Sloppy talk means executives are lost in space

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The corporation’s unique identity is defined by its distinctive capabilities. The matching of distinctive capability to market and industry is the process that defines “our space”.

At a business conference recently, thought I would scream if anyone repeated again the phrase “in the space”. But the room would have sounded like the interrogation cells of Guantánamo Bay. We seem to live in so many spaces. Great corporations operate in the digital space, make deals in the merger and acquisition space and lose money in the structured credit space. Their leaders go home to enjoy a few moments of quality time in the domestic space.

We learn cool jargon from our children, and the connection from MySpace to the structured credit space, although convoluted, is short. But loose terms and clichéd expression are generally signs of sloppy thought. So it is here. The phrase is popular because the boundaries between business activities have been shifting. To talk about what a company is doing “in the space” avoids precision about the implications of these changes or the rationale of the business strategies.

For more than two decades, companies have asked “what business are we in?” or “what is our core business?” But because the term “business” has no specific meaning, corporations could answer such questions in any way they chose. The characteristic of MySpace is that it embraces pretty much anything people want to place in it.

Industrial boundaries are indeed breaking down, but that does not mean that anything goes. Vague terms such as “business” or “space” typically conflate the market – where related customer needs are satisfied – with the industry – which groups together related production activities. Such confusion leads to the belief that because oil, coal and wind can all cook our dinners and power our television sets, the same companies will be equipped to manage all these activities. So the oil companies that once thought coal mines were their business now believe that wind farms are part of their space.

The concept of the digital space invites the notion that if a company is doing something digital – and few companies are not – everything that might be digitised is on its agenda. Committees of middle-aged telecommunications executives try to identify the crazes that will preoccupy teens next year. A few minutes in MySpace would surely dispel the illusion that they ever could.

The age-old demarcation between origination, publishing and delivery remains relevant in the digital space. Creative people generate material (and, in today’s digital space, so do uncreative people). Manufacturers and service providers distribute their work. Publishers co-ordinate these functions, organise the financing and manage the marketing. The talents required of authors, printers, booksellers and editors are distinct in new media as in old.

What distinguishes MySpace from YourSpace is my capacities and the interests and activities that follow from them. MySpace overlaps YourSpace when we use similar methods to attract the attention of the same people. Similarly, the corporation’s unique identity is defined by its distinctive capabilities. The competitive battleground is defined by its strategic group, the companies with similar strategies against whom it benchmarks its performance. What differentiates a company from its competitors will continue to differentiate it even after those competitors realise the benefits the originating company derives.

If these distinctive capabilities result from relations with consumers – through brands and reputation, for example – they dictate the markets in which a company can derive competitive advantage. If distinctive capabilities are the product of production capabilities – the structure of assets or ownership of technology – they dictate the industrial activities that yield competitive advantage. The matching of distinctive capability to market and industry is the process that defines “our space”.

George Orwell wrote that the cure for the use of the double negative was to memorise the phrase “a not unblack dog was chasing a not unsmall rabbit”. William Blake did not aspire to create Jerusalem in England’s green and pleasant space. If business speakers memorised that phrase they might cure themselves of teenage argot.

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