What business are you really in? A revisit for 2020
It’s A Tough Question Sometimes If You Really Dig Into It
Asking yourself what business you’re really in has always been a creative thought exercise. It’s a way of getting beneath the obvious and finding the sweet spot that allows you to focus there and maximize your abilities.
History is replete with examples of businesses that failed because they didn’t change with technology, but in saying that, we’ve essentially said they didn’t understand what business they were really in. Eastman Kodak was actually a pioneer in digital camera technology, but it kept doubling and tripling down on film, because its board thought it was in the film business, and not the memory preservation business.
Domino’s Pizza would have been just another pizza place if not for the realization that it’s in the ease and convenience business, and not the pizza business.
Macro Focus Affects Micro Focus
Truly understanding what you’re really here to do can help clarify and focus on seemingly smaller details that make a big impact when consistently brought to bear. Harley Davidson Dealerships, for example, that don’t realize they’re in the fun business, and not the ‘alternative transportation’ business, will keep allowing their reps to answer the phones like they stock the breakroom with Thorazine muffins.
YouTube Is In The EduTainment Business
McDonald’s is really in the real estate business. BMW is in the status business. Oddly, so are colleges and universities, which explains so much about why a finance degree costs about what a gender studies degree costs to obtain. If they were really in the education business, let’s face it…YouTube probably has them beat before the bell goes off. I’ve often wondered who qualified to hand out the first Ph.D. I digress.
We Need To Pre-Digest The Coming Wave Of Technologies So We Can Ride It
The reason I think it makes sense to revisit this question heading into 2020 is because a new wave of technologies is about to create more value than we can fathom, and the opportunities to grow will be best availed if we can get a better grasp on how these will affect and benefit us going forward. But before we go there, let’s dispel some nonsense about technology and what it is and isn’t.
What Technology Is And Isn’t
Technology simply refers to a new way of doing things that allows us to get more output with less input. Fishing nets are better technology than a baited line. The wheel is better technology than skids, over most surfaces, and the automobile is better technology than the horse and carriage, in terms of things humans appreciate.
Technology Compounds Continuously Upon Itself
Better technology produces compound effects. It frees up humans to do other things, one of which is to invent even better technology. Meanwhile, the old stuff is still being done automatically. If a restaurant employs 4 people to wash dishes, and the owner invests in an automatic dishwasher, and he lays off 3 of the workers, society is richer, not poorer, the minute the workers get re-employed doing something that the economy demands. The dishes are still getting done, and arguably done better, and sanitized. The moment the former dish washers learn to weld, or write code or pilot a plane, society is richer by a compound order of magnitude.
Implications: Faster Flows, Lessening Scarcity, No Fixed Pie
This is why nearly 100% of the world’s estimated $370 Trillion in wealth has been grown in just the last 200 years: the compounding effects of technological leaps underpinned by a core aimed at transmitting, understanding and using information faster, and with greater precision. This has some very profound macro-implications we should touch on before we drill down to why we really need to get clear about what business we’re really in. One of these is the shortening lifespan of scarcity, and another is implied by this: there is not a fixed pie of resources out there such that to get some for yourself, you must take from someone else. That mental construct is wholly inaccurate and should be destroyed. The pie isn’t fixed. Value is created from scratch every day. The creators or legal owners of its effects clearly benefit the most, and this produces inequality of outcomes; but those to whom value has accrued can’t just hoard it. They have to spend it. And similarly to the way electric currents only flow when there is inequality from one pole to another, economic flows become more dynamic in such an environment as well. If everyone were exactly equal in all respects, economic activity would slow to a trickle. It’s this dynamism that is at the heart of a robust economy.
Technology Determines What Is A Resource And How Much Of It We Have
The technology in use at a particular time determines not only what is or can be a resource, but also how much we have of that resource, by determining how quickly we consume it. Oil, e.g. was not a resource until we learned to refine it into finished products. Now, it is arguably the world’s most critical resource.
People Are Easily Manipulated By False Scarcity
Our brains are hard wired to respect and expect scarcity. Marketers know this and use Fear Of Missing Out (FOMO) and other scarcity-based calls to action to get us to act now. These and other psychological triggers rest on millions of years of evolution over which time technology changed relatively slowly. The modern world doesn’t make much sense to our reptilian brains, and those who understand this can manipulate people on a massive scale by using fear to further their own political and business agendas.
Example: Crude Oil As A Resource
As an encapsulating example of this, let’s look again at oil. Crude oil used to be an annoying thing you stepped in, that seeped out of the earth. Once someone figured out how to refine it beyond kerosene, its usefulness as a resource grew exponentially. It produced an unprecedented rush for land, it spurred entire new industries and today 6 of the 10 highest revenue corporations are in the oil sector. But something that has become (thanks to technology) so central and critical to modern life is bound to be used by those with political agendas to try to manipulate people, en masse. We see examples of this even today, with clever marketing schemes designed to play on our fears: climate change (as if we can control the climate if we only send enough money to the UN), renewable energy campaigns, recycling, and shaming campaigns aimed at oil companies over accidents on their watch, etc.)
