The Myths of Business

Business Myopia - The Relevancy to Small Business

Had railroad executives seen themselves as being in the business of transportation rather than the railroad business, they would have grown.   Every major industry has been a growth industry, but some that have been or were riding a wave of growth enthusiasm are very much in decline.  

In many cases, the result has been due to management failing to understand some fundamental questions of  business. The railroads did not fail to grow because of the demand for passenger and freight business, rather the demand was filled by other industries, cars, planes and even telephones.  They allowed other industries take customers away from because they assumed themselves to be in the railroad business rather than in the transportation business.

The moral of the story is that the railroad industry lacked the imagination and audacity that made them at one point in time an economic force.

In reality, companies are organised and operated to create and capitalise on growth opportunities.  Companies that assume themselves to be riding some automatic escalator of growth invariably descend into stagnation. There are many 

examples, such as dry cleaning, electric utilities and grocery stores.

There are Four Myths that may contribute to this:

1. the belief that growth is assured by expanding and the creation of an affluent population.
2. The belief that there is a substitute of the industry product.
3. Too much faith in mass production and the  advantages of declining unit costs as output rises.
4. Too much reliance on a product that lends itself to carefully controlled scientific research, improvement and manufacturing cost reduction.

These 4 myths are a  consistent reminder of the risks that businesses must carefully evaluate at every stage of the cycle. The view that an industry / business is a customer satisfying process and not a goods producing process is vital for all business to understand.

Given the customers needs, the business develops its DNA by working backwards through the manufacturing / servicing process and identifying the building blocks of the business.

All in all, the entire business must be viewed as a customer creating and customer satisfying entity. 

Working as team and making sure the whole organisation is enthusiastically aware of the road map is critical for managements ability to execute the business strategies. 

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