Studebaker, producer of some of the most iconic cars in America, started making wagons for farmers, miners, and the military in 1852. Incorporated in 1868 under the name Studebaker Brothers Manufacturing Co., it entered the automobile business in 1902 making electric vehicles. By 1904 it was making gasoline-powered vehicles, and for the next 50 years it became a major player in the industry. Studebaker earned a reputation for quality and reliability during America’s golden age of the automobile.
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It’s gone now. A bloated and sluggish manufacturing system, poor capital management, and an ill-advised merger finally did the company in. The last vehicle rolled off its assembly line in 1966.
But Studebaker isn’t the only company to disappear from the scene. Blockbuster is gone, as are the once-viable companies Woolworth’s, Pullman (plush railroad cars), Montgomery Ward, and American Motors. To be viable is to be capable of working successfully. However, a company may be capable of working successfully even as its market shrinks or its constituency changes. What worked well during the market’s heyday may not work so well in later years.
Why? Because one must maintain viability.
“Viability,” according to Wikipedia, “is the ability of a thing (e.g., a living organism, an artificial system, an idea) to maintain itself or recover its potentialities.” This definition is precisely why I’ve been emphasizing that strategies and tactics must follow vision, not the other way around.
Viability means your company possesses the following things and does more than offer mere lip service.
Relevance. The product you offer or services you provide must have meaning and a connection with those you are targeting. These potential customers must engage emotionally with the product or service.
You know that sales are almost never logical. They are almost always emotional. But even recognizing this is insufficient. There must be a need for what you offer. When written correctly, your promotional materials should describe the benefits your product or service provides while meeting that need.
To maintain relevance means maintaining an ability to satisfy the user’s needs. This involves more than the product; it requires experience. Look at the evolution of supermarkets. Today’s prosperous companies have well-lighted stores with wide aisles and products appropriate for the local customers’ desires. Look into the development of online businesses to see how relevance plays such a critical role.
Relief. There is a pain or a promise element to every business transaction. The customer or constituent experiences some pain, even if it is minor. They need something. The question is always, “Do we as a company, and do I as a salesperson, understand what that customer needs?” Companies and organizations that maintain viability are successful at promising to satisfy that need and then fulfilling it.
All economic transactions are problem-solving ones. The customer has a problem, and we solve it and get paid to do it. The customer’s pain may have multiple levels. Someone may be in the market for a car, but needs more than transportation. They may need to feel the rush of a powerful and responsive driving experience. They may need to feel safe and comfortable, too. Companies that maintain viability offer relief because they understand what their customers and constituents need.
Efficiency. Studebaker neglected to update its manufacturing plants. At the time of its demise, its plants had a break-even target of 500,000 vehicles. The company made no money at all until 500,000 cars were sold. When businesses reach this state, it’s a signal to start envisioning the leadership and management your company needs to increase efficiency and profitability.
Effectiveness is gauged by measuring all three elements of viability—relevance, relief, and efficiency. A comprehensive vision born out of real-world circumstances, a cunning assessment of the market, responsibly managed resources, and a light-on-your-feet adaptability add up to a viable company.
First published March 24, 2014, on The Practical Leader.
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