The 1980s: a Turning Point for Marketing And Strategy

Posted by 17 March, 2008 Comments Off on The 1980s: a Turning Point for Marketing And Strategy

MARKETING AND STRATEGY
Using Tested Concepts and New Ideas for Marketing Strategy.

 

THE 1980S: A TURNING POINT FOR MARKETING AND STRATEGY

If any single factor can be blamed for the death of strategic planning, it must be the failure of the U.S. economy to compete globally during the 1980s. This economic bot­tleneck in the United States forced a reexamination of every aspect of business man­agement. And even though the economy rebounded in the 1990s, that examination revealed too many warts for anyone to want to return to business as usual. The failure of conventional strategies and management methods became painfully obvious in the 1980s as the trade imbalance in categories such as autos, machine tools, consumer electronics, semiconductors, and textiles took a nasty turn for the worse on the econ­omist’s charts. A report from MIT’s Commission on Industrial Productivity summed up management’s initial response to the problem:

The decline of the U.S. economy puzzles most Americans. The qualities and talents that gave rise to the dynamism of the postwar years must surely be present still in the national character, and yet American industry seems to have lost much of its vigor. In looking for ways to reverse the decline, it is only natural to turn to the methods that succeeded in the golden years of growth and innovation. Many business managers have adopted just this strategy. The results, unfortunately, are rather like those of a man who keeps striking the same match because it worked fine the first time.
This failure to measure up to global competition left the people at Xerox look­ing through their pockets for another book of matches. Xerox’s story is an excellent il­lustration of what is happening to planning in U.S. businesses at this critical turning point in history. In 1974, Xerox had a stunning 86 percent world market share for photocopiers. What could possibly go wrong? As discussed shortly, conventional plan­ning models assume that strength and profits flow from strong market shares. But as new competitors, such as Ricoh and Canon, entered the market, Xerox fell back, all the way to a 17 percent market share in 1984.8 If strategic planning really was king, Xerox’s managers would have been beheaded! The company began to climb back out of its hole in the latter half of the 1980s, regaining lost share and improving quality. Along the way, Xerox invented new ways of planning and implementing strategy, and adopted many of the best techniques used by its Japanese competitors. We’ll start with a quick review of the planning models that led companies such as Xerox into so much trouble.
It is easy to dismiss the old approach to planning as worthless, but this is not fair. Managers today cannot ignore the old wisdom, but they also cannot rely on it to provide competitive advantage. One must know yesterday’s techniques to play the game, and must pioneer tomorrow’s techniques to win it. One must realize that the changing environment requires new tools, and the old tools by nature lose their edge when everyone learns to use them. As this lesson’s opening quote suggests, there is a sort of arms race in strategy, with the advantage going to the innovators. But, al­though “smart missiles” may now carry the day, it would still be folly to enter the bat­tlefield without a rifle. Business strategy is similar: Today’s planners must master both the old and the new. (And then, most likely, invent something of their own any­way. But more on that later!)

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