Three Classic Business Books That Influenced Me
Three books all written nearly a half century ago may have influenced my thinking with respect to marketing strategy more than any other books written since. The authors are Peter Drucker, Ted Levitt, and Alfred Sloan.
Managing for Results
Peter Drucker’s 1964 book Managing for Results, in my view, is the best single book on management written. A few highlights. First, executives should exploit opportunities rather than solve problems and allocate resources accordingly. Second, a key role of management is to identify and actively manage key result areas. A key result area could be anything that drives success such as the leadership position for a product, superior technical staff, or efficient distribution. Third, business can be categorized into nine types such as today’s breadwinner, tomorrow’s breadwinner, investment in managerial ego, justified specialties, and the has-been.
Each type should be managed and resourced differently. Years later, BCG popularized the growth-share matrix which was a highly simplified version of these ideas. Fourth, the concept of the firm as being based on knowledge is introduced, there will be a set of assets and skills related to implementing the firm’s strategy that need to be identified and strengthened for the firm to succeed over time.
I had the good fortune to attend a Coca-Cola retreat in the mid 90s with the top three people at Coke and six gurus one of whom was Drucker. He blew the rest of us away with his penetrating and spot-on analysis of the emerging beverage market and Coke’s strategy options. The author of some 39 books, half in management and the rest in economics and subjects like Japanese art, he single-handedly advanced the practice of management.
Innovation in Marketing
Ted Levitt’s 1962 book Innovation in Marketing was drawn from his HBR articles that changed the way that executives looked at their firms. One idea came from his “Marketing Myopia” article that said that firms lose growth opportunities and even risk decline by viewing themselves as making products rather than serving customers. He argued that firms need to broaden their view of business by moving up the customer’s value chain. Thus, railroad firms should be in the transportation business, petroleum firms in the energy business, and movie companies in the entertainment business.
Expanding the business vision dramatically changes strategy and opens up innovation and growth. This concept led me to focus on the value proposition that goes beyond functional attributes when defining a business strategy or a brand. Other ideas introduced by Levitt were to aggressively fund marketing R&D, to have a blue-skies plan that anticipates and influences the future, and to create integrated marketing communications.
All influential and there were more. There was a time in which it appeared that there would be a Nobel Prize in marketing. My nominee was Ted Levitt. His ideas did more to change marketing than any other of his generation. I was once walking on the Harvard campus as a very young, very quantitative professor and Ted saw me, invited me into his office and spent over an hour discussing my work (dreadfully boring) and my ideas about the future of research in marketing. Amazing person.
My Year with General Motors
The third nominee is Alfred Sloan’s 1963 book “My Years with General Motors.” Sloan was a top executive at General Motors from 1917 to 1956 and his account of his path making decisions are instructive and interesting. He, unlike some modern GM executives, had a brilliant brand strategy. He created tiers of brands with different price levels, target markets, and product designs. The modern version would be laddered from Chevrolet to Pontiac to Oldsmobile (now dead of course) to Buick to Cadillac. He asserted “A car for every purse and purpose.”
A companion innovation was to make all these divisions completely autonomous. In fact, he said that “the responsibility of each operation should be in no way limited.” However, he used a series of organizational devices to promote cooperation and optimal resource allocation among the divisions. His ability to manage innovation and the changing marketplace is also innovative and instructive. He is indeed the father of the modern organization. Three books from a three-year period in the mid-sixties. How amazing that these three books and their authors had so much influence on the management of brands and businesses of modern times.