“So what exactly does your company do anyway?” A question often asked and as any founder out there knows, one that can be challenging to answer during the early days of a start-up. Having a simple answer to that question can make those small-talk conversations easier and sales conversations more productive, however there is a trade-off between simplicity and short-changing your company’s value. A great way to simplify this answer is to focus on the problem your company solves rather than how you solve it, since you may otherwise run the risk of unwittingly creating a paradigm that limits your competitiveness.
If you are building a business with a sustainable competitive advantage, the true answer to ‘what’ you do is necessarily complex, since the business runs the risk of becoming a commodity if there isn’t a constant evolution of products or services. There is a good argument to be made between staying true to your core competencies and diversifying your offerings. That said, if an organization defines itself by the problem it solves rather than the way in which it solves that problem, then things become a lot clearer.
Let’s take the financial services industry as a great example of this, and Scotiabank specifically for illustrative purposes. Thirty years ago, banks were largely brick and mortar locations where you deposited money and took out loans, but by focusing on the problem they solve, “… helping our clients achieve their financial goals”, Scotiabank began to broaden their offerings. They began to acquire investment dealers, trust companies, offered more advisory services, online banking and mobile services. In fact, today most of largely us know Scotiabank as another app on our phone. Despite this already-huge shift into technology, they are still planning to invest another $1.3B into new technology solutions over the next 3 years. If we hid the company name and saw that a company was going to spend this huge sum on technology development, we would probably assume that they are a well-funded tech company as opposed to a bank that has been around for more than 100 years.
This same trend is occurring in marketing, transportation, food service and almost every other industry you can think of, particularly in service businesses where customer experience is a large part of the competitive equation. Regardless of whether your business is serving consumer or business markets, customers are now more than comfortable with technology; they expect it to be part of their experience. You’re going to send me a package and it will be here in 5 days? Great, give me the tracking number so I can follow it along the route on my phone!
To emphasize the importance of sales, an entrepreneur once told me that “you are running a sales and marketing company that also happens to do X”. In my opinion, any company that wants to scale and intends to follow Wayne Gretzky’s advice of “skating to where the puck is headed” needs to view themselves as a “sales, marketing and technology company that also happens to do X.”
To build a sustainable competitive advantage, organizations need to focus on what problems they solve, rather than how they solve them. Investing in technology to complement existing offerings by improving efficiency and/or customer experience is one way to ensure you stay one step ahead of the market.