In 50 Business Classics series, Tom Butler-Bowdon includes a discussion of Theodore (“Ted”) Levitt and his concept of marketing myopia, introduced in an HBR article (1960) and then featured in Levitt’s The Marketing Imagination (1983).
These are among the dozens of insights that caught my eye:
o “The railroad companies declined not because the market for passenger and freight transportation decreased — it grew substantially. The problem was that these companies [according to Levitt] saw themselves in the´railroad business. If they had seen themselves in the transportation business, some of them could have kept going as players in the automobile, truck, or aviation fields. They were focused on their product — rail transport — not their customer, that is, people and their need to transport themselves and their goods.” (Page 205)
Comment: Consider the current market value of the real estate on which railroad stations were built. Consider, also, the upscale retail establishments to be found in railroad stations today, notably in Washington (DC) and Kansas City (MO).
o “Every industry, Levitt notes, “is at first seen as a growth industry, because there seems to be ‘no substitute’ for the product or service it provides. even industries as prosaic as dry cleaning once seen as fast growth, because because — hooray! — wool clothing could now be cleaned easily and quickly. Dry cleaners thought they had a bright future…until clothing and styles changed, with much more use if cotton and synthetics, reducing the need for dry cleaning.” (206)
o “‘To survive,’ Levitt writes [58 years ago], any company ‘will have to plot the obsolescence of what now produces their livelihood.’ In other words, to develop products that will cannibalize the best features of their existing ones. This is the only way to be at the edge of new markets.” (206)
o “Levitt argues that there are no growth industries, only growth companies. Any firm believing that it is on some ‘automatic growth escalator’ simply because it is in the right field, will soon see its decline. It is ideas and management that will keep it relevant, not some inherent quality of its industry or demographic dynamism.” (206)
Comment: Within twelve months after Henry Ford introduced the Model T in 1908, four of the five largest and most profitable carriage-makers were no longer in business. The single exception had immediately begun to manufacture automotive products such as fan belts.
o “Conventional wisdom says that an industry begins with an invention, a process, a discovery. But an industry is at heart a ‘customer-satisfying process, not a goods-producing process.’ It starts with with the needs of a customer, then must work backwards.” (209)
50 Business Classics: Your shortcut to the most important ideas on innovation, management and strategy was published by Nicholas Brealey (2018)
Marketing Imagination, New, Expanded Edition, was published by Free Press (1988)