The tantalizing profit possibilities of low unit production costs may be the most seriously self-deceiving attitude that can afflict a company, particularly a "growth" company where an apparently assured expansion of demand already tends to undermine a proper concern for the importance of marketing and the customer.
The usual result of this narrow preoccupation with so-called concrete matters is that instead of growing, the industry declines. It usually means that the product fails to adapt to the constantly changing patterns of consumer needs and tastes, to new and modified marketing institutions and practices, or to product developments in competing or complementary industries. The industry has its eyes so firmly on its own specific product that it does not see how it is being made obsolete.
The classical example of this is the buggy whip industry. No amount of product improvement could stave off its death sentence. But had the industry defined itself as being in the transportation business rather than the buggy whip business, it might have survived. It would have done what survival always entails, that is, changing. Even if it had only defined its business as providing a stimulant or catalyst to an energy source, it might have survived by becoming a manufacturer of, say, fan belts or air cleaners.
What may some day be a still more classical example is, again, the oil industry. Having let others steal marvelous opportunities from it (e.g., natural gas, as already mentioned, missile fuels, and jet engine lubricants), one would expect it to have taken steps never to let that happen again. But this is not the case. We are now getting extraordinary new developments in fuel systems specifically designed to power automobiles.
Not only are these developments concentrated in firms outside the petroleum industry, but petroleum is almost systematically ignoring them, securely content in its wedded bliss to oil. It is the story of the kerosene lamp versus the incandescent lamp all over again. Oil is trying to improve hydrocarbon fuels rather than to develop any fuels best suited to the needs of their users, whether or not made in different ways and with different raw materials from oil.
Here are some of the things which non-petroleum companies are working on:
• Over a dozen such firms now have advanced working models of energy systems which, when perfected, will replace the internal combustion engine and eliminate the demand for gasoline. The superior merit of each of these systems is their elimination of frequent, time-consuming, and irritating refueling stops. Most of these systems are fuel cells designed to create electrical energy directly from chemicals without combustion. Most of them use chemicals that are not derived from oil, generally hydrogen and oxygen.
• Several other companies have advanced models of electric storage batteries designed to power automobiles. One of these is an aircraft producer that is working jointly with several electric utility companies. The latter hope to use off-peak generating capacity to supply overnight plug-in battery regeneration. Another company, also using the battery approach, is a medium-size electronics firm with extensive small-battery experience that it developed in connection with its work on hearing aids. It is collaborating with an automobile manufacturer. Recent improvements arising from the need for high-powered miniature power storage plants in rockets have put us within reach of a relatively small battery capable of withstanding great overloads or surges of power. Germanium diode applications and batteries using sintered-plate and nickel-cadmium techniques promise to make a revolution in our energy sources.
• Solar energy conversion systems are also getting increasing attention. One usually cautious Detroit auto executive recently ventured that solar powered cars might be common by 1980.
As for the oil companies, they are more or less "watching developments," as one research director put it to me. A few are doing a bit of research on fuel cells, but almost always confined to developing cells powered by hydrocarbon chemicals. None of them are enthusiastic all researching fuel cells, batteries, or solar power plants. None of them are spending a fraction as much on research in these profoundly important areas as they are on the usual run-of-the-mill things like reducing combustion chamber deposit in gasoline engines. One major integrated petroleum company recently took a tentative look at the fuel cell and concluded that although "the companies actively working on it indicate a belief in ultimate success . . . the timing and magnitude of its impact are too remote to warrant recognition in our forecasts."
One might, of course, ask: Why should the oil companies do anything different? Would not chemical fuel cells, batteries, or solar energy kill the present product lines? The answer is that they would indeed, and that is precisely the reason for the oil firms having to develop these power units before their competitors, so they will not be companies without an industry.
Management might be more likely to do what is needed for its own preservation if it thought of itself as being in the energy business.
But even that would not be enough if it persists in imprisoning itself in the narrow grip of its tight product orientation. It has to think of itself as taking care of customer needs, not finding, refining, or even selling oil. Once it genuinely thinks of its business as taking care of people's transportation needs, nothing can stop it from creating its own extravagantly profitable growth.
