Ask most people what business they’re in and they’ll likely tell you what they do for a living. Some will define themselves by the product they produce or the services they provide, others will default to their job title or their role as a way of defining their business. The problem with these definitions is that they only make sense within a particular time frame and context.
We’d like to suggest that a better definition of your business is the value exchange you are engaged in with your customers. This exists independent of changes in product or service delivery and beyond simple definitions of title or role. More importantly, it allows you to embrace change rather than being driven by it.
This is what allows organizations to “reinvent” themselves successfully. Although, strictly speaking, it’s not reinvention at all, it’s simply a reapplication of the value exchange through a new methodology.
For example, Apple is in the business of making technology more humanly intuitive or reducing the friction between the human being and the digital interface. This lens has driven their success in everything from the visual OS they delivered with the first Macintosh, to the swipe and pinch of their touch screens, to Siri and even into wearable technology that responds to your bodily movements and geography. In fact, Apple’s failed Newton experiment is in many ways a warning to others not to venture too far from your values exchange. Those of you who remember the Newton (we were early adopters at the time) will recall than the OS was anything but intuitive.
The warning is just as salient for those who fail to adopt new methods for delivering this value exchange. For all of its history, Kodak was in the “memory preservation” business. However, when their customers preferred method for storing memories changed, they failed to maintain the value exchange.
What this indicates is that the value exchange, or business you’re really in, is not only critical to drive innovation and deeper customer connection, but is also essential to maintain relevance. However, this can be difficult to monitor at an operations level, which is why leadership on this issue is so critical.
So how does an executive team use this consciousness to drive business strategy?
1. Consider who else can offer this value exchange
One of the mistakes we make in the commercial world is to make the assumption that our competition comes only in the form of businesses in our industry sector. The music industry, for instance, was not paying close enough attention to the world of computing until it was too late and their influence has been diminished. But this can also offer up opportunities to innovate. Working with a group of hairdressers recently, we realized that they were as subject to economic change as any industry in that in hard times, the frequency of visit decreased. Now of course, the value exchange (which goes far beyond shorter hair) was still being met elsewhere by other businesses they had not considered competitors. What they learned was they could adopt some of the services these outlying competitors provided and increase frequency of visit in doing so.
2. Align your goals with your customer’s values
Every one of us is filtering the world through our own personal values hierarchy and conflict arises, not from one person being wrong and another being right, but because of a misalignment of values.
This becomes an issue when we make too many assumptions about our customers and don’t do enough research into who they really are and what they truly value. Unless we are willing to dig beneath the surface to gain truer insights we run the risk of infringing on our customer’s values.
3. Be attached to outcomes not methods
Rather than insisting our customers experience value through the way we are structured to offer it, we would do better to be flexible in our approach and offering and hard on the result for the customer or client.
Unfortunately, the opposite is usually the case. We invest so much of our time in learning a particular skill or methodology that we are hesitant to give it up, even when our customers are clearly no longer interested.
When all is said and done, if we want to stay in business, we must first understand the business that we are really in. And the reality is, this is very much more in the hands of our customers than in our own. Our job, therefore, is to listen very carefully.