Summary
1. What we need to do in a business (that is, our strategy) is conditioned by what we think that business is. An essential element of any strategy should be the clear and explicit definition of the business the company is in. Formulating this definition should be the starting point of any strategy-planning session. Once you have a specific definition, the actions you need to take become apparent.
2. There is no right or wrong way to define a business. The trick is to identify a definition that suits your company's unique capabilities. Doing so allows the company to maximize the impact of its unique capabilities relative to competitors and gives it the competitive advantage it needs to be profitable.
3. Once accepted, a business definition must be questioned continually. As business conditions change, another definition may become more attractive. Unless a company is willing to question its current definition and explore alternatives, these potentially more attractive definitions will never be discovered.
4. Often the most dangerous competitors are maverickscompanies that break the rules of the game. What allows them to "see" a way of competing that's different from that of established competitors is a different starting pointa different definition of the business. The only way to compete with mavericks is to identify their "new" behavior early on in the game. To do that, a firm must be on constant alert. It is only by correctly identifying their business definitions that you will be able to make sense of their behavior as well as recognize their maverick behavior early on in the game.
5. A business definition that works well for one firm will not necessarily work for another; there should be no rush to imitate. Each firm should adopt the definition that makes sense for itself, given its unique capabilities.