The almighty dollar reigns supreme in the quest for business success. Organizations today strive to squeeze every last penny out of their customers and maximize all profit possibilities. That is simply the way of doing business. Right?
At the same time, however, the newswires are buzzing with tales of companies that are succeeding wildly beyond expectations by putting their customers first. A recent article in Fast Company magazine and a post at the Innovate Forum blog give two examples of companies that are succeeding wildly by breaking the rules.
Facebook has attracted nearly 19 million users in only three years by running an interactive social-networking website for young people. They've done so well that recently they were offered a nearly $1 billion buyout offer. (Which they refused.)
Another unusual success is Craigslist, a website that flies against conventional wisdom by simply striving to connect sellers and buyers in the easiest way possible. And of course, it's a runaway success, with over 450 cities worldwide and over 7 billion page views a month.
Yet, all business logic says that a medium such as Craigslist shouldn't work.
No ads, a simple, very plain interface, and the only profit coming from bottom-basement fees for job listing in 7 cities of the 450 (the others are free), and apart listing fees for NYC. And Craigslist barely does anything to promote itself. In fact, it doesn't even have a logo!
Facebook doesn't look great from a business perspective either. It has over three million users, but doesn't really make a direct income from any of them. Fliers, one of their purchase options, bring in a little money, but otherwise the site runs mainly on investments and sponsorships. Bad business model or not, it seems to work for Facebook. They're growing exponentially.
So, is Craigslist a freak success that inexplicably scrapes by despite its focus on the customer over revenue, or is it on to something? What about Facebook? How in the world are they succeeding on business models that are completely "flawed"?
Or is it conventional business wisdom--the emphasis on profits over
customers as the only way to succeed--that is misguided?
In very short amounts of time, Craigslist and Facebook have both grown dramatically while also gathering a fiercely-loyal following. They've gained name recognitions and gotten their users to do their marketing for them.
Most regular organizations, on the other hand, are dying for innovations that will set them above the competition. They're struggling to cut costs, spending tons of money on advertising to "differentiate" their products from their competitors, and irritating their customers when they send call centers overseas in order to cut costs. And above all, they're desperately searching for the next great idea.
Perhaps the focus on profit isn't such a perfect strategy after all!