The tantalizing profit possibilities of low unit production costs may be the most seriously self-deceiving attitude that can afflict a company, particularly a "growth" company where an apparently assured expansion of demand already tends to undermine a proper concern for the importance of marketing and the customer.
The usual result of this narrow preoccupation with so-called concrete matters is that instead of growing, the industry declines. It usually means that the product fails to adapt to the constantly changing patterns of consumer needs and tastes, to new and modified marketing institutions and practices, or to product developments in competing or complementary industries. The industry has its eyes so firmly on its own specific product that it does not see how it is being made obsolete.
The classical example of this is the buggy whip industry. No amount of product improvement could stave off its death sentence. But had the industry defined itself as being in the transportation business rather than the buggy whip business, it might have survived. It would have done what survival always entails, that is, changing. Even if it had only defined its business as providing a stimulant or catalyst to an energy source, it might have survived by becoming a manufacturer of, say, fan belts or air cleaners.
What may some day be a still more classical example is, again, the oil industry. Having let others steal marvelous opportunities from it (e.g., natural gas, as already mentioned, missile fuels, and jet engine lubricants), one would expect it to have taken steps never to let that happen again. But this is not the case. We are now getting extraordinary new developments in fuel systems specifically designed to power automobiles.
Not only are these developments concentrated in firms outside the petroleum industry, but petroleum is almost systematically ignoring them, securely content in its wedded bliss to oil. It is the story of the kerosene lamp versus the incandescent lamp all over again. Oil is trying to improve hydrocarbon fuels rather than to develop any fuels best suited to the needs of their users, whether or not made in different ways and with different raw materials from oil.
Here are some of the things which non-petroleum companies are working on:
• Over a dozen such firms now have advanced working models of energy systems which, when perfected, will replace the internal combustion engine and eliminate the demand for gasoline. The superior merit of each of these systems is their elimination of frequent, time-consuming, and irritating refueling stops. Most of these systems are fuel cells designed to create electrical energy directly from chemicals without combustion. Most of them use chemicals that are not derived from oil, generally hydrogen and oxygen.
• Several other companies have advanced models of electric storage batteries designed to power automobiles. One of these is an aircraft producer that is working jointly with several electric utility companies. The latter hope to use off-peak generating capacity to supply overnight plug-in battery regeneration. Another company, also using the battery approach, is a medium-size electronics firm with extensive small-battery experience that it developed in connection with its work on hearing aids. It is collaborating with an automobile manufacturer. Recent improvements arising from the need for high-powered miniature power storage plants in rockets have put us within reach of a relatively small battery capable of withstanding great overloads or surges of power. Germanium diode applications and batteries using sintered-plate and nickel-cadmium techniques promise to make a revolution in our energy sources.
• Solar energy conversion systems are also getting increasing attention. One usually cautious Detroit auto executive recently ventured that solar powered cars might be common by 1980.
As for the oil companies, they are more or less "watching developments," as one research director put it to me. A few are doing a bit of research on fuel cells, but almost always confined to developing cells powered by hydrocarbon chemicals. None of them are enthusiastic all researching fuel cells, batteries, or solar power plants. None of them are spending a fraction as much on research in these profoundly important areas as they are on the usual run-of-the-mill things like reducing combustion chamber deposit in gasoline engines. One major integrated petroleum company recently took a tentative look at the fuel cell and concluded that although "the companies actively working on it indicate a belief in ultimate success . . . the timing and magnitude of its impact are too remote to warrant recognition in our forecasts."
One might, of course, ask: Why should the oil companies do anything different? Would not chemical fuel cells, batteries, or solar energy kill the present product lines? The answer is that they would indeed, and that is precisely the reason for the oil firms having to develop these power units before their competitors, so they will not be companies without an industry.
Management might be more likely to do what is needed for its own preservation if it thought of itself as being in the energy business.
But even that would not be enough if it persists in imprisoning itself in the narrow grip of its tight product orientation. It has to think of itself as taking care of customer needs, not finding, refining, or even selling oil. Once it genuinely thinks of its business as taking care of people's transportation needs, nothing can stop it from creating its own extravagantly profitable growth.
