In the fast-changing and increasingly unpredictable world, one practice I learned is to zoom out and read timeless classics that are at least decades old to anchor myself with something that has withstood the test of time.
One of those articles is Marketing Myopia, written by Ted Levitt and published in Harvard Business Review (HBR) in 1960. Since its original publication, “Marketing Myopia” has been repackaged many times and was included in “HBR’s 10 must-reads in Marketing”. The central idea is to answer “what business you are in.” The author argues that companies are much more likely to survive generational and technological shifts by defining a business, not around specific products and services but around what specific needs those products and services fulfill for customers.
Today, technology, social media, and other new advances are changing how companies and individuals market themselves and their offerings. But even as we admire the shiniest and newest ideas, let’s not forget that some fundamental approaches like the one from “Marketing Myopia” are likely to last.
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By Theodore Levitt
Sustained growth depends on how broadly you define your business—and how carefully you gauge your customers’ needs. - Theodore Levitt
At some point in its development, every industry can be considered a growth industry, based on the apparent superiority of its product. But in case after case, industries have fallen under the shadow of mismanagement. What usually gets emphasized is selling, not marketing. This is a mistake, since selling focuses on the needs of the seller, while marketing concentrates on the needs of the buyer.
In this widely quoted and anthologized article, first published in 1960, Theodore Levitt argues that “the history of every dead and dying ‘growth’ industry shows a self-deceiving cycle of bountiful expansion and undetected decay.” But, as he illustrates, memories are short.
The railroads serve as an example of an industry whose failure to grow is due to a limited market view. Those behind the railroads are in trouble not because the need for passenger transportation has declined or even because that need has been filled by cars, airplanes, and other modes of transport. Rather, the industry is failing because those behind it assumed they were in the railroad business rather than the transportation business. They were railroad oriented instead of transportation oriented, product oriented instead of customer oriented.
For companies to ensure continued evolution, they must define their industries broadly to take advantage of growth opportunities. They must ascertain and act on their customers’ needs and desires, not bank on the presumed longevity of their products. In short, the best way for a firm to be lucky is to make its own luck.
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.
Every major industry was once a growth industry. But some that are now riding a wave of growth enthusiasm are very much in the shadow of decline. Others that are thought of as seasoned growth industries have actually stopped growing. In every case, the reason growth is threatened, slowed, or stopped is not because the market is saturated. It is because there has been a failure of management.
The failure is at the top. The executives responsible for it, in the last analysis, are those who deal with broad aims and policies. Thus:
The railroads did not stop growing because the need for passenger and freight transportation declined. That grew. The railroads are in trouble today not because that need was filled by others (cars, trucks, airplanes, and even telephones) but because it was not filled by the railroads themselves. They let others take customers away from them because they assumed themselves to be in the railroad business rather than in the transportation business. The reason they defined their industry incorrectly was that they were railroad oriented instead of transportation oriented; they were product oriented instead of customer oriented.
Hollywood barely escaped being totally ravished by television. Actually, all the established film companies went through drastic reorganizations. Some simply disappeared. All of them got into trouble not because of TV’s inroads but because of their own myopia. As with the railroads, Hollywood defined its business incorrectly. It thought it was in the movie business when it was actually in the entertainment business. “Movies” implied a specific, limited product. This produced a fatuous contentment that from the beginning led producers to view TV as a threat. Hollywood scorned and rejected TV when it should have welcomed it as an opportunity—an opportunity to expand the entertainment business.
Today, TV is a bigger business than the old narrowly defined movie business ever was. Had Hollywood been customer oriented (providing entertainment) rather than product oriented (making movies), would it have gone through the fiscal purgatory that it did? I doubt it. What ultimately saved Hollywood and accounted for its resurgence was the wave of new young writers, producers, and directors whose previous successes in television had decimated the old movie companies and toppled the big movie moguls.
Shadow of Obsolescence
It is impossible to mention a single major industry that did not at one time qualify for the magic appellation of “growth industry.” In each case, the industry’s assumed strength lay in the apparently unchallenged superiority of its product. There appeared to be no effective substitute for it. It was itself a runaway substitute for the product it so triumphantly replaced. Yet one after another of these celebrated industries has come under a shadow. Let us look briefly at a few more of them, this time taking examples that have so far received a little less attention.
This was once a growth industry with lavish prospects. In an age of wool garments, imagine being finally able to get them clean safely and easily. The boom was on. Yet here we are 30 years after the boom started, and the industry is in trouble. Where has the competition come from? From a better way of cleaning? No. It has come from synthetic fibers and chemical additives that have cut the need for dry cleaning.
This is another one of those supposedly “no substitute” products that has been enthroned on a pedestal of invincible growth. When the incandescent lamp came along, kerosene lights were finished. Later, the waterwheel and the steam engine were cut to ribbons by the flexibility, reliability, simplicity, and just plain easy availability of electric motors. The prosperity of electric utilities continues to wax extravagant as the home is converted into a museum of electric gadgetry. How can anybody miss by investing in utilities, with no competition, nothing but growth ahead?
But a second look is not quite so comforting. A score of nonutility companies are well advanced toward developing a powerful chemical fuel cell, which could sit in some hidden closet of every home silently ticking off electric power. The electric lines that vulgarize so many neighborhoods would be eliminated. So would the endless demolition of streets and service interruptions during storms. Also on the horizon is solar energy, again pioneered by nonutility companies.
