Rise Performance Group

The Question Leaders Often Fail to Ask


Peter Drucker, one of the great business minds of our time, loved to ask the question:  “What business are you really in?”  In his book, The Practice of Management, he wrote, “That the question is so rarely asked – at least in a clear and sharp form – and so rarely given adequate study and thought, is perhaps the most important single cause of business failure”.

Blockbuster Entertainment provides an example of what can happen when leadership does not adequately consider the business it is really in.  Blockbuster was founded in 1985 and peeked in 2014 when it recorded over $5 billion in revenue with 9,000 stores and 60,000 employees.  The fact that this company has been literally wiped from the face of the earth is concerning.

How do we prevent the same thing from happening to our business, our business units or the business functions we lead?  The answer is to continually challenge what business we are really in.  Had Blockbuster leadership been asking that question maybe they would have come to the conclusion that they were more than a video rental chain.  Maybe they would have considered themselves an entertainment company and acted in 2002 when they had a chance to buy Netflix, the company many believe to be at the root of Blockbusters demise, for the reported $50 million asking price.  In 2014, according to their most recent SEC filing, Netflix generated over $5 billion in revenues and over $250 million in net income.  That could have been an investment that would have paid off for Blockbuster.

A company that appears to be doing a great job asking the right questions is Grapevine (Texas) based GameStop.  This company generated over $9 billion in revenues in 2014.  However, they are not resting on their laurels – they are challenging their business model.  Rather than looking at themselves as a video game rental business, they are viewing themselves as a specialty retailer.  They are leveraging capabilities such as selecting real estate, developing retail talent, maximizing a 40 million-member loyalty program, and adapting their buy-sell-trade model beyond video games.  Click here to learn more about their approach.

Whether leading a company, a department or yourself, doesn’t it make sense to take some time to explore the question, “What business you are really in?”  It’s been said that if you want better answers, be sure you and your team are asking better quality questions.

What questions are leading you to breakthroughs?  What business ARE you really in?  Comment and let us know!

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