May 19, 2021
CUSTOMERS- WHY ORGANISATIONS EXIST!
Theodor Levitt’s seminal article “Marketing Myopia” in Harvard business review was supposed to be a wakeup-call, yet today 60 years later, most companies still don’t get it!
An industry begins with the customer and his or her needs, not with a patent, a raw material, or a selling skill. Theodore Levitt
If you and your company focus on your company, your products, and services, how well you are doing, or what skills you have, you will soon have no reason to do that anymore because you will no longer have a company!
Marketing Myopia suggests that businesses will do better in the end if they concentrate on meeting customers’ needs rather than on selling products. Theodor Levitt (1960) “Marketing Myopia.” Harvard Business Review.
Especially today, 60 years after Levitt’s article, your skills, your past knowledge, your past ideas, and your market leadership no longer means anything.
There is no dearth of choice out there for the customers. Virtually all barriers to entry in most industries have disappeared. Almost every worker today is a knowledge worker, and product switching costs have all but disappeared as even the most complicated products become commoditized!
Why would anyone buy your product or service if it does not fulfill their needs, their requirements, and if it’s not easy to access and use or even sometimes if it does not satisfy the buyer’s whims — entirely?
Customers are spoiled for choice, and it has never been easier for a customer to exercise their ‘right’ to choose. They mostly do so with their feet, just moving to the next provider!
The purpose of a business is to get and keep a customer. Without customers, no amount of engineering wizardry, clever financing, or operations expertise can keep a company going. Theodore Levitt.
That means that organizations exist firstly for the benefit of our customers (and for those of you that know me, you see why I detest the views of Friedman)!
All other reasons for the existence of an organization are subservient to this one reason — without a customer, there is no business, no profit, no employment, and no value for other stakeholders — there is NOTHING!
We can only choose which customers we serve because their needs and our offering are aligned!
Strategy is about defining which customers we will serve by providing what products and services. From a strategic perspective — how we do that is irrelevant (that is, the domain of tactics executed or operations).
We believe this to be true then, but even more so NOW. But WHY?
In an economy and age of abundance (of knowledge, finance, and resources), virtually all traditional sources of competitive advantage eroded. There is a level playing field that allows the three-person organization to compete head-on with one thousand people!
The only remaining competitive advantages now are; innovation, speed, and agility — and preferably all three combined and working in unison to create value for customers by solving problems and meeting continuously changing needs at the correct price-point!
If you want to out-compete the competition for customers spoiled for choice’s attention and dollars, you have to ‘out-know’ and ‘out-understand’ customer needs, ‘out-invent’ competitors based on what you know. You need to meet the customers’ ever-changing needs and be able to do so fast, and be able to change direction with little or no warning!
How successful your organization is today means nothing — and Levitt warned leaders that self-deception leads to failure. Even if you are in a ‘growth industry,’ you are not safe! A few years ago, many previously in your organization’s position have become companies without an industry because they had products without customers, built for an industry or industry sector that no longer exists!
Don’t align yourself too closely to your industry; if you align yourself with customers and adapt to customer needs, you will always have a business.
This article is part of a series exploring the use of Agile ADapT™, a Digital Transformation Method for incumbent organizations struggling to compete in the digital age.
