Iron Cycle of Growth
Looking at the business cycle one is overcome by a feeling of despair that inevitable like the human body and like kingdoms there is the “iron cycle” of growth and then decay – an infallible law of Nature from which there seems to be no escape. But Theodore Levitt in his powerful presentation Marketing Myopia holds out hope that the dead and dying can be resurrected and reincarnated to new life and vigor. But to know how that can be made possible it is necessary to understand why it happens.
Levitt argued that in most of the cases the vision of the top management is petty or myopic. There is a lack of imagination. For instance, the railroad industry began to sink not because of competition from the road traffic, but because it only thought of itself as being in the railroad business and not in the broader sense in the transport business. In other words it was more product-oriented than customer oriented (Levitt 1960).
Levitt opines that there is no such thing as growth industry but companies set up and tuned to make the best use of growth – accelerate and harness its power. The cycle of expansion and decay is bound by four rules. There is the belief that growth is tied to the surety of an expanding population and that there is no product that can compete with the excellence of what the company is manufacturing. Thirdly there is blind faith in the fact that mass production will bring down the cost of production of each unit. Fourthly there is narrow focus on the reliance of the excellence of the product on narrow scientific experiments (Kustin 2008).
Levitt’s argument: Validity Today
Even today Levitt’s argument holds true as even today the top managers of top companies are clinging to the same four mistakes leading to the inevitable cycle of growth and decay. For instance, in the present recession there is the problem of too many goods in the shops, whether foreclosed houses or toys on the shelves, but too few buyers. Mass production has concentrated on selling rather than marketing. In selling the focus is on the seller but marketing being more sophisticated, deals with the needs of the buyer. If the latter is done by the top management with imagination, innovation and aplomb such a dichotomy and crisis would not occur. Thus the outlook of the management must not be that of basic survival but of something with more guts and basics – it must be all embracing “entrepreneurial greatness”. The vision has to be majestic.
Each organization like the nation needs a leader with a pulsating drive to succeed driven by followers – his customers and clients. It must be a “customer-satisfying organism”. The aim is not just to produce products but to produce items that satisfy the needs of customers. Hence it requires constant adjustability and checking up on the socio-economic health of society.
Example
Kustin (2008) indicates that it was the same with the movie industry that foolishly thought itself threatened by television. Instead of being focused on movie it should have identified itself as the entertainment industry and thus doing would have found an extension of itself in television; something that took place later on. Thus the mistake was the thinking of the industry to be a ‘growth industry’ – as the very word ‘growth’ is intimately linked with the word ‘decay’. There is hardly any industry that has escaped this petty thinking. The concentration and complacency has come from the superiority of the product – and nothing beyond that (Kustin 2008). Similarly, the approach of Apple’s iPad in order to counter Microsoft’s products can be termed as myopic indeed. Apple should have concentrated more on proper innovation and change management without producing gimmick over iPad and its mouse less approach.
References
Kustin, R.K. (2008). Marketing globalization: A didactic examination for corporate strategy. The International Executive 36(1), 79-93.
Levitt, T. (1960). Marketing Myopia. Harvard Business Review 4(4), 45-56.