Many people think that the automobile brought on the death of the buggy whip manufacturer. Not true!

Buggy whip manufacturing still exists today. But it’s safe to say the market for buggy whips isn’t what it used to be.

Many people believed the internet would be the end of printed newspapers. Again, not true. Many fine newspapers still exist, although they are under increased pressure.

What do buggy whip manufacturers, newspapers, and your business all have in common?

They all must understand the business they are in.

Some argue that buggy whip manufacturers could have survived and thrived if they had noticed the changes and responded more quickly. But if they continued to believe they were in the buggy whip business they never could. The only way they could have made the transition would have been if they knew they were in the transportation initiation business. A buggy whip initiated the motion of the horse and buggy.

Buggy whip manufacturers are not needed unless you want to initiate transportation via horse and buggy. For buggy whip manufacturers to truly survive they would have needed to fundamentally change their focus of manufacturing to starters for internal combustion engines. This would have resulted in a new target market for their products. Nonetheless, buggy whip manufacturers could have survived had they focused on their core business of transportation initiation.

Newspapers are not needed without advertisers (with all apologies to fine reporting and information dispersion). Newspapers are more likely to survive and transition with the times because they recognize they are in the business of aggregating audiences for advertisers. The delivery of news and information is a by-product of the need to bring audiences together for advertisers.

According to Peter Drucker, “The purpose of a business is to create and keep a customer.” I would argue that is only partially true. The actual purpose of a business is to create and keep the right customers. While newspapers create subscribers who are customers, they would be hard pressed to survive on subscribers alone. They bring together two groups of customers to create a value. Subscribers receive value from the information from the publication. The advertisers receive value from the exposure to the subscribers who are likely candidates for their products and services.

Regardless of the eventual outcome of the changes in the newspaper business, it is safe to say that many will survive and transition to a new model because they understand the business they are really in, aggregating an audience for advertisers. The subscriber base is essential to the advertisers and monetizing it is an added bonus.

What about your business? Are there ways to increase the value you bring to your “right customers” that would increase your business value? What is the real purpose of your business? Who are your “right customers”?

By answering these questions you can answer the ultimate question, “What business am I really in?” When you identify this core fact you’ll be in a position to dominate your marketplace.

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