I almost never meet people on airplanes — I guess my headphones and open laptop discourage conversation. But my good friend Bob Berkowitz, CEO of Multivision Video, often meets important people on planes. He believes that his American Airlines upgrades are worth every penny because the person he’ll sit next to in business class will invariably become a client.
A number of years ago Bob sat next to Tom Monaghan. Bob says when he realized his seatmate was the Domino’s Pizza magnate he turned to him and said “I love your pizza. It’s my favorite.” Tom looked at him for a moment before disagreeing, pointing out that Domino’s really wasn’t Bob’s favorite, instead there was some little pizza parlor in Bob’s neighborhood that served better pies. “Maybe you like their fresh mozzarella, or their crispy crust, or their meatballs, but there’s something about their pizza you prefer.” Tom said.
Now, Bob is a lot of things – an innovative businessman, brilliant networker, savvy tech mind, lightening-fast Morse code keypunch operator, a great father, big brother, and all around great guy – but he’s no gourmand. Domino’s might very well be Bob’s favorite pizza after all. But Monaghan didn’t know any of this.
“You see,” Tom went on, “we’re not actually in the pizza business. We’re in the ‘it’s 7 p.m. on a school night and I don’t feel like cooking’ business.’ We’re in the ‘the guys just got here to watch the game and there’s nothing in the fridge to eat’ business.’ We’re in the ‘the twins’ birthday party is tomorrow and I’ve been working all week and haven’t had a moment to go to the store’ business.’ Our pizza doesn’t have to be the best. It has to be the best hot food you can get in 30 minutes or less.”
“Why else do you think we ran a 30 minutes or it’s free promotion? If we take more than 30 minutes to deliver, you’ve got lots of other options – you can pop a frozen pizza in the oven; you can call a local pizza parlor; you can drive through a fast food restaurant. But if you need to feed a crowd in 30 minutes or less, we’re the best.”
But if Tom Monaghan’s not in the pizza business, don’t you wonder what business you’re in?
Pizza Hut thought that just because they were in the pizza restaurant business, they could also be in the free pizza delivery business. But according to Wikipedia, in 1999 Pizza Hut began experimenting with a 50-cent delivery charge in Dallas-Fort Worth. By the summer 2001 they charged 50¢ in 95% of their company-owned restaurants and a smaller number of their franchises. What’s with that? Dominos promises 30 minutes or it’s free and Pizza Hut can charge extra for delivery? What Pizza Hut discovered was that they were in a different business than Domino’s, and that their customers would pay extra for their extra service.
So what business are you in?
If you’re in the business of distributing credit cards but your customers don’t have good credit, are you just handing out cards? Or are you selling something else?
If you work at a newspaper but the majority of your customers download your content on their iPads and laptops, what are you selling?
More and more, disintermediation is pulling the rug out from under the traditional businesses that define themselves one way but actually sell something very different than their business description.
If cars offer transportation, then how come no car company defines themselves as facilitating your movement from point A to point B? Instead, Volvo sells safety, BMW sells performance, Mercedes-Benz sells engineering and status, Audi sells design, and as of last week’s latest bankruptcy threats, Saab no longer sells anything.
The Center for Applied Research reports that between 1988 and 1998 Nike increased its share of the American sport-shoe business from 18 percent to 43 percent; yet an estimated 80 percent of the sneakers they sold in the U.S. are never used for athletics.
I know lawyers who don’t practice law, a doctor who is a bank president, and speakers who do so much consulting that they don’t have time to speak. I know a chiropractor who runs an online information business, and a professional musician who’s a school principal. And I’m an art director who spends much more time writing than directing anything.