What is at the core of your company – product or idea?

What is at the core of your company – product or idea?

June 29th, 2011 // 9:42 am @

What is at the core of companies that survive and prosper for decades, and those that are great for a while and then die?

What makes a company successful in the long term? It is often at the core of how they see themselves in relation to their market. Do they understand their relationship with their market in terms of a wider “idea” of how they are positioned within the market that transcends mere products, or do they see themselves more simply as the purveyor of a particular product. The former tend to prosper, the latter die when their product dies – as all products eventually die,

Example 1 – Apple

Apple is an “idea” company. It understands its relationship with its market at a level beyond merely selling products. They provide user-friendly, stylish, very well built technology to the top part of the market. This is an “idea” that transcends mere products; it can work with computers, phones, iPods, cloud computing, and beyond. It allows Apple to be constantly building new revenue streams in new markets while sticking to and strengthening its core brand position in the public’s mind.

Example 2 – Microsoft

Microsoft is a product-based company. It makes its money from Windows, which is a product that will not be successful forever. When this product is overtaken by newer technology as always happens eventually it is likely Microsoft will fade. Microsoft lacks a real relationship between itself as a company and its market. And it is noteworthy that Microsoft has been weak at trying (as it has done repeatedly) to widen its offering to the public, and to reduce its reliance on software. Its moves into new products have normally been expensive failures (such as it’s attempts to get into the Smartphone phone market) in stark relation to Apple who has moved into new markets with massive success.

Example 3 – Polaroid

Polaroid was a product company, massively famous and successful for a product not an idea, and when the Polaroid camera was overtaken by technology the company failed. Had they managed to position themselves as the maker of high-technology photographic equipment, as Canon and Nikon did, maybe they too could have not only weathered but profited from the massive technology changes within that industry.

As the market changes and develops, Apple can keep launching new products in line with their “idea” and Microsoft will struggle to do so. The public understands idea companies, and if you ask them to describe a company, they will do so in terms of the idea, not in terms of the product. Ask most people about Apple and they will talk about up-market electronics, possibly with a product example, but they will normally annunciate the idea. Ask them about Microsoft and you will normally get the answer: “Windows”.

Maybe if Microsoft had a big “idea” they would do better. Possibly Microsoft could be the Ford of the technology world, the supplier of reasonably priced products to the mass market. Ford is understood as a vehicle company. We know they are no Mercedes, and they do not claim to be. They bring features first seen on more expensive cars to a mass market at mass market prices.

Is that what Microsoft should be doing? Bringing affordable reliable technology with the features mass consumers aspire to own, to the mass market? I suspect there is a market for an IPhone clone with 90% of the features at half the price.

Being a product-driven company has historically been dangerous in our ever faster moving business world. It is now a very dangerous place to be.

Category : Blog &Business Strategy

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