The Club Of Rome Dupes The World
In 1972, an organization called the Club of Rome sponsored the publishing of a book called The Limits To Growth, which essentially was a fear-based marketing campaign. Its underlying assumptions have not stood the test of time, and it is viewed today by anyone with critical thinking skills to be trashy propaganda, its 2002 update/excuse notwithstanding. In this book, the authors claimed we would run out of oil by 1992, for example.
The Costs Of Not Understanding The Macro Role Of Technological Advancement
Whether nefarious or incompetent, the authors were simply wrong. They didn’t note that technology changes. It adapts and compounds results. They held technology constant in their pronouncements, and consequently missed the mark. Back then, to be fair, drilling a well was a crapshoot. Today, the term ‘dry hole’ is meaningless. We know precisely where to drill. And we drill horizontally, over dozens of miles, at different depths, from the same starting point. Oh, and thanks to shale extraction technology, most of the crude we bring out of the ground today in the US is clear. In fact, US refineries are all geared toward higher-sulphur grades of crude and we import and we ship our domestic production elsewhere. This will change, but it’s the legacy of how quickly things can and do change.
The Lifespan Even Of Actual Scarcity Is Shortening
Today, we have more assailable crude in the ground than we knew existed in 1972. And not only that, but we have developed the fuel injector, among other technologies, which halved the consumption of gas for each car. When you cut your consumption rate in half, you effectively double your supply. The perception of scarcity was a nothing burger, and as we will see, this is nearly always the case. Issues of actual scarcity are functions of increasingly shorter time frames. Things are only scarce for short spells, in other words.
The Biggest Reason For A Fresh Look At What Business You’re Really In
These dual functions of technology, resource definition and use, govern the resource base in our economy. The difference between the best technology currently in use and the technology about to come on-scene has never been greater, i.e. inequality between what’s here now and what’s to come has never been greater. And that is why it makes sense to reexamine the business you’re really in in this light.
The Sweet Spot Between The Obvious And The Ridiculous
The business you believe you’re really in dictates how you’ll allocate resources as well as where you’ll focus your aims. If you’re in the B2B space and aren’t actually in the customer-revenue-and-profits-increasing business, you run the risk of being discarded the next time the economy contracts. You might as well be in the Thorazine muffins business.
New Technology Can Open New Markets
This perception of why you’re in business can take on a whole new meaning with advancements in new technology. For example, let’s say you’re in the fitness niche, and your market is men over 40 interested in being fit. You ask yourself why would these guys want to be fit? Well, to avoid feeling old. And for better sex, more energy, greater strength, greater overall health and resistance to injury. But why would they want those? See where we crossed the sweet spot from obvious to ridiculous? But there is value in playing around here and circling that sweet spot, as it were.
Dancing Around The Sweet Spot To See New New Markets And Opportunities
If you did that for a bit, you might discover a sub niche who thrive on 80/20 thinking, efficiency, body hacking and don’t want to inject themselves with steroids. They want the benefits of exercise without the huge time commitment, and if you make that your core offering, you can now view literally anything that guy thinks will better his life as yet another funnel for extremely-well-targeted clients to your core offering. And if you thought for a minute, you might notice that’s not just how he approaches fitness, but lots of other things, each one being another funnel entrance, and now, like the left-arcing curve of the path through the duty-free shop, you’ll be able to offer him things along the way that he will actually value, and you might start seeing synergies you didn’t consider before in potential strategic partners serving the same customers.
Machine Learning Is Barely At The Toddler Stage
And it’s technology that will make this simpler to do. Machine learning is at a critical stage right now, not quite able to generalize and translate compound skill sets across applications, but able to mix and match simple skills to form robust compound skills for specific applications like marketing, sales, recruiting and HR. We can teach machines to play poker and beat humans most of the time, but not yet to take what they know from poker and apply it to business, or war, or when stop lights should change colors.
What Happens To Technology If We Wage Peace?
Speaking of war, there’s a dichotomy to be discussed. War has long been a driver of technology. The microchip was invented so we could guide missiles in flight. The digital camera was created so we could download spy satellite photos instead of having to drop and physically pick up the film. Scarcity underpins warfare. Warfare drives technology, and technology reduces scarcity. It will be interesting to see how technology advances as we wage peace.
A Word To Modern-Day Luddites
While we’re here, let’s also dispel another fear-based myth people keep trying to spin out into the world: the one that says automation will produce massive unemployment. All one has to do is examine history to disprove this. We have the highest amount of automation in the history of the world today, alongside some of the lowest unemployment rates. Did the Luddites do anyone a service when they destroyed the textile mills they perceived as taking their jobs? Obviously not. And John Henry was an idiot for not learning to use the steam drill. When we let technology automate the routine, and do more with less, it frees up humans for more creative work, and that’s not a bad thing. Compound growth is an amazing phenomenon.
Get In Touch With Us
If you’d like to discuss what business you’re really in, want some high quality leads or want to light the fire under your business in 2020 and accelerate your growth, we’ll be accepting a very limited number of new clients early in the year. Please reach out over linked in or feel free to schedule a call.