If you have ever founded or thought of starting up a company, chances are it all started with a product idea. Depending on your nature, this product might have been based on keen observations of customer needs, perhaps based on instinct that customers would want this product, or simply according to your interests. Surely, some companies might (and have) succeed even if their products are not based on actual measures of customer demand, perhaps from luck, or good insight. But generally, a company will succeed if it is customer oriented – if its goals are to satisfy customer needs.
The book Marketing Myopia , a reprint of the original article by Theodore Levitt published in 1960, illustrates the importance of customer orientation and marketing through the discussion of the evolution of different industries; an article that is still absolutely relevant and contemporary.
A Leading Nation
Much of the article focuses on the demise of the railroad industry and the impending failure of the oil industry should it not react promptly to the changing market demand. The author illustrates that the railroad industry has failed, not because of lower demand, but because it had failed to strategically position itself in the transportation industry in general. The industry could have adapted its products and services to better serve consumer needs that other companies have swiftly responded to (referring to the automobile industry). The industry was product oriented rather than customer oriented.
Other examples are the utility and oil industries. The first mostly known for its electricity companies and the second for its production of fuel. These industries are failing to successfully position themselves as energy companies in the broader sense. Instead of actively focusing on customer needs, companies in these industries are mostly focused on their core products. Rather than capitalizing on alternative energy sources they are focused on pushing out their current products to customers.
But not all are failing. Of all places, companies and governments in the United Arab Emirates have realized this fact and are now investing billions of dollars in alternative energy sources. The UAE has realized that if it is to keep its strategic advantage in the energy industry, now dominated by oil, it has to look at alternatives to better meet future customer demand. To further illustrate this, here are some striking facts. Abu Dhabi is investing $17 billion (USD) in clean alternative energy technology; $2 billion in solar technology and $15 billion for building the world’s largest hydrogen power plant (Middle East Electricity). In comparison, in 2005, global clean energy investment was estimated at US$42 billion (canREA). Think about it, Abu Dhabi, a city, is spending over 40% of that amount. Yes, a city is spending more than 40% of the global investment in alternative energy. Who’s missing out? Quite frankly, it’s incredibly shameful that USA and Canada are not doing more here; and shameful is quite an understatement. We have the chance of liberating ourselves from the stronghold of oil, yet, again, we’re leaving it to the hands of others to be the ultimate provider in energy. This leads me to think now might be the time for me to move in the UAE – seems like they’re showing more vision than we are.
Selling vs Marketing
If you look at the tech industry, I think you’ll notice many companies focusing more on technology and product than customer need. If you’ve read one of my previous posts, I’ve been through that, more than once. One of the reasons might be the passion for technology these entrepreneurs have, who, without sufficient business acumen may drive towards failure. It doesn’t mean you need an MBA to successfully run a company. It means it’s important that you focus on what really counts – what consumers want and need. Need is the keyword. The following quote from the book raises a very pertinent point. You can approach the problem by trying to push the product onto the customer through sales, or you can create and deliver a product that customers want in the first place.
“Selling focuses on the needs of the seller, marketing on the needs of the buyer. Selling is preoccupied with the seller’s need to convert the product into cash, marketing with the idea of satisfying the needs of the customer by means of the product and the whole cluster of things associated with creating, delivering, and, finally, consuming it. “
So it’s clear. My next startup will certainly be based on sound market studies and strong business foundations, which at the time of my first 2 startups I didn’t have. Remember the following:
“An industry begins with the customer and his or her needs, not with a patent, a raw material, or a selling skill.”
The patent and the selling skills are there to strategically position you in that industry and grow your market share.
For the past 3 years I’ve been working in the speech industry, more specifically with IVR systems. One of the core products I was working on is a self-care system for wireless carriers who were desperate to reduce customer care costs. So they put in place IVR systems to filter out customer care calls. Whenever I would tell someone that I worked on such systems I was always quick at saying that we were the ones working on making the systems better for the users. As if I was convincing them I wasn’t the bad guy making their lives, as consumers, miserable. What I’m trying to say here is that wireless carriers were simply looking at cost rather than looking at how to better serve the consumer while reducing their operational costs. Focus wasn’t put in the right place. I’m quite please to say that now I’m working on a mobile self-care solution (mobile app) that improves customer satisfaction while reducing the carrier’s customer care costs. I don’t have to shield myself anymore from those who I explain what I do for a living.
Words of Wisdom
Remember this; always consider customer needs and create a great vision for your company. Don’t lose yourself in a single product or technology, but follow your vision that focuses on satisfying customer needs. This is as important for startup companies, if not more, since it’s all too easy to focus on a product, the one you’re putting all those hours in to bring to market. I speak from the experience of not following these simple recommendations. On a final note, I leave you with the following quote from the book.
“No organization can achieve greatness without a vigorous leader who is driven onward by a pulsating will to success. A leader has to have a vision of grandeur, a vision that can produce eager followers in vast numbers. In business, the followers are the customers.”