Management Drives Growth Potential

It is hard to identify a "growth" industry in America today. Perhaps in providing more band width, but even with the innovations that Apple has brought to the technology market, the tech industry has reached what some might consider a saturation point. Theodore Levitt once wrote that he didn't believe there was such a thing as a growth industry. He felt there were only companies organized and operated to create and capitalize on growth opportunities.

Levitt identified four conditions that usually guarantee a cycle of "bountiful expansion and undetected decay:"

1. Belief that growth is assured by an expanding and ever more affluent population;
2. Belief that there is no competitive substitute for the industry's major product;
3. Too much faith in mass production and the advantages of rapidly declining unit costs as output rises; and,
4. Preoccupation with a product that lends itself to carefully controlled scientific experimentation, improvement, and manufacturing cost reduction.

In every case Levitt studied, the reason growth was threatened, slowed, or stopped was not because the market was saturated. It was due to a failure of management!

Opportunities exist today. It is managerial imaginativeness and audacity that will make the right people great. Steve Jobs and his ingenuity with the iPad, iPhone, iTunes, and everything else Apple is doing has transformed the way we communicate and get information.

What we need in this country is the will of companies to survive and, more than that, to satisfy the public with their inventiveness and skill. To survive, the growth companies will have to plot the obsolescence of what now produces their livelihood.

Make sense?

Levitt's comments and advice are 50 years old! His article on "Marketing Myopia" appeared in the July/August 1960 edition of the Harvard Business Review.