A long time ago, my friend, who was the CEO of Thomson at the time, said that success accrues to companies that produce products which are consumed like air, not haircuts. Let me clarify what he meant. In short, there two types of businesses:
- The first category sells products that are like haircuts — their customers purchase them only infrequently — once a month at most, if not less often, and
- The second group creates products that are like air – their services are inhaled all day long by their customers – either at home or at business.
When you think about it, it is easy to see which companies make and sell air and which ones deliver haircuts. In the first category, companies like GM, Whirlpool and GE reside. In the latter, eBay and Salesforce.com exist. I like my car — although it is from BMW, not GM – but I couldn’t live without my Google desktop and my NetSuite dashboard.
As you think about your company in today’s highly connected, increasingly flat world, there are two questions you need to ask:
- Does your company make and sell hair cuts or air, and
- If you sell hair cuts, what portion of your product or service is like air vs. haircuts
This second question is not easy for most enterprises to answer, given most companies were built to make and sell things (hair cuts), not create information (air). Worse, most companies don’t even make good products or services anymore (e.g. they give bad haircuts like GM, Ford and others) and know little about their customers oxygen needs. Consequently, many of their customers now go to different hair dressers even for their monthly hair cuts.
But there is a solution. Every company has a group of people – customers, employees, partners, investors – who want desperately to be connected to each other for the information (e.g. air) they need to be successful at home and at business.
Given this reality, there is hope for every enterprise. By simply connecting your company’s constituencies to each other and the information they need, they will begin to create the future energy your company needs to prosper – user generated content. In short, your company’s social network, and the content they create, is the oxygen you need for your people and yourself to be successful in the ‘air’ economy.
It’s time to stop giving bad haircuts.
- Barry 9/2/06