What Business Are You In?: Classic Advice from Theodore Levitt

If I had to select the five most influential articles ever to appear in Harvard Business Review, the first would be Ted Levitt’s “Marketing Myopia” (1960). Another would be this article (October 2006) by HBR‘s then editors who discuss Levitt and his brilliant work. This is probably his most widely quoted observation: “People don’t want quarter-inch drills. They want quarter-inch holes.”

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Editors’ Note: For all the talk about management as a science, experienced executives know that strategic decisions and tactics depend heavily on context. No one understood this better than Theodore Levitt (1925–2006).

A scholar renowned as a founder of modern marketing, he sought above all to use his insights to serve the needs of businesspeople. In a series of powerfully insightful—and delightfully written—essays in Harvard Business Review, he provoked readers to reexamine their settled thinking about vital issues so that they could better meet the needs of customers.

Theodore Levitt was born in Vollmerz, Germany, in 1925. Ten years later, like an older émigré named Peter Drucker, he and his family fled the rise of Nazism and immigrated to the United States. They settled in Dayton, Ohio, where they became U.S. citizens in 1940. After earning a doctorate in economics in 1951, Levitt eventually joined the faculty of Harvard Business School, where he remained a professor until retiring in 1990.

His early work was fairly conventional scholarship. That had changed by 1960, when HBR published his best-known article, “Marketing Myopia.” It was not so much an article as a manifesto. Picking up threads that he and others had prepared, Levitt wove a powerful argument that companies should stop defining themselves by what they produced and instead reorient themselves toward customer needs. No one before had so aggressively and practically made the case for centering companies on customers, and his ideas continue to shape marketing practices even today, as Clay Christensen acknowledged last December in his HBR article “Marketing Malpractice.”

Levitt intended “Marketing Myopia” to be a challenge to businesses as a whole, not just to their marketing departments. Twenty-three years later, his article “The Globalization of Markets” told a similar story on a grander scale. To take advantage of globalization, he wrote, companies should standardize as much as possible, because what people most desire are the low prices and quality made possible by standardization. The marketing evangelist was now praising engineering-oriented companies that lacked marketing departments but whose businesses understood the strategic opportunity globalization presented. Once again, his take-no-prisoners prose attracted wide attention and discussion, as well as criticism fixated on his over-the-top pronouncements. The critics missed the larger message about what consumers really seek and therefore missed the point.

Levitt had the gifts of provocation and generalization, offering ideas that startled readers but compelled them to think more creatively, and more intelligently, about their businesses. Writing at a time when business was held in far less esteem, he rejected the easy contempt that many intellectuals had for managers and consumers. He celebrated the material achievements of corporations and presciently saw their long-term power. He became one of this magazine’s most prolific authors, publishing 26 articles—a number exceeded only by Peter Drucker.

Levitt carried his practical approach to his tenure as Harvard Business Review’s eighth chief editor, from 1985 to 1989. He was at the same time one of HBR’s most intellectual and most populist editors. He understood that the magazine’s main purpose was to serve as a kind of sophisticated translation, clarifying authors’ raw—and sometimes rough—ideas for impatient, time-pressed readers. In both his writing and his editing, he epitomized HBR’s standard of tireless practical engagement with ideas.

Levitt’s ideal businessperson was someone who, amid the clamor of meetings, phone calls, stock-market updates, daily papers, weekly magazines, and consultants’ presentations, was fed up with hype and showed an insatiable appetite for expertise. In a 1987 editor’s letter, Levitt wrote, “Harvard Business Review enters with the authoritative well-reasoned sounds of solidly professional thought and sense—with articles written by experienced specialists and professionals addressing important people who make important decisions about important matters in the world of affairs. That’s what we think thoughtful businesspeople need and want in this unstable world of slick popularizing and celebrity hype.” In that ideal, he was his own best exemplar.
Marketing Myopia

Excerpted from July–August 1960

“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….” Theodore Levitt’s HBR Articles

Advertising: “The Poetry of Becoming” March–April 1993 The Case of the Migrating Markets July–August 1990 After …

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….

The belief that profits are assured by an expanding and more affluent population is dear to the heart of every industry. It takes the edge off the apprehensions everybody understandably feels about the future. If consumers are multiplying and also buying more of your product or service, you can face the future with considerably more comfort than if the market were shrinking. An expanding market keeps the manufacturer from having to think very hard or imaginatively. If thinking is an intellectual response to a problem, then the absence of a problem leads to the absence of thinking. If your product has an automatically expanding market, then you will not give much thought to how to expand it….

The profit lure of mass production obviously has a place in the plans and strategy of business management, but it must always follow hard thinking about the customer. This is one of the most important lessons we can learn from the contradictory behavior of Henry Ford. In a sense, Ford was both the most brilliant and the most senseless marketer in American history. He was senseless because he refused to give the customer anything but a black car. He was brilliant because he fashioned a production system designed to fit market needs. We habitually celebrate him for the wrong reason: for his production genius. His real genius was marketing. We think he was able to cut his selling price and therefore sell millions of $500 cars because his invention of the assembly line had reduced the costs. Actually, he invented the assembly line because he had concluded that at $500 he could sell millions of cars. Mass production was the result, not the cause, of his low prices….

…Let us start at the beginning: the customer. It can be shown that motorists strongly dislike the bother, delay, and experience of buying gasoline. People actually do not buy gasoline. They cannot see it, taste it, feel it, appreciate it, or really test it. What they buy is the right to continue driving their cars. The gas station is like a tax collector to whom people are compelled to pay a periodic toll as the price of using their cars. This makes the gas station a basically unpopular institution. It can never be made popular or pleasant, only less unpopular, less unpleasant.

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Here is a direct link to the complete article.

I highly recommend Levitt’s The Marketing Imagination as well as another HBR article, by Amy Gallo: “A Refresher on Marketing Myopia,” published in 2016.

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