What Business Are They In?

Some companies do not know what business they are in.

The car makers have made this clear. They are in a consumer products business, but run the company like they are a finance company or a manufacturer. Consider Proctor and Gamble. They manufacture a whole lot of products from Pampers to Tide. But they understand the business they are in. They are not run by the finance function or the manufacturing function. They are run by the brand managers.

The U.S. airline industry is another where management has a fundamental misunderstanding of which business they are in. They are run as if they were in the transportation business. Just because you own planes and move people and luggage around doesn't mean you are in the transportation business. They are in the service business, just like Ritz Carlton or Marriott. Ritz Carlton does not treat its guests as if it were in the real estate business just because they own hotels.

Think about it. How memorable is it when a flight attendant is actually pleasant and truly accommodating? When was the last innovation in the airline business that was done for the consumer's interest and not the airlines'? You wonder why Southwest has done well? It has managed to combine good service with cheap prices. The service is appropriate for the price you pay. It is a fair trade and consumers have voted with their dollars.

What business is your company in? Who really runs the company? Companies who really understand their business and their customers have aligned the answers to these two questions.