What Business Am I In? A Tale of Sports and Chickens
February 2nd, 2013
“What business am I really in?” That’s the classic question that many CEOs forget to ask. Too many define their business too narrowly. They don’t understand why their customers buy from them. And they end up in bankruptcy court.
For example, Kodak thought it was in the film business and didn’t see digital cameras until it was too late. Most Kodak customers weren’t devoted to film; they just wanted to see sharp images. Tower Records thought it was in the record and CD-selling business and didn’t understand that consumers simply wanted to listen to music and were quite happy to hear it through digital downloads.
Occasionally, a leader will think broadly enough to get ahead of the curve. Listen to this compelling example. In my book Lasting Lessons from the Corner Office, I tell the story of the brilliant and innovative David Sarnoff. Sarnoff, who put RCA and NBC on the map in the 1920s, was basically born a monk in Minsk. He came to America in 1896 with no knowledge of English. By age 15, while working in New York, he met Marconi and soon developed the idea of putting the radios into homes.
But Sarnoff didn’t stop there. He realized he was not simply in the radio business; he was in the sound business. He negotiated to put radios in GM cars. In 1928 he negotiated with Joseph P. Kennedy to wire movie theaters with speakers, just in time for Al Jolson’s The Jazz Singer. And he turned sports into a broadcasting enterprise, hooking up a Jack Dempsey fight to radio transmitters in 1921, allowing 300,000 people to listen to Dempsey’s punishing jabs knock out the French boxer George Carpentier.
Each year around the Super Bowl we marvel that companies will pay $4 million for 30 seconds of broadcast time. Even more marvelous: David Sarnoff foresaw this phenomenon back in 1916!
While recently giving a speech in the Dominican Republic, I came across another story of an innovative CEO. In the 1950s, Leon Bloom was a chicken man. He ran a small family business in Georgia cleaning and disinfecting hatcheries and chickens. Today, as in the 1950s, many chickens are dunked in chlorine baths to keep them from spreading germs to the dinner table. Bloom was a part of a two-man sales force for his company.
Bloom could have stuck with chicken wings and turkeys. But as he traveled with his supply of disinfectants, he wondered what else they could be used for. He also noticed that, amid the new prosperity of the Eisenhower 1950s economy, many Americans were upgrading their backyards. What did he see? Swimming pools! Hollywood movies like Esther Williams’ Million Dollar Mermaid turned home swimming pools into status symbols. Above-ground, below-ground and even plastic and rubberized blowup pools dotted lawns. (And this was long before hot tubs and Jacuzzis came along.)
Bloom figured that if his chlorine mixtures worked well for chicken baths, they could be adapted for swimming pools. Today his company, Biolab, is still based in Georgia and one of the world’s leading suppliers to the pool and spa industry. It all started with chicken wings.