More on Peter Drucker and “What business are we in?”

I recently blogged about Peter Drucker’s famous question: “What business are you in?” Drucker, the brilliant business philosopher, used to ask this “naïve” question because he found that many businesspeople had a mistaken notion. Case in point being the railroad industry that lost out to air travel because it thought it was in the railroad business when it was in fact in the travel business. The implication being, that if you don’t know what business you are truly in you really can’t know who your competition is. 

I proposed that the toy industry was in the play business rather than the toy business and that, therefore, competition came from any entity that provided play, whether it be a video game company, an amusement park or even a playground.

I was approached by a reader who said: “I’m going to admit I’m not exactly seeing the implications you are for being a "play" company versus a "toy" company…How would toymaker’s business be different it were a "play" company?”

Good question! Here is my answer:

When Nolan Bushnell approached the toy industry in the 1970’s with the first at home video game “Pong” he was turned away. Why, because it was not deemed a toy. As a result, a new industry was born, “Video Games,” and the toy industry has suffered the consequences ever since.

What if the toy manufacturers who were approached recognized that they were in the same industry as Bushnell, the “Play Industry,” and that what he and they were producing was the same thing: Vehicles for play? They would have included video gaming into their mix of products and it would be Hasbro, Mattel or some other toy companies rather than Nintendo, Electronic Arts or Activision that would be generating untold revenues. 

What does this mean for the toy industry going forward? Here are just three thoughts:

·         Keep your eyes out for any new product opportunity that can deliver play. If it does, then it should at least be considered for inclusion in a toy company’s product portfolio.

·         Keep your eyes out for any company that is delivering play. If they are, they are your competition. Create strategies and tactics to compete with them for the consumer dollar.

·         If a stranger approaches you with a new and exotic idea for a play delivery system, don’t automatically turn them away. Your company and the industry can use the new blood and the new ideas.

What differences do you think it would make if the toy industry thought of itself in the play rather than toy industries?