If anybody is asked, “What business is McDonald’s in?”
The obvious answer would be the business of French fries and burgers, right?
Wrong. McDonald’s is actually in the business of real estate. The lands on which the McDonald’s franchises are built are owned and rented to the franchise by the McDonald’s corporation. This smart business thinking delivers a whopping $4.5billion dollars in annual revenue.
What about Starbucks?
They are not in the business of selling lattes and cappuccinos. They are in the business of providing third spaces.
The ‘third space’ was a golden insight Starbucks uncovered about its audience. Home is everyone’s first space. Work is the second. However, Starbucks noticed a growing trend of people desiring another space to hang out with friends and business associates over a cup of light beverage. Boom! Starbucks, acting on this insight, optimized their coffee shops to become the third home for friends and business associates to hang out and chat over a cup of Starbucks. Sales went through the roof and the brand expanded into more countries, with the gospel of third spaces.
The business of your business is that inconspicuous insight that can accelerate the trajectory of your brand if properly leveraged.
Facebook is another interesting case study that aptly describes this phenomenal business concept.
Facebook is always on the lookout to buy any digital product that has the potential of getting users hooked on habits. When Facebook can’t buy such a product, they simply replicate the feature and bundle it with the products in the Facebook ecosystem. We see this happened with Snapchat. When Facebook couldn’t buy them out, they replicated most of Snapchat’s features on their apps (Stories, filters, virtual disguise, etc). The same thing happened with TikTok and Reels on Instagram. The word on the street is that Facebook has a Clubhouse look-alike in the works.
While the jury is still out on how ethical Facebook’s business approach is, I think one thing that is obvious is that Mark Zuckerberg understands the business of his business. Facebook is not in the business of shipping digital apps. It’s in the business of monetizing habits. You see an app, but Facebook sees digital opium!
If you have ever wondered why so many brands seem to tick all the boxes and yet their growth is stunted, such brands are yet to discover the business of their business.
How does this insight help brands to experience higher growth?
When you successfully uncover the business of your business, focus becomes imperative. A business can channel resources only to improve and reinforce the factors that matter to business growth. Lack of focus, which is a symptom of not knowing the business of your business, largely contributes to brands experiencing shrinking growth.
2. Sustainable differentiator
Brands that thrive in the marketplace are those who have discovered not just a differentiator that makes them stand out but a sustainable differentiator. Discovering the business of your business helps you to hone in on what makes you distinct. But that’s not enough, it must be a sustainable action plan that a business can execute in the long term.
3. Edge ahead and hedge against competition
One of the uniqueness of discovering the business-of-the-business insight is that it gives the brand an edge ahead of the competition and also provides a hedge against competition. A long-term execution of this insight, when discovered, protects a brand’s market share because it’s also difficult for the competition to replicate. So, it helps build an effective, more competitive strategy.
The business-of-the-business insight is not a simple thing to come by. Sometimes, it takes years of keen observation of markets, consumers, and the business itself to uncover one. Data and business intelligence usually come in handy because they help businesses translate data into actionable insights that can deliver competitive advantage. Keeping an open mind and experimenting with as many insights as possible can be very helpful in nailing the right insight; the actual business of the business.
Cover image source: Lisa