How an organisation defines its business will impact everything it does - what customers it serves, how it serves them, who are its competitors, what it considers as external forces, what strategies it uses, and how it innovates.
However, companies often define themselves by the products they sell or by an inward-looking characteristic such as its business model or capability. They answer the question of what business they are in in a myopic way that obscures the realities around them, leading to missing emerging threats and opportunities.
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