Who says that the utilities have no competition? They may be natural monopolies now, but tomorrow they may be natural deaths. To avoid this prospect, they too will have to develop fuel cells, solar energy, and other power sources. To survive, they themselves will have to plot the obsolescence of what now produces their livelihood.
The petroleum industry’s efforts have focused on improving the efficiency of getting and making its product, not really on improving the generic product or its marketing. Moreover, its chief product has continually been defined in the narrowest possible terms—namely, gasoline, not energy, fuel, or transportation. This attitude has helped assure that:
Major improvements in gasoline quality tend not to originate in the oil industry. The development of superior alternative fuels also comes from outside the oil industry, as will be shown later.
Major innovations in automobile fuel marketing come from small, new oil companies that are not primarily preoccupied with production or refining. These are the companies that have been responsible for the rapidly expanding multipump gasoline stations, with their successful emphasis on large and clean layouts, rapid and efficient driveway service, and quality gasoline at low prices.
In truth, there is no such thing as a growth industry, I believe. There are only companies organized and operated to create and capitalize on growth opportunities. Industries that assume themselves to be riding some automatic growth escalator invariably descend into stagnation. The history of every dead and dying “growth” industry shows a self-deceiving cycle of bountiful expansion and undetected decay. There are four conditions that usually guarantee this cycle:
1. The belief that growth is assured by an expanding and more affluent population;
2. The belief that there is no competitive substitute for the industry’s major product;
3. Too much faith in mass production and in the advantages of rapidly declining unit costs as output rises;
4. Preoccupation with a product that lends itself to carefully controlled scientific experimentation, improvement, and manufacturing cost reduction.
The view that an industry is a customer-satisfying process, not a goods-producing process, is vital for all businesspeople to understand. An industry begins with the customer and his or her needs, not with a patent, a raw material, or a selling skill. Given the customer’s needs, the industry develops backwards, first concerning itself with the physical delivery of customer satisfactions. Then it moves back further to creating the things by which these satisfactions are in part achieved. How these materials are created is a matter of indifference to the customer, hence the particular form of manufacturing, processing, or what have you cannot be considered as a vital aspect of the industry. Finally, the industry moves back still further to finding the raw materials necessary for making its products.
A leader has to have a vision of grandeur, a vision that can produce eager followers in vast numbers. In business, the followers are the customers.
In order to produce these customers, the entire corporation must be viewed as a customer-creating and customer-satisfying organism. Management must think of itself not as producing products but as providing customer-creating value satisfactions. It must push this idea (and everything it means and requires) into every nook and cranny of the organization. It has to do this continuously and with the kind of flair that excites and stimulates the people in it. Otherwise, the company will be merely a series of pigeonholed parts, with no consolidating sense of purpose or direction.
In short, the organization must learn to think of itself not as producing goods or services but as buying customers, as doing the things that will make people want to do business with it. And the chief executive has the inescapable responsibility for creating this environment, this viewpoint, this attitude, this aspiration. The chief executive must set the company’s style, its direction, and its goals.
Featured business: In Creative Co.
Company URL: https://increative.co/
Location: Remote / Global / Based in NJ & NY
Founded year: 2020
🎨 Tell us about yourself, your company, and how you got started.
I call myself a "professional weirdo" who dresses in "work-quirk," and I realized I needed to build In Creative Company to be accepted and find my place in this world. 4 years on a corporate marketing team, followed by 3 years as a freelance graphic designer, I found myself longing for a middle ground. I searched for something with the stability and opportunity of an agency and the freedom and flexibility of an independent contractor. Our model closes the gap between creative agency & freelancer, between physical & digital worlds, between client work & personal work. In just 6 months, this gap quickly filled with over 100 diverse creatives who wanted to define this in-between with us.
🎨 How did you acquire your first batch of customers?
Joining two different BNI Global chapters was the spark that showed my co-founder and me how expansive our network could be. We found other creatives in other chapters who were also eager to connect clients with creative experts and invited them onto our In Creative Core leadership team. With a respected Giver's Gain mentality focused on word-of-mouth referrals, we have built such a solid client base who come to us for creative services that benefit from the execution of our custom-built creative team.
🎨 Did your business pivot in the pandemic? Or, how did your business start during this time?
Creative Company was born out of both the pandemic and the r/evolution to cope with the divide between isolation and togetherness. When my dear friend and now co-founder called me on March 29 to see if I wanted to build a company with her based on values and structure that would allow us to be our most creative selves, I told her I would search for my head first and see where it leads me. As I waited for an answer from unemployment, I told myself I would share every next project with another freelancer in this horrid situation, which led to my response to my co-founder that I feel most fulfilled and confident while collaborating with other womxn. She agreed that this sisterhood nourished her inner child and let her artist come out to play.
🎨 What is your plan for the future? What trends do you foresee for your industry?
We believe we have begun to revolutionize the way creatives work together. Our collaborative (yet super independent) model offers a work-life balance that allows us to produce our best work and reach our highest creative potential. With layoffs and a forced shift to at-home isolation, many creatives have taken to freelancing by default, or they are searching far and wide for a full-time opportunity. We hope they can find us in a creative company to feel its positive support and paid opportunities needed during these trying times and far beyond.
🎨 Any other lessons/advice you’d like to share with other fellow entrepreneurs?
See if you can trade services with an attorney! Not only do you get to offset those daunting legal fees, but when you are working together, your attorney gets to know you and your business better so they can really cater to your contracts and advise you.
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