The Next Engine: Beyond Campaign Thinking

Phil Wainwright at ZDnet writes about Microsoft’s “software-plus-services” mantra and mostly grinds it to dust. Along the way, he reminds us of Theodore Levitt’s famous essay in the Harvard Business Review. (Well, the essay isn’t famous, but the takeaway is: Railroads failed because they didn’t understand they were in the transportation business. They thought they were in the railroad business.)

It’s important to understand what you really do. Sports Illustrated did itself a huge disfavor by believing it was in the magazine business. ESPN crushed Sports Illustrated by understanding what was important were sports, not media. If you don’t believe me, ask yourself this: if I say sports, do you think of ESPN or SI first? Once ESPN “owned” sports, it was easy for them to launch a magazine. Conversely, by sticking to its magazine roots, SI couldn’t expand outwards to be a cable channel.

That doesn’t mean you will always succeed by defining yourself by a category like transportation or sports. Starbucks seems to have lost its luster lately by forgetting what business it was really in. Starbucks is in the coffee business. And it lost sight of that. As Eve Tahmincioglu writes in the article I linked to says,

“I recently visited a local Starbucks and I knew I was in trouble when the barista handed me my cup of coffee in three seconds.

OK, I pay $2.80 for a tall latte, so the least the barista can do is take some time frothing up the milk. If nothing else it would help me feel a bit better about the extravagant purchase.”

All of this has great bearing on marketers and their agencies. The agencies need to make sure their clients understand the true business they’re in.

Agencies need to figure that out, for themselves, too. Pronto. Given the upheaval in the media and advertising world, you (as agency/marketing types) really need to be able to answer that correctly. Or you’ll wind up being the B&O railroad of the 21st century.

Tags: ESPN, Microsoft, Sports Illustrated, Starbucks