In the 1890s, the majority of consumers in the Far East purchased their oil in blue tins supplied by Standard Oil, the dominant American company which had grown rapidly through its extensive control of production and distribution. However, when a competing organisation led by the Samuel Brothers was able to slash the price of oil by through a new transportation network built around bulk tankers, Standard Oil found it had an unlikely competitive advantage. Far Eastern consumers had become so accustomed to re-using Standard Oil tins for other purposes, including everything from roofing to opium cups, that they were reluctant to switch to a brand which did not come with the useful tin, even though the new competitor was much cheaper. The by-product was a sufficient influence on consumer behaviour to counter-act the more obvious factors of a rational market.
Reading this story in Daniel Yergin’s fascinating ‘The Prize’, an 800 page treatise on the history of oil, I couldn’t help but consider where it might be analogous to digital industry. In particular, it is a reminder of the importance of really getting to know your customers. While your company might consider its core business to be X, your customers may actually perceive your core business to be Y. The longer you continue to develop your strategy unaware of what you mean to your customers, the further your strategy drifts from being of relevance and value.