What business are we in? Who are our customers? These two questions surface your most important business challenges and opportunities. Even if you are an internal service provider in a bigger organization, these are still the right questions. Here is a simple case I am dealing with right now that focuses primarily on the first question. Retail banks started by thinking they were in the banking business. They kept your money safe, hence the big stone edifice and the secure vault as their important symbols. They loaned you money, provided convenient alternatives to carrying cash, and paid you interest for holding and using your money.
Ever so slowly my retail bank is realizing that it might be in the personal financial management business. I want to manage all my financial transactions electronically and know where I stand financially at any point, how much money I have to spend on what, who I have paid, who has paid me. I want to do all of this easily (a) on one website without visiting a physical bank location, (b) with all the transactional information captured without my intervention, and (c) with no worries about the security of my savings or the theft of my identity.
Other competitors in this business are solving some of my problems but still operating in parallel with my bank. I can download my banking transactions into Quicken or Mint.com to manage my personal finances, but despite some integration, I still have to do duplicate data entry if I want useful analysis or reports. Why can’t the bank just provide this service on its own website? I can also use Paypal and Popmoney to help me expedite electronic transfer via the web but these services aren’t tightly integrated with my bank either.
More surprising is that when my bank adds a great new feature, it still forgets it’s in the business of helping me manage my personal finances. I can now deposit a check by taking a picture of it with my smartphone and submit it via a little app. Once the deposit is confirmed, I can shred the check. This is very handy, except if later I want to see in my online register on the bank’s website who wrote me that check I deposited, I can’t. All I can see is the date and the amount of the deposit. What good is that? This is doubly frustrating because I can actually click on a check number in my transaction history on the bank’s website and see a scanned picture of any check I have written to someone else once they deposit it and it clears.
So if I can click to see a picture of a check I have written to someone else, why can’t I click to see a picture of a check I have deposited myself via my smartphone? I supplied the picture of the deposited check to the Bank in the first place, so I know they have it. If they actually want me to use the remote deposit feature rather than bringing the check to the bank, then make the service meet my needs. Even one of the newest high-profile web-based banks operates the same way. The only conclusion I can draw is that despite all their innovations, retail banks are really not customer-focused in defining what business they are in. They must still think they are in the banking business for their convenience, not in the personal financial management business for mine.
In next week’s blog, we will look more closely at the “who are our customers?” question.
Note: It’s a good idea to re-read Ted Levitt’s 1960 seminal article, Marketing Myopia, periodically (yes, pun intended). You can find it as a PDF for free on many b-school websites through a Google search or order it from Harvard Business Review. Levitt’s classic and often quoted example is:
The railroads did not stop growing because the need for passenger and freight transportation declined. That grew. The railroads are in trouble today not because that need was filled by others (cars, trucks, airplanes, and even telephones) but because it was not filled by the railroads themselves. They let others take customers away from them because they assumed themselves to be in the railroad business rather than in the transportation business. The reason they defined their industry incorrectly was that they were railroad oriented instead of transportation oriented; they were product oriented instead of customer oriented.