Many of you may already be familiar with the term “Marketing Myopia”, which is a term first coined by late Harvard Business School professor Theodore Levitt, almost 60 years ago. His now classic article Marketing Myopia (excerpts here) begins this way:
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 which 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.
That failure is caused by what Levitt called “marketing myopia” which he defines as what happens when company leaders define their mission too narrowly. It is a form of business nearsightedness whereby companies focus on selling products and services, rather than seeing the “big picture” of what consumers really want. This concept has stayed in tact over the last 50-plus years.
The evolution of Marketing Myopia
Levitt used some examples of how asking “What business are you really in?” can challenge us to really think more intelligently about the purpose of our company. His classic example of why railroads stopped growing was not because cars, trucks and airoplanes took their customers away, but because they assumed themselves to be in the train business rather than the transportation business; they were product oriented instead of customer oriented…
While Levitt’s article has guided many companies and marketing students over the years, and has undoubtedly made a significant impact on businesses; the concept of focusing on the customer rather than the product has evolved. Rather, if we shift the focus from just marketing to management, not only has the term “myopia” evolved but there is almost a different kind of myopia emerging in management across all industries today.
Over the past decade, marketing departments have in fact become very good at focusing on the customer and what the customer wants, perhaps even taken Levitt’s advice to the extreme.
While being “customer centric” is now widely becoming accepted as the most promising business model, leadership is failing to see that that they have a very narrow understanding of the customer. This is the second problem of myopia and I will get back to this later.
The first is the short-sightedness and short-termism running rife amongst management. Some of the reasons for this myopia could be:
• Not only due to the “millennial mindset” of a shortened attention span, constant stimulation and need for technologically driven social interactions which have seeped into organisational culture and norms; but short term emphasis on goal setting and attainment is exacerbated by the speed of technology-driven communication i.e everyone wants something now and they need to see results now – through Facebook, blogging, Twitter etc.
• Outdated KPI’s with frequent performance reviews and evaluations, and of course the ubiquitous quarterly reporting of financial results; encourages management to scew and / or manipulate results.
• And along the same vein, the process of providing executives with short term incentives tied to current performance and stock prices.
• Short termism may have also been heightened by the move from a focus on relationships to a focus on transactions – i.e. a concentration on an immediate win/lose mentality rather than the long term win/win of an ongoing relationship. In the race to become more customer centric we have lost the essence of a real trust building interaction with the customer as a person. Rather, we are becoming better at capturing large amounts of customer data and focus on statistics rather than emotionally connecting with the customer.
• Finally, due to the fast pace and short-termism, everyone in the organisation falls back on System 1 – type thinking instead of taking time to make sound, strategic, decisions. Not that there is anything wrong with engaging in System 1 thinking at work, but there should be a good balance between the two in various situations.
Overall, there is evidence that suggests that corporate short-termism is associated with greater risk and thus affects resource allocation. Myopic management tends to not only stress near sighted projects over research and development and other capital investments but also misallocates resources (decreasing spending on learning and knowledge transfer). Those organisations and their internal cultures respectively, who are more oriented to the short term than the long term, typically are characterised by silo cultures and ultimately led by management with a more self-serving approach to “leadership”. Not only self-serving, but myopic in the sense that if the company has no real long term vision or strategies, then management will not be able to lead their teams towards a shared and common goal, thus will focus on immediate rewards. Furthermore, how is decision making affected in short term thinking rather than long term thinking?
The second, and perhaps most overlooked, area of management myopia is: understanding the customer. Becoming “customer centric” is now seen as the most progressive business model, but do companies really have an understanding of the customer? Both Amazon and Zappos are prime examples of brands that are customer centric and have spent years creating a culture around the customer and their needs. Their commitment in delivering customer value is genuine. They have achieved this by putting the customer at the epicenter of their operations. While adopting “customer centricity” as a core value mostly involves a complete comprehensive change to vision and goal setting, leadership and accountability, resource requirements, processes and tools, technological systems, communications, organisational culture and alignment, learning and knowledge management, among many others… the fact still remains that we need to understand the customer first! “Advances in technology and communication, combined with the explosive growth in data and information, have given rise to a more empowered global consumer” EY report “The journey toward greater customer centricity”. While applying data analytics to the customer service front line and analysis of call center transactions can be powerful to better route customers to the appropriate type of products and support, it is only the first step to engage them. One of the best investments to make to lead a customer centric culture is to hire experts specialising in customer experience management, process review and design, and who can generate customer behavioural insight. In our need to satisfy the customer we must also recognise that the value of the customer relationship is vital — at the point of initial sale and over the customer lifetime. Neuromarketing and Neuroselling does not only provide us with insight into a person’s behaviours and the reasons behind those behaviours and how to emotionally engage the customer, but have also proved to show a greater prediction of buy-behaviour than traditional market research methods. Many businesses are not keeping up with changing market and consumer dynamics and are far behind other industries in meeting customer expectations partly due to the myopic view of executives and management with reasons aforementioned. To succeed in this fast-changing environment and achieve sustainable top-line growth, management need to focus on redefining customer relationships, transforming business models to embrace data and digital and introducing an innovative culture in support of strategic decision-making.
Disruptions are constantly challenging the stability of industries. While there is a need to remain agile and be able to make quick decisions in the fast pace of change we are operating in as businesses; we cannot underestimate the power of a shared, long-term and forward-looking goal. While management should be focusing on the customer and not the product; they will indeed be better prepared for whatever the future will bring, but how they will do that is the key consideration in executing growth strategies. If management continues to operate with this myopic view of an “end game”, they run the risk of losing sight of the real purpose of their business, which is to satisfy their customers and their stakeholders. So, what business are you in?