Is A Dead Business Model

If you keep on thinking of yourself as a retailer (see “Borders Today, Barnes & Noble Tomorrow” ) and your place of business as a store or website, and your offerings for sale as products, and your pricing as competitively valued, then you will most certainly die.

This is not a new concept. The same kind of myopic thinking and how it can constrain growth was the focus of a marketing paper by former Harvard professor, Theodore Levitt, published in the Harvard Business Review in 1960, titled “Marketing Myopia.” The thesis makes the point that managers who narrowly define the business (or industry) they are in by the products or services they create or sell are myopically limiting their growth potential. Contemporary examples of such constricting views would be those who would define their business as a magazine, newspaper or book publishing as opposed to being in the information business, which infinitely expands the potential for creating all kinds of information and distributing it across a multitude of mediums, now including, of course, the Internet. Other examples: the petroleum business vs. the energy business; the railroad vs. transportation business; and more.

So, are you in the retail business, which can be defined by the selling of goods to end users, not for resale, but for use and consumption by the purchaser? Or, are you in the consumer satisfaction business? And, if so, what is it that you can uniquely satisfy them with?

As most of you know, in the early 1990’s, Vittorio Radice, then new CEO of Selfridge’s department store in London, declared that they would no longer define Selfridge’s as a department store selling stuff. He redefined Selfridge’s to be the “coolest” destination in London for fun, entertainment, a social outing and for discovering new things, including services. Oh, and by the way, there would also be “cool” brands which you could buy during the “coolest” of experiences you were having in London. So, one could broadly define Radice’s Selfridge’s as being in the consumer satisfaction business. And, he satisfied them with a unique experience.

A couple other well-worn examples on this side of the pond are: Lululemon (LULU) – are they selling yoga-wear or a yoga lifestyle experience? And: Abercrombie & Fitch (ANF) – are they selling casualwear or sex (a sexy experience)? And, there are other winning examples of those who have escaped the confines of myopic thinking to infinitely expand the potential products and services they can sell as “by-products” so to speak, of the consumer satisfying experience.

I cannot stress enough that Apple (AAPL) does not sell stuff, not even computers. They sell a highly experiential education first, and then it just so happens that they have the most innovative, sleek and cool digital devices in the world.

Amazon’s (AMZN) unique consumer-satisfying experience emanates from its founding idea to make it easy for people to buy stuff, and this implies incredible service. So, they can sell anything, and are proceeding to do so. Facebook’s experience is about helping people to easily share their lives with friends.

I know that for most traditional retail leaders, running huge, or even small companies founded and defined by the “retail stores selling stuff ” business model, find it almost impossible not to think this way. Worse, the model is perpetuated because it’s easier to squeeze out incremental growth (or just survival), by doing the same things, the same way as they have always been done, than it is to blow up the paradigm and fundamentally “change the game.”

Blowing it up may not be necessary, but building a plan and process to transform the business is imperative for survival.

Yawn, yawn, you’ve heard this before, over and over. Well, I’m saying it once again. And, analogous to what they were saying in Washington DC about our budget deficit (but did not listen to their own advice), “you cannot kick this can down the road one more day.” It’s now or never. Step out of the “trees,” see and understand the “forest” and if you have not already done so, figure out how you can uniquely be in the consumer satisfaction business.