That's why so many companies waste so many billions of dollars diversifying. They think their main business is in danger of going the way of the buggy whip, but very rarely does technology overtake traditional markets as fast as the company owners fear.
For instance, it's easy to argue that the days are numbered for newspapers and TV stations. Viewership for network affiliates is deteriorating at an alarming rate, and new computerized classified advertising services could siphon this bread-and-butter category from newspapers' shrinking ad linage.
But network television still provides the most efficient way to reach a mass market, even though cable has eroded the network audience (keep in mind that cable is eating into its own numbers; CNN on a 24-hour average now registers less than a share point).
Newspapers still represent very formidable brand names that will continue to give them an advantage over local Web sites; a paper's own Web site will drive business and readers from print to electronics, and back again, something upstart Web services can't do.
It doesn't pay to bet the ranch on milking your core business. At Eastman Kodak Co., the old guard lost faith in traditional photography. Here's how Forbes put it: "Panicking at the prospect that new digital technologies would make obsolete nearly everything Kodak did, they committed huge resources to diversification: drugs, clinical diagnostic machines and batteries. Meanwhile, they neglected huge new opportunities in photography like the explosion in new 35mm film that followed the introduction of the 35mm 'point-and-shoot' camera. It was a classic dog-with-bone story."
George Fisher, chairman of Kodak, was brought in to turn the company around in late 1993. "By the time I came, we weren't investing in the base business," he told Forbes. "Think of the signal you send to the people in your core business when most of your actions have been diverting resources to other areas like health or consumer goods."
For a while Kodak did great. It concentrated on improving traditional photographic products, put its bucks into new imaging technology and stepped up to lead the move to digital.
But the company couldn't quite get away from embracing the new technology, when all its customers really wanted to do was take pictures the old-fashioned way.
Kodak pushed hard to introduce a new digital-and-conventional camera technology it called Advantix. The cameras, which are fairly pricy, allow you to switch to three different size shots on the same roll (including wide angle). They also imprint digital information about the pictures you shot, lighting conditions, date, etc.
There's good news and bad news for Kodak here, based on what's happening in my family. I bought my wife, Merrilee, an Advantix for Christmas, but alas, she's not using it. That's the bad news. But the good news is she's taking more pictures than ever with her conventional camera because she and my daughter Heather have become fanatics in something called Creative Memories.
Creative Memories is a Tupperware-like company that offers a range of acid-free products to help you put together really neat-looking albums, including stickers and die-cuts of letters and numbers and things to commemorate special occasions-birthday cakes, tennis rackets, golf clubs and trophies. The company offers an idea book full of various layouts for your pictures and holds classes to teach you the rudiments of how to design your album. Heather now takes a roll of film specifically for her Creative Memories projects.
The moral of the story is that most people don't care about fancy new technology with all the bells and whistles. Marketing is about giving your customer a fun and creative way to use your product-that's the way to protect your core