John Hagel had a great riff at the Innovative Marketing Conference today on companies not understanding — or deciding — what business they’re really in. According to Hagel, there are three fundamental types of business:
– Infrastructure management: companies that do routine, high volume tasks, such as manufacturing, transportation, call centers, etc.
– Product innovation and commercialization: companies that focus on developing great new products and services
– Customer relationships: companies that based on serving specific customers’ needs.
Hmm…but don’t many companies do all three, or at least two of three? Yes they do, but according to Hagel that’s a problem. It’s hard to do more than one of them well, he said, because they each require different cultures, economics, and skills. All three can be profitable, but only if they are managed as a focused business, and companies that try to do more than one typically underperform because they fail to see the inherent internal conflicts.
So what business are you in?