Mind your own business. Define it deftly.

Bottlenecks are at the top, as the old saying goes. Most problems afflicting businesses start right up there – at the top!

I don’t mean the management or the entrepreneur who runs the business, though they are the chief captains of crime, in most cases. I am talking about how most businesses are defined, if they are defined at all. And how wrongly they end up being defined, when they do get defined.

The late Theodore Levitt said it so eloquently fifty two years ago in his path-breaking (and one of my favourite) article in the Harvard Business Review titled ‘Marketing Myopia’.

Pity most respected businessmen and revered MBA’s have the foggiest when it comes to defining what business they are actually in.

Last week I had to give a speech on Marketing at the Sivakasi Chapter of Young Entrepreneurs School, a unit of the Tamil Nadu Chamber of Commerce. A big chunk of the audience was entrepreneurs who owned match box manufacturing units. Sivakasi accounts for 90% of India’s match box production. It also accounts for 90% of India’s fireworks manufacturing. Reason why Sivakasi is affectionately referred to as ‘Kutti Japan’! (Little Japan).

Post the speech, during the open session, most match box manufacturers had a few questions to ask: ‘Why is our business not growing as much?’ ‘Why are we stagnating?’ ‘How do we grow as fast as we once did?’

I posed Levitt’s classic question: “What business are you in?’

The answer was on expected lines. ‘We are in the match box business’.

I then explained why the match box business was stagnating – increasing usage of lighters to light cigarettes, automatic gas stove lighters, induction stoves, lack of time, space and interest to light puja lamps, increasing use of emergency lamps that obviates the need for candles etc.,

Match box consumption is bound to come down though it might not die completely, is what I said. And then continued, “Get ready to face lesser sales and be prepared to take most of the blame.”

Obviously aghast, they retorted ‘How can we be blamed if the need for match boxes goes down due to technology and other reasons.”

I replied, “Because you have got your business definition all wrong. You guys are not in the match box business. You never were.”

Having got their attention, I espoused Levitt’s theory.

“Business should not be defined by the products that you make; but by the needs that you satisfy. You are not in the match boxes business. You are in the business of lighting flames. If you had defined it as such, you would have been the first to come out with cigarette lighters; you would have pioneered automatic gas lighters; you would have brought out innovations like ‘Home Lites’ did.”

“The product is just the means to satisfy a need. The need in itself had to be clearly articulated and should have guided the business that you were in.”

“Since you defined your business as making match boxes, you stayed put there. And failed to realize what was happening or foresee what might happen. So now that the consumers are moving slowly out of match boxes, you realize your business is stagnating. Even worse, you still fail to realize why.”

“Business must be viewed as a customer-satisfying process. Not a goods producing process. This is because product are temporary; but needs are permanent. A market definition, that’s why, is superior to product definition.”

“PepsiCo, for instance, is not in the beverages business. If they had defined it as such they would have stagnated long time ago. They realized they are in the business of quenching thirst. Reason why they didn’t stop with colas and came out with a range of thirst quenchers – orange drinks, lemon drinks, juices, mineral water and, amazingly though perfectly appropriate, vodka and wine!”

“They didn’t stop there. They moved into Quick Service Restaurants through YUM Restaurants – Pizza Hut, KFC, Taco Bell, A&E, and Long John Silvers. And for good measure they even moved into salty snacks – through Frito Lay.”

“Pepsi was in the business of quenching thirst. And the clear articulation of that definition led them to one success after another.”

When I finished, I was ready to face an onslaught of angry outburst from the entrepreneurs. Here I was telling rich, successful and experienced businessmen at their face that they were wrong.

But I was humbled when they nodded and said they accepted and were willing to take the blame. I was deeply touched by the applause when I sat down.

Did I light a spark in the minds of the match box manufacturers? I hope I did. Would they redefine their business and light up Sivakasi again? I wish they do!