What business should you be in?

As a result of this column you and your organization will:

Develop strategies to become better while also becoming different.
Seek and develop new opportunities waiting to be exploited.
Maintain and grow current markets while developing the markets of tomorrow.

The world isn’t standing still. In the 1960’s, variety retailer Kresge transformed into Kmart, which, before collapsing into and then repeatedly reemerging from bankruptcy, became the largest discount store in the U.S. By questioning our own strategic position, businesses will realize that if a position is shrinking, there is opportunity to stake out a new one…just waiting to be exploited.

To be strategic innovators, we must focus on improving our existing position while also identifying needs of customers that no competitor is addressing. We have to become better while also becoming different.

Howard Schultz, the president of Starbucks, realized his company wasn’t in the coffee business. “Starbucks is in the business of creating a consumption experience, in which coffee is just a part, along with romance, theatrics, and community.”

The first step in creating a strategy is asking what business are we in. Questioning the very things that we take for granted is the key to strategic innovation. We must reward employee ideas that arise from challenges to the status quo. Identify sacred cows and encourage people to question them. These tenets are especially true when it comes to customer service.

To define your business, begin by thinking of how it could be defined by…

Product or service

Customer

Core Competency

BMW could have seen itself as being in the car business…of serving yuppie customers. Or, BMW could visualize itself as a company with the core competence in engineering.

Next, ask who would my customers be, and what would they need? Can I satisfy those needs better than my competitors? Is the market likely to grow in the future, and is it difficult for others to enter?

Ask the same questions for each definition, what business, what customers, and what core competency? Once you have been able to choose the one that gives you the best competitive advantage, you have now defined why the company will invest in certain products and markets, and not in others.

Most companies would never turn down profitable customers because they’re “not right” for their business…that would be considered as lunacy.

However, the process of selecting customers is similar to the process of defining your business.

After identifying all possible customer groups, you need to select which ones to serve and which ones are better served elsewhere.

The reality is that you cannot be everything to everybody. The small Danish bank of Lan & Spar asked it’s corporate customers to do their banking elsewhere. Lan & Spar had made a decision to serve only white-collar workers. Lan & Spar is now the most profitable bank in Denmark. Behind the decision was a shrewd strategic analysis.

The fastest growing companies are those that identify and serve untapped customer segments. Yet most companies never really choose their customers consciously. To do that, you have to look at what your company offers that is unique, and where you can do more for a selected customer group than any competitor.

List all of your possible customers and decide which ones to target. Develop a list of criteria that you can use to define your “ideal customer,” and then apply those criteria to existing and potential customers. Get rid of those who “don’t fit,” and pour all efforts into those present or future customers who meet your criteria.

The final choice is never really final. Just as organizations must continually ask what is our core competency; and what business are we in, we must ask what customer should we be serving?

In the end, all successful businesses have found “one thing” they can deliver to “one customer segment” better than anyone in their competitive environment. Now that’s customer service at its best.

Questions for discussion:

What ideas do I, my teammates, strategic partners, vendors or suppliers have about the one thing we can do better than anyone else?

What unmet, underserved, or new and emerging needs do our customers have that we are capable of or could become capable of filling in an extraordinary way?

No one has an exclusive on good ideas. Please share your thoughts by posting at the bottom of our blog. Click here

This article is provided by Joe Murtagh, “The DreamSpeaker^TM” www.TheDreamSpeaker.com. For keynotes, facilitation, workshops, consulting and questions or or a free report on The 3 Most Common Mistakes Organizations Make, email us at Joe@TheDreamSpeaker.com or call 800-239-0058.

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