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The tantalizing profit possibilities of low unit production costs may be the most seriously self-deceiving attitude that can afflict a company, particularly a "growth" company where an apparently assured expansion of demand already tends to undermine a proper concern for the importance of marketing and the customer.
The usual result of this narrow preoccupation with so-called concrete matters is that instead of growing, the industry declines. It usually means that the product fails to adapt to the constantly changing patterns of consumer needs and tastes, to new and modified marketing institutions and practices, or to product developments in competing or complementary industries. The industry has its eyes so firmly on its own specific product that it does not see how it is being made obsolete.
The classical example of this is the buggy whip industry. No amount of product improvement could stave off its death sentence. But had the industry defined itself as being in the transportation business rather than the buggy whip business, it might have survived. It would have done what survival always entails, that is, changing. Even if it had only defined its business as providing a stimulant or catalyst to an energy source, it might have survived by becoming a manufacturer of, say, fan belts or air cleaners.
What may some day be a still more classical example is, again, the oil industry. Having let others steal marvelous opportunities from it (e.g., natural gas, as already mentioned, missile fuels, and jet engine lubricants), one would expect it to have taken steps never to let that happen again. But this is not the case. We are now getting extraordinary new developments in fuel systems specifically designed to power automobiles.
Not only are these developments concentrated in firms outside the petroleum industry, but petroleum is almost systematically ignoring them, securely content in its wedded bliss to oil. It is the story of the kerosene lamp versus the incandescent lamp all over again. Oil is trying to improve hydrocarbon fuels rather than to develop any fuels best suited to the needs of their users, whether or not made in different ways and with different raw materials from oil.
Here are some of the things which non-petroleum companies are working on:
• Over a dozen such firms now have advanced working models of energy systems which, when perfected, will replace the internal combustion engine and eliminate the demand for gasoline. The superior merit of each of these systems is their elimination of frequent, time-consuming, and irritating refueling stops. Most of these systems are fuel cells designed to create electrical energy directly from chemicals without combustion. Most of them use chemicals that are not derived from oil, generally hydrogen and oxygen.
• Several other companies have advanced models of electric storage batteries designed to power automobiles. One of these is an aircraft producer that is working jointly with several electric utility companies. The latter hope to use off-peak generating capacity to supply overnight plug-in battery regeneration. Another company, also using the battery approach, is a medium-size electronics firm with extensive small-battery experience that it developed in connection with its work on hearing aids. It is collaborating with an automobile manufacturer. Recent improvements arising from the need for high-powered miniature power storage plants in rockets have put us within reach of a relatively small battery capable of withstanding great overloads or surges of power. Germanium diode applications and batteries using sintered-plate and nickel-cadmium techniques promise to make a revolution in our energy sources.
• Solar energy conversion systems are also getting increasing attention. One usually cautious Detroit auto executive recently ventured that solar powered cars might be common by 1980.
As for the oil companies, they are more or less "watching developments," as one research director put it to me. A few are doing a bit of research on fuel cells, but almost always confined to developing cells powered by hydrocarbon chemicals. None of them are enthusiastic all researching fuel cells, batteries, or solar power plants. None of them are spending a fraction as much on research in these profoundly important areas as they are on the usual run-of-the-mill things like reducing combustion chamber deposit in gasoline engines. One major integrated petroleum company recently took a tentative look at the fuel cell and concluded that although "the companies actively working on it indicate a belief in ultimate success . . . the timing and magnitude of its impact are too remote to warrant recognition in our forecasts."
One might, of course, ask: Why should the oil companies do anything different? Would not chemical fuel cells, batteries, or solar energy kill the present product lines? The answer is that they would indeed, and that is precisely the reason for the oil firms having to develop these power units before their competitors, so they will not be companies without an industry.
Management might be more likely to do what is needed for its own preservation if it thought of itself as being in the energy business.
But even that would not be enough if it persists in imprisoning itself in the narrow grip of its tight product orientation. It has to think of itself as taking care of customer needs, not finding, refining, or even selling oil. Once it genuinely thinks of its business as taking care of people's transportation needs, nothing can stop it from creating its own extravagantly profitable growth.
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