Business Errors and False Assumptions

False Assumptions and Business Errors

According to Warren Buffett, hindsight in business is always 20/20. Most businesses in retrospect understand where they went wrong. It is a rare business that can anticipate shifts in market demand and problems which arise. According to Mackay (2014), even though a business cannot predict the future, it can take proactive steps to at least better secure its position in customer’s lives and hearts, including having an easily remembered and identifiable brand name and image, offer a unique service that customers desire, and to know how to communicate the products and services work for customers and how the products and services are used in customers’ everyday lives.

Quite often, businesses assume that customers know the value their products offer, but this is not always the case. The first fatal business error of many organizations is the assumption that the business knows the identity of the right target customer, and that customers are aware of the business. But customer needs and demographics are always changing. An excellent example of this is the declining consumption of soda. While once a popular beverage, because of health concerns and the availability of more options, a much smaller and narrower demographic than in the past consumers regular soda. Assuming that companies do not have to consider their business processes and the options the organizations offer customers is why changes in technology resulted in the bankruptcy of Blockbuster, the video rental company, while Netflix, which seamlessly shifted to streaming options, remained thriving and healthy. Knowing how and what consumers want, and how they are consuming the product in a niche way is critical for survival in today’s marketplace.

To remain responsive to contemporary customer needs also demands smart, forward-thinking leadership which does not simply fall back on past assumptions. Wall (2016) offers cautions about assumptions regarding internal business operations, stressing not to make snap judgements about who makes the best leaders, not assuming the extroverts are inevitably the best leaders, and also to avoid the assumption that individuals who work the longest hours are the most capable and dedicated employees. Many companies focus upon loyalty and promoting from within, or rely upon outside consultants. But understanding the customer base and hiring employees who reflect their assumptions is often important to understanding how the product is used, particularly for a company expanding into a new nation.

For example, one reason Starbucks has been so successful in its international expansion is partnering with local businesses, and offering a menu tailored to the national population. Flexibility and understanding if customers prefer coffee or tea, eating out or eating in, savory or sweet foods enable Starbucks to still offer its core brand of a café where people can get a hot or cold specialty beverage and something to eat, but also ensures that the company meets the customer where the customer is; companies which fail to do so, and simply impose the same product on customers are likely to struggle.

Another company which has reflected changes in how consumers consume the product and consume media is Pop Tarts. Pop Tarts, as the name suggests, were originally designed to be toasted. But the company also knows that people eat the product on the go, and the company’s packaging of two tarts in a silver container makes it easy for people to grab the product and run. The website even includes recipes involving Pop Tarts to encourage creativity with the product, such as freezing the tarts or topping them with ice cream. This reflects an attempt to both reflect the reality of how consumers eat the product, not just the original intention, and also encourages greater consumption of the product by acknowledging the fact many people use it as a treat. In contrast, cereals (another breakfast product) are declining in consumption, as fewer people have time to sit down to breakfast.