Thursday, January 25, 2007

Thoughts on Successful Businesses

For the past few years, I've been thinking about a concise definition (or indicator) of successful businesses and I think I've narrowed the list down to two:

Successful Business, noun:
  1. an entity that has the ability to charge its customers a premium to comparable goods or services for no apparent reason.
  2. an entity that changes the way a vast majority of people live their lives.

The first definition includes companies such as Evian and Starbucks. It excludes fashion companies with no functional differences but discernable stylistic ones such as BMW, Mercedes, Nike, and so on. The key is to be able to charge more for the same amount of effort/value-add. Fashion companies arguably spend a great deal on superior branding and product development which warrent the premium. This definition acknowledges those companies who are able to get more for nothing.

The second definiton applies to companies such as Ford, RCA, and McDonnald's who respectively changed where people lived, what they did in their leisure time, and how quickly they ate their meals. These companies had an incredible amount of impact on the lives of many, many people.

Admittedly, my examples for the first definition are weak and the ones for the second definition are old. If you can think of any companies that fit my description or if you have a beter definition, please let me know.

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