We Can't Move Forward if Cautious Marketers Stand in Way of Innovation

Why It's Time to Rethink a Few Things

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Rance Crain
Rance Crain
Is the marketing function standing in the way of innovation?

The marketing mantra has always been to give the customer what he or she wants, but that approach pretty much precludes giving consumers things they don't know they want or haven't thought of. And are marketers sometimes "held captive by their customers" -- proclaiming they don't want an improvement or new technology because it would be too disruptive to their normal behavior?

In other words, marketers can read their business correctly -- assessing what customers want or don't -- and still miss.

In a study of the disc-drive industry that applies to all marketers, Clayton Christensen wrote in his book "The Innovator's Dilemma" that the established firms were "aggressive, innovative and customer-sensitive in their approaches to sustaining innovations of every sort."

But they couldn't keep it up. "Finding new applications and markets for these new products seem to be a capability that each of these firms exhibited once, upon entry, and then apparently lost. It was as if the leading firms were held captive by their customers, enabling attacking entrant firms to topple the incumbent industry leaders each time a disruptive technology emerged."

The fundamental problem, as Alan Murray wrote in The Wall Street Journal, is that the modern corporation might have outlived its usefulness. He says "the best corporate managers have become, in a sense, enemies of the corporation.

"The reasons for this are clear enough. Corporations are bureaucrats and managers are bureaucrats. Their fundamental tendency is toward self-perpetuation. They are, almost by definition, resistant to change. They were designed and tasked, not with reinforcing market forces, but with supplanting and even resisting the market."

So what do we have? Two immovable objects -- the big corporation and the even bigger U.S. government, both loaded with bureaucratic caution and inertia -- trying to cope with the biggest recession since the Great Depression. Not a very good combination to get things going again.

I exchanged emails recently with an agency exec on how the recovery was proceeding. He told me that the big brands have maintained most of their revenue, driven costs down significantly "and are sitting on decent profits. They are spending needed marketing dollars to keep sales up and prices strong. But in the last few months they have grown more cautious about future investments. It is cool to be cautious again. Every CEO sees a cloudy couple of years with at least some downside risks.

"There are no jobs being created. Most of the stimulus dollars went to protect public-sector jobs or to pave or repave roads. Consumers are still leaning toward pulling back where they can. And business leaders are increasingly down on the Obama Administration and the Democratic agenda (increase taxes, increase the size of government, drive up health-care costs, tons of health-care confusion, race to write lots of regulations that really slow small businesses down, cater to the unions and demonize top earners and big businesses). CEOs feel it is imprudent to hire and launch big investments right now."

So the big corporations are holding back because of confusion and uncertainty, and the federal government is intent on getting bigger and more bureaucratic. Consumers, caught in the middle, are keeping their wallets and purses snapped shut, and that's probably not going to change anytime soon.

As I said the other week, export markets are starting to look pretty good to U.S. corporations. And the nice thing is, the future in developing countries has already been invented. Marketers can gauge consumer reaction to products not even envisioned by third-world consumers but used as staples by U.S. consumers. So the U.S. would serve as one gigantic test market for where the real sales potential is: in Asia and Africa.

If corporations need to be reinvented, then so does marketing. As Mr. Murray said, "change, innovation, adaptability all have to become orders of the day."

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