There is something going on that will increasingly complicate the lives of the analysts, investors, regulators, and lawyers whose lives depend on a tidy classification of companies by industry.
As the research in my upcoming book indicates, the most competitive companies today do not try to fit themselves into standard industry lines. They know exactly who they are and what they are good at, but these things are no longer dictated by standard industry codes set by the Interpretations Committee (SIC).
Is Google an advertising, software, online-service, payments, or mobile phone business? Is Apple a computer, software, design, or digital entertainment company?
Last week in Boston, I visited a company that precisely illustrates this trend. MaidPro runs one of the U.S.'s largest maid service franchises. Its more than 100 franchisees run independent businesses composed of teams of maids who travel to clean clients' homes. They currently conduct more than a half-million cleanings per year and generate nearly $50M in revenue.
As the elevator opens into their offices just steps away from the sports stadium that hosts the Boston Celtics and Boston Bruins, conspicuously absent are chlorine fumes or bottles of Windex. Instead one is met with a setup out of Silicon Valley: colorful walls surrounding open-space cubicles in which young MaidPro workers manipulate propriety software. You see, while MaidPro is a maid service business, it is also a software company.
It wasn't always that way. The company's founder, Mark Kushinsky, shared with me that he started out planning to simply run a maid service business. As he got better at running it, he was inspired to try turning it into a franchise. That was the first time Mark really experienced the difficulty—and potential genius—of strategically crossing industry boundaries. "My big 'aha'—or really 'uh oh'—was that franchising is a completely different business than the underlying cleaning business."
It requires a different skill set and focus. A franchisor's purpose is not just to serve end users; it must also serve its franchisees. This means not only making sure the bathrooms and kitchens are clean, but also that maids are happy, customers can sign up easily, and everything else that goes into ensuring franchisees are running the best business they can. MaidPro's core customers were no longer people with dirty homes; they were entrepreneurs seeking to build a maid service business. This shift brought MaidPro closer to its real purpose: figuring out how to make a service business deliver better results more efficiently.
This led MaidPro to begin developing software that could do things like suggest dates to new customers for cleanings that would reduce the travel time of maids. The software produced better results than Mark and his team could have hoped. Because maids traveled less, they could do more cleanings, so they earned more money, so they were happier, so their bosses' franchises experienced lower turnover, so they were more profitable, so they could pay more and make maids even happier. The software set off a virtuous cycle by triggering what in my new book I call a new "point of leverage" that competitors overlook. As Mark built MaidPro, his software grew with it. It became so powerful that he sold the software as a separate company called ServiceCEO.
Now Mark is at it again, developing a new software platform, this time built in the "cloud." This enables franchisees to automate and outsource things like new customer sales, routing, scheduling, and invoicing, thereby saving them time and creating a better experience for customers and maids.
Mark says he thinks of MaidPro as a software company, not a maid service company. Because MaidPro's competitors hold a more traditional view, they don't expect to be attacked by a software company and so will likely have difficulty competing with this "outthinker."
Just as lions fluster their prey by attacking from two fronts, outtthinkers fluster competitors by attacking unexpectedly across industry boundaries. They defy you to categorize them.
Is MaidPro a maid service company, a franchise company, or a software company? Its values, culture and focus indicate that its true purpose and competitive advantage lies somewhere in their intersection. If you want to
make it more difficult for your competitors to understand where you are heading or to copy you, choose not to categorize yourself within standard industry bounds. Study and seek to internalize the strategic dynamic that outthinkers like Google, Apple and MaidPro do. Ask yourself:
- If we are not in the industry others think we are in, what industry ARE we in?
- If we look at what we love to do and can really become the best at, what other industries could we apply this to?
- How can we cross industry boundaries to force our competitors onto multi-front battles?