Dangers of R&D
Another big danger to a firm’s continued
growth arises when top management is wholly
transfixed by the profit possibilities of technical
research and development. To illustrate, I
shall turn first to a new industry—electronics—
and then return once more to the oil companies.
By comparing a fresh example with a
familiar one, I hope to emphasize the prevalence
and insidiousness of a hazardous way of
thinking.
Marketing Shortchanged.
In the case of electronics,
the greatest danger that faces the glamorous
new companies in this field is not that they
do not pay enough attention to research and development
but that they pay too much attention
to it. And the fact that the fastest-growing electronics
firms owe their eminence to their heavy
emphasis on technical research is completely beside
the point. They have vaulted to affluence on
a sudden crest of unusually strong general receptiveness
to new technical ideas. Also, their success
has been shaped in the virtually guaranteed market
of military subsidies and by military orders
that in many cases actually preceded the existence
of facilities to make the products. Their expansion
has, in other words, been almost totally
devoid of marketing effort.
Thus, they are growing up under conditions
that come dangerously close to creating the illusion
that a superior product will sell itself. It
is not surprising that, having created a successful
company by making a superior product,
management continues to be oriented toward
the product rather than the people who consume
it. It develops the philosophy that continued
growth is a matter of continued product
innovation and improvement.
A number of other factors tend to strengthen
and sustain this belief:
1. Because electronic products are highly
complex and sophisticated, managements become
top-heavy with engineers and scientists.
This creates a selective bias in favor of research
and production at the expense of marketing.
The organization tends to view itself as making
things rather than as satisfying customer
needs. Marketing gets treated as a residual activity,
“something else” that must be done once
the vital job of product creation and production
is completed.
2. To this bias in favor of product research,
development, and production is added the bias
in favor of dealing with controllable variables.
It is not surprising that,
having created a
successful company by
making a superior
product, management
continues to be oriented
toward the product
rather than the people
who consume it.
Marketing Myopia