Lee Iacocca is the former President of Ford and later served as the
Chairman of Chrysler. He spent over 40 years in the automotive industry and was
the quintessential leader. In 1988, the famous Iacocca quote appeared in
Forbes, “A company
with the best distribution system and the best service will win all the marbles
- because you can't keep an advantage in the other areas for long” (Iacocca,
Taylor, & Bellis, 1988, para. 1). Iacocca was referring to creating a
sustainable competitive advantage (SCA). Iacocca went on to explain that even
if an automaker created an innovative new model vehicle, the other
manufacturers would copy it. So to Iacocca’s point, a competitive advantage is
not sustainable if it is easily replicated. Companies that successfully create
a SCA will outperform the competition over time (Liu,
2013).
Kumar, Jones, Venkatesan, and Leone (2011) argued that globalization,
furious competition, mergers, acquisitions, and constant product and
technological innovations characterize the current business environment. Not only
must firms change, but also they must change faster than their competition. The
history books are filled with examples of companies that were once household
names, such as Kmart, Circuit City, and Blockbuster whose leadership was unable
to sense and respond to the fast paced changes in market conditions. These firms failed because of an inability to
fulfill current and future customer needs. Simply put, these organizations did
not have a market orientation.
In
their seminal work, Kohli and Jaworski (1990) formally defined market
orientation as involving a companywide effort to gather market intelligence on
current and future customer needs, disseminating the information throughout the
organization and acting upon the information. Earlier adopters of a market
orientation strategy were able to transform the knowledge gained and
disseminated throughout the organization into a SCA. However, since the advent
of the 21st century, more and more firms have adopted a market
orientation strategy. Consequently, in the current business environment having
a market orientation can be considered “table stakes” rather than a SCA. As the
world shifts from a product-dominant market to a service-dominant market, many
companies will need to shift their thinking and innovation efforts to involve service
related market oriented views (Kumar et al., 2011).
So is
Iacocca’s perspective from 1988 that the firm with the best
distribution and service would win all the marbles still accurate and
applicable today? The opinion was appropriate and understandable within the
context of the slow moving, capital-intensive 1988 automotive market in the
United States. However, while service and the distribution system remains
mission critical to a firm’s success, especially within a service-dominant
market, Iacocca’s view is too narrowly focused for the current highly
competitive global market that all businesses exist in, some three decades after
his iconic statement. Moon, Miller, and Kim, (2013)
argued that innovation is key to a firm’s ability to create a SCA. Consumer
needs are constantly changing and more sales are generated when consumers view
the product as cutting edge.
What do
you
think?
Learn
more about the author by checking my LinkedIn Profile at http://www.linkedin.com/in/roycewilliard
© 2015, The Williard Group LLC
References:
Iacocca, L., Taylor, A, III, & Bellis, W. (1988, August).
Iococca – In his own words, the Chrysler chairman talks candidly about Henery
Ford II and GM’s Roger Smith, reflects on his four decades as an automaker, and
speculates on what the 21st century holds for the business around
the world. Fortune. Retrieved from
http://archive.fortune.com/magazines/fortune/fortune_archive/1988/08/29/70953/index.htm
Kohli, A. K., & Jaworski, B. J. (1990). Market Orientation:
The Construct, Research Propositions, and Managerial Implications. Journal
Of Marketing, 54(2), 1-18. doi: 10.2307/1251866
Kumar, V., Jones, E., Venkatesan, R., & Leone, R. P. (2011).
Is market orientation a source of sustainable competitive advantage or simply
the cost of competing?. Journal Of Marketing, 75(1), 16-30.
doi:10.1509/jmkg.75.1.16
Liu, Y. (2013). Sustainable competitive advantage in turbulent
business environments. International Journal Of Production Research, 51(10),
2821-2841. doi:10.1080/00207543.2012.720392
Moon, H., Miller, D. R., & Kim, S. H. (2013). Product design
innovation and customer value: Cross-cultural research in the United States and
Korea. Journal Of Product Innovation Management, 30(1), 31-43.
doi:10.1111/j.1540-5885.2012.00984.x
