Lessons from a Legend
A Tribute to Ted Levitt
The other day when I was looking trough the archived articles in Harvard Business School’s Working Knowledge, I happened on a piece published on December 17, 2008 entitled ‘Ted Levitt Changed My Life.’ The author was Julia Hanna, associate editor (at the time) of the HBS Alumni Bulletin.
While I have never met Ted Levitt, who died at the age of 81 in 2006, he has been a presence in my classrooms for 27 years and I would like to believe that he changed the lives of the hundreds of graduate and undergraduate business school students who have come under my influence. Since I have been teaching marketing, I begin every graduate and undergraduate class with the mandatory assignment that students read and understand Levitt’s Marketing Myopia. Written in 1960, Marketing Myopia is the most reprinted article ever in the history of academic marketing. Some 900,000 copies have been sold, according to Hanna.
In reviewing and re-reading this masterpiece, I never fail to learn something new from this work. More than 50 years old, this article is as fresh and vital as the day it was first published. The basic premise of the article reveals Levitt’s creative insight based on his observation of a business phenomenon. You see, in 1960 Levitt observed that one of the great growth industries in history – the railroad industry – had fallen on such a state of demise that government subsidies were needed to keep this industry alive.
It was through Levitt’s observation of the railroad industry that he came up with his key premise. In looking at “growth” industries, Levitt maintains there is no such thing as a growth industry and the reason why growth has stopped or is threatened is through a failure (or shortsightedness or myopia) of management. It is here where Levitt asks the key question – What business are you in?
He concludes that the failure to define one’s business is a the great cause of marketing myopia. While the railroad industry was broke, there was no shortage of the need for transportation and over-the-road trucking and air were prospering while the railroads were pleading for subsidies. He points out Hollywood’s failure to see itself in the entertainment business instead of the movie business, or the oil industry’s failure to define their sphere as the energy business instead of the oil business.
Levitt goes on in this article to essentially define what has become known as the marketing concept. Levitt wrote that “an industry begins with the customer and his or her needs, not with a patent, a raw material or a selling skill.” He is particularly critical of the lab rats – those scientists and engineers that design products and modifications of products within the laboratory and with no recognition or understanding of the needs of the customer.
Levitt attacks other “myths” such as:
- Growth is assured by an ever-increasing population
- There is no competitive substitute for the product.
- Putting too much faith in mass production.
While Marketing Myopia has always been a key fixture to my classroom work, another of his blockbuster articles, “The Globalization of Markets,” has also been presented to hundreds of my students. The greatness of this article is Levitt’s ability to take a premise and re-consider it. In Marketing Myopia, Levitt is critical of mass production as “myth” that perpetuates growth industry failure. Yet, in “The Globalization…” Levitt advocates the “global product,” which can be sold everywhere to everybody. In the ‘Globalization,’ Levitt makes the distinction between the multi-national company and the global company. The multi-national company caters to the needs of individual countries and market segments while the global company produces and markets products that have universal appeal.
In many textbooks and scores of articles, Levitt has transformed modern marketing thinking. As long as I will be teaching, Ted Levitt will be an integral force in my classroom.