Possibly the smartest businessman I ever met is a guy named Ed. He is the key partner in a prestigious equity firm on Park Avenue in New York City. I met him in a meeting to discuss a company he owned. He ended up hiring me to conceive and drive the strategy to turn that company around.
It’s no wonder I think he’s smart. But truly other folks think so too.
After I’d worked at the company for almost 6 months, I realized something about how Ed was seeing this company that he owned. Because all of his other companies were publishing magazines and newspapers, he figured our book publishing company would work the same and grow the same as those he already owned.
But book companies are significantly different from magazine and newspaper companies in the fact that the Inventory investment — books — lasts so much longer. A newspaper dies within a day. A magazine is done a month later. A book can live for years. What that means is that a mistake in a book is far more costly because it represents inventory that can’t be fixed until that huge investment on the shelves in the warehouse has been sold or burned.
Ed didn’t realize that simple difference until I said it.
I didn’t realize until that moment that Ed didn’t know what business we were in.
From that moment decades ago until this moment now, I’ve made it a mission to start with the idea that everyone I work with needs to know what business we’re in. What I’ve experienced is that from entrepreneur to CEO of huge corporations, those who truly know what business they’re in are fewer than I’d imagined.
- Some had lost sight of their actual customers.
- Some saw their value proposition differently than their customers did.
- Some were trying to reconfigure their customers to fit their idea of what business they were in.
- Some thought they were smarter than their customers.
- Some were trying to be the business they had always been.
Some never had asked the questions, “What is our business? Who do we serve and why do they care?”
Some had asked those questions and answered them. Then the business changes, the economy changes, the customers change, and they forget to ask again.
And as a result here’s what I saw happen over and over and over again. The little company who still asked the question would get the customers. They’d have the 10-foot booth at the big trade show (think CES) one year. A few years later, they’d have a 60-ft booth at the trade show. Not much later, they’d have a 90-foot booth at the trade show and be looking to their corporate partners and possible acquisitions to grow <-- losing track of what business they were in.... and while they were looking at other businesses, another little company who still asked the question was talking to their customers from the 10-foot booth right next to them.
The biggest mistake a successful business makes is to quit asking the questions that got them there.
Whether you’re an entrepreneur, a small business, or a corporation, if you’re still asking what business you’re in, you’re ahead of them.
What business are you in?
–ME “Liz” Strauss
Work with Liz on your business!!