What business are you in?
Hint: You Probably Don’t Know
What business are you in?
Sounds like a dumb question, doesn’t it? Sounds like a question with an easy answer, doesn’t it?
Well . . . maybe not.
One of my favorite stories on this topic comes from Ray Kroc, the founder of McDonald’s. As legend has it, he was speaking at an MBA class at the University of Texas. After his speaking arrangement, the students asked Ray to join them for a few beers, to which Ray obliged.
“What business am I in?” Ray asked, once the group all had their beers in hand. No one answered, so Ray asked the question again. “What business do you think I am in?”
The students laughed, and finally someone said, “Ray, who in the world doesn’t know that you’re in the hamburger business.”
Ray chuckled. “That is what I thought you would say.” He paused and then quickly said, “Ladies and gentlemen, I’m not in the hamburger business. My business is real estate.”
Years ago, when I was in the mortgage business, I used to ask my team this question all the time. At first, they would look at me like I stuck my thumb in their soup.
Well it turns out I wasn’t quite that big of a dummy and it turns out it is an important and insightful question. Important and insightful REGARDLESS of the business you are in.
Here is why:
Although we were called a ‘mortgage company’, that was NOT the business we were in . We didn’t write the underwriting platform that FNMA or FREDDIE MAC administers to lenders nationwide. We didn’t calculate the algorithms and market movements that determined the increase or decrease of interest rates. Once we ‘sold’ a mortgage to another lender we weren’t even responsible for the payment performance of the borrower.
These responsibilities and duties fell to the people and concerns that are actually in the ‘mortgage’ business. All the issues of underwriting loans, funding loans, setting rates, specifics on home appraisals and credit were designed by the larger platforms that puts the mortgage industry in orbit.
So what business were we in?
I called on builders and realtors because they were the primary source of referrals for Paul Karem Mortgage. In a sense, although we had a massive responsibility to the actual borrowers, the builders and realtors were a primary customer. So, I always emphasized to the team that “we are in the realtor service business.” Other than making sure our borrowers were treated to service excellence, with the very best advice and counsel, our co-mission was to see to it that the referring realtor and builder were well-informed, up to the allowances of the law on the processing of the mortgage that they had referred to us.
This is true of just about any business out there in the market. If you are in the HVAC business and you take care of maintaining service contracts on people’s homes or businesses, I’ve news for you. You are in the RESPONSE business, regardless of how much your technicians know about air conditioners and heat pumps. If they can’t deliver that information to the customer in a cordial and skillful manner, all that knowledge is for naught.
If you are in the trucking business, you are in the TIME business. You are in the business of serving your customer by making deliveries on time . . . not the trucking business. Even though that wording may be included in the name of your firm that’s not why you are in business.
If you own a fruit stand, you aren’t in the fruit business. The pickers and growers are the ones in the fruit business. The fruit stand owner is in the business of selling delicious, fresh fruit. Otherwise, there’s no sales.
If you are in the IT repair and support business you probably have a lot of very smart, young people working for you. Make sure they know they are in the response business every bit as much as they are in the business of filling their brains with knowledge about the complicated technologies that they are tackling and must master.
Like it or not those are the facts.
And the facts all come back to one work.
REGARDLESS of the business you are in.