It may seem like ancient history, but in a landmark 1960s article in the Harvard Business Review entitled “Marketing Myopia”, Theodore Levitt put forward the thesis that most companies take too narrow a view of the business they are in. He challenged executives to re-examine their corporate vision and take a wider perspective of the markets in which they compete. His argument was that organizations miss opportunities they are presented with simply because they fail to take a wider view.
An example he uses is the railroads whose failure to grow was due to a limited market view. The problem was that management saw themselves as being in the railroad business rather than the transportation business. There was a growing demand for passenger transportation but it was being filled by cars and airplanes, non-traditional competitors to the railroads. Management was railroad oriented instead of transportation oriented, product oriented instead of customer oriented.
Many credit Levitt with ushering in the era of modern marketing with many concepts we consider commonplace today. Levitt’s argument is that what usually happens is that management emphasizes selling, not marketing. The problem is that selling focuses on the needs of the seller, but marketing concentrates on the needs of the buyer. For companies to grow, he argues, they have to define their industries broadly to take advantage of growth opportunities. They must understand and act on their customers’ needs and desires, not bank on the presumed longevity of their products.
He says that an organization must learn to think of itself not as producing goods or services but as doing the things that will make people want to do business with it. And in every case, the chief executive is responsible for creating an environment that reflects this mission.
In the context of the automotive industry, product is key and I am encouraged by many of the technologies that are being incorporated in new vehicles being launched since they do seem to address genuine needs that customers have told us about. Who would complain about advances in safety, fuel efficiency, or navigation?
But a different perspective needs to be established, and this perspective must be squarely focused on customer needs. Does any new technology considered for a new model truly address a need that customers have or is it just cool technology that the engineering department has come up with? (Just so you don’t think I’m throwing engineers under the bus, I’m not. My brother and uncle are engineers and our son is currently studying to be one too!)
And in a wider context, do CEOs define their business as being in the car business? Or, taking a page from Levitt’s book, should it be defined as being in the transportation business? Defined in this way, it has the potential of broadening opportunities that CEOs will pursue for the company.
There is benefit in dusting off the old business management articles and books that we may have dismissed simply because “they’re too old.” Often the writers have already thought and written about business issues that we’re facing today and if we can learn from their insight and experience, then so much the better.
What do you think? Should manufacturers “stick to their own knitting” or should they consider seeing themselves as being in the transportation business, and not just the car business? Tell me what you think.