Forgetting who the customers are

"The main reason business' fail is because they forget who their customers are." (Steve Arnold, Polaris Ventures)

This comment, given by a guest lecturer last week, immediately stood out to me. Its simplicity and clarity enabled me to understand its meaning at once - though I have limited business experience. As a designer, I realize how easy it is to focus on improving small details while losing sight of the whole. I also struggle with the pressure to serve a broad audience, which often accumulates in not serving any one group well.

The article, "What is Strategy?" gave language and examples to what losing sight of the client might looks like. One of the most memorable examples mentioned is Maytag. Pressured by dealers and worried about growth, they tried to extend their standard product line (laundry and dish washers) to include refrigerators and cooking products. Though the company grew, the return on sales declined. (Harvard Business Review, Page 76) Did they forget who their customer was? I don't think it is quite that simple, though in this example, they appear to have compromised for the sake of growth. The end result was an expanded company with less profits. They went from serving a select customer group well to serving a broad group with average results. I would argue that they lost confidence in who they were (strengths) and who they were serving. They gave in to the external pressure and to other people's ideas of success.

This leads me to revisit the definition of success - is it being the largest, most expansive company or serving a clearly defined set of needs well? This conversation reminds me of the film, Food Inc. I was deeply impressed by the organic, free range farmer interviewed. He spoke of his mission or desire "to just feed people so they can be healthy." His primary commitment is to health, not wealth. Therefore, he resists expansion and rapid growth that would lead to a short term higher profit - with a compromise on quality and values. His definition of success is linked directly to his investment in human health, not in buying more land, producing higher yields, and being able to compete with large corporations.

The article, "What is Strategy" can be summarized in one sentence - "The essence of strategy is choosing what not to do." (page 70) The organic farmer was strategic in that he knew what he wanted, who his customers are, and where to draw the line.