.”

They understand that they are in the organization business, not the web search business or the email business. They solve the internet user’s problem with organization. That is a pillar of their success.

Think about any Google product or feature and how it enhances your life. They organized your web with Search in 1998, your headlines with News in 2002, your inbox with Gmail in 2004, and your work with Docs in 2006.

If Google thought it was in the advertising business, would they have done any of that? Most likely not.

How can you solve for this? How can you be more like Google?  It starts at the top and trickles down through every decision you make as a company.  You have to commit yourself to dedicate yourself to your consumer.

#1: Create a mission statement that addresses the problem you solve for your consumer.

 

Live by it.

Remember Blockbuster?

I still have fond memories of running through the infinitely tall aisles filled with movies and begging my mother to rent different Nintendo games.

Well, Blockbuster thought they were in the movie rental business. They weren’t. They were in the on-demand (relatively) entertainment business. Had they realized this sooner and focused on the consumer’s problem instead of their product they may have seen the light like Netflix.

Unlike Blockbuster, Netflix understands that they are in the on-demand entertainment business.

You wanted movie night to be easier? They responded in 2007 by introducing their streaming platform.

In 2014, Netflix spent zero dollars advertising their DVD mailing service. If they thought they were in the DVD mailing business, they would have never made the change; they would still be slinging DVDs. Instead, they account for more than a third of internet traffic in North America at peak hours.

How can we be less like Blockbuster and more like Netflix? 

 #2: Become more vested in your consumer than in your product.

This one pains me. Remember Polaroid?

Let me tell you, if you’ve never waved a photograph back and forth for a minute, waiting for it to develop, you’re missing out.

If you are expecting me to tell you how they missed the boat on digital photography, you would be wrong.

Reports show that Polaroid was researching digital photography in the 1960s and by 1989 they were investing 42% of their R&D budget into digital.  In 1991, Polaroid reported 3 billion in revenue.  In the 2000s, they filed bankruptcy, twice.

At a first glance, it would seem like Polaroid just got unlucky, but they didn’t.  Their principal investment was in printed film and they ventured to make that better. That’s was their product.

But film and print was short-sighted (myopic) or small picture.  Sure, it was unbelievably important in one age, but it wasn’t the reason consumers needed Polaroid.  Polaroid’s customers needed Polaroid to create and preserve memories, and that, unlike the product, never changed.

If Polaroid was focused on creating and preserving memories, would they have created Flickr or Instagram instead of dying with printed photography?

What’s important here is that you understand the problem you solve for your consumer.  Remember your mission statement?

#3: Create products for your consumer, not consumers for your product.

Avoiding Marketing Myopia

This whole idea of considering why you are really in business was famously articulated by a Harvard business professor in the 1960s. Theodore Levitt’s famous manifesto, Marketing Myopia, opens with a bang:

“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 because the market is saturated. It is because there has been a failure of management.”

The failure he speaks of is a misunderstanding; the misunderstanding that their business is their product and as we’ve seen above, this can be a recipe for disaster.

In his manifesto, Theodore Levitt describes four conditions that usually guarantee a “self-deceiving cycle of bountiful expansion and undetected decay.”

I rephrased the conditions as questions you should be asking yourself to avoid this fate.

Better yet, these are questions you should ask your most trusted advisor and your toughest critic:

1. Do you believe that your growth is assured by an expanding and more affluent population?

2. Do you believe that there is no competitive substitution for your industry’s major product?

3. Do you focus on mass production and on the advantages of rapidly declining unit costs as output rises?

4. Are you preoccupied with a product that lends itself to carefully controlled scientific experimentation, improvement, and manufacturing cost reduction?

Key Takeaway

I’ll end this article just like Theodore ended his manifesto

This is exactly that: a manifesto, my opinion.  

This is not a diagnostic of your company; only you can do that.

Woven through Theodore and my words is a way of thought.

What business are you in? 

Happy growing.