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Extending the marketing myopia concept to promotestrategic agilityKevin Johnston aa School of Engineering, Enterprise and Technology Management Group, Liverpool JohnMoores University , Byrom Street, Liverpool, L3 3AF, UKPublished online: 20 May 2009.

To cite this article: Kevin Johnston (2009) Extending the marketing myopia concept to promote strategic agility, Journal ofStrategic Marketing, 17:2, 139-148, DOI: 10.1080/09652540902879292

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Extending the marketing myopia concept to promote strategic agility

Kevin Johnston*

School of Engineering, Enterprise and Technology Management Group, Liverpool John MooresUniversity, Byrom Street, Liverpool, L3 3AF, UK

(Final version received February 2007)

This paper proposes that many firms suffer from ‘self-concept specificity’. This is anunconsciously self-imposed restriction on creative strategy formulation that is theresult of a highly bounded concept of a firm held by its senior management.Recognising that this concept resonates with Levitt’s seminal Marketing Myopiaconcept, the paper draws on Resource-based View and Network Organisationsliterature to add two further dimensions, Capability Myopia and Boundary Myopiarespectively. The paper then explores insights that systems thinking and organisationallearning literature may provide to help firms to escape the paradox of adaptation inwhich conflicting imperatives drive both specialisation and variety. Such insights mayallow strategic managers to be made more aware of their current organisational self-concept and its constraints, to challenge its assumptions and to reframe it, so generatingmore innovative strategic options.

Keywords: marketing myopia; strategic renewal; capabilities; systems; cognition

The agility imperative

Ormerod (2005, p. xi) notes that ‘more than 10% of all the companies in America disappear

each year’. Of the top 100 global companies in 1912, only 19 were still in the list by 1995

(Hannah, 1999). Schumpeter (1934, p. 66) wrote of ‘gales of creative destruction’. The

speed and ferocity of this creative destruction is accelerating (D’Aveni, 1994; Eisenhardt,

1989). This is a time of discontinuous change in business (Tushman & Anderson, 1986). For

example, branded goods manufacturers are ‘disintermediating’ (Malone, Yates, &

Benjamin, 1987) their distributors and retailers to reach the consumer directly, thus

threatening the raison d’etre of many business models such as high street insurance brokers,

travel agents and music retailers. New entrants have appeared, their value-added frequently

based on providing information to assist purchase decision making. Chircu and Kauffman

(2000) apply the term ‘reintermediation’ to describe this phenomenon and posit an

‘intermediation–disintermediation–reintermediation’ cycle. For incumbents, a redefiniton

of their value-added (e.g. bookstores incorporating coffee shops, Negroponte, 1995), or

even a reinvention of their business model (e.g. book ‘ATMs’ enabling ‘printing on

demand’, Epstein, 2001), are thus strategic imperatives in many sectors.

Marketing myopia

Levitt (1960) posited that customer-centric definitions of a business are superior to

product-based definitions. For Levitt, the limitations of a product-focus were apparent

ISSN 0965-254X print/ISSN 1466-4488 online

q 2009 Taylor & Francis

DOI: 10.1080/09652540902879292

http://www.informaworld.com

*Email: k.m.johnston@livjm.ac.uk

Journal of Strategic Marketing

Vol. 17, No. 2, April 2009, 139–148

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when the railroads went into decline in the 1950s ‘because they assumed themselves to

be in the railroad business rather than the transportation business’ (1960, p. 5) and thus

overlooked the threat posed by alternative forms of transportation. A company should

therefore define itself in relation to the value it adds and the benefits it offers (i.e.

‘transportation’ rather than ‘trains’ in the case of railroads). Such a perspective is now

axiomatic, companies carefully package their market offerings as ‘solutions’ and

corporate branding de-emphasises product (for example, ‘BT’ rather than British

Telecom, BP’s ‘Beyond Petroleum’). Levitt’s ‘marketing myopia’ provides a seminal

exploration of organisational cognitive failure but pre-dated by three decades the rise of

the highly influential resource-based school of strategy and thus could not consider a

further dimension: capabilities.

Capability myopia

The Resource-based View (RBV) school of strategy that came to prominence in the 1990s,

challenging the orthodox Industrial Organisation (IO) school (as exemplified by Porter,

1979), encouraged firms to take an ‘inside–out’ view that emphasised the capabilities of a

firm. Penrose (1959) argued that internal resource configurations both facilitate and

constrain the direction of expansion of the firm and that a firm’s expansion is influenced by

its own previously acquired or inherited resources and those it must obtain from the market

in order to carry out its production and expansion programmes. Prahalad and Hamel (1990)

developed the concept of ‘core competences’ that link underlying competencies and end

products, provide the source of a firm’s competitive advantage and are the basis for new

products and entry to new markets (Ansoff, 1957). In an example made famous in a 2005

motion picture (‘Kinky Boots’), a traditional shoe manufacturer was saved from bankruptcy

by reinventing itself as a manufacturer of boots for transvestites. The core competence of the

firm in high quality leather footwear was transposed to a new market and provided a crucial

competitive advantage (the strength to carry a man’s weight in a female-style boot). Barney

(1991) developed the ‘VRIN’ framework for assessing the potency of core competences,

positing that they should ideally be valuable, rare, inimitable and non-substitutable.

Leonard-Barton (1992) recognised that the core competencies that once formed the

basis of a firm’s competitive advantage can undermine that advantage if the environment

changes such that their potency is reduced. Miller (1990) described this phenomenon as the

‘Icarus paradox’. Teece, Pisano and Shuen (1997, p. 517) define dynamic capabilities as

‘the ability to integrate, build, and reconfigure internal and external competencies to address

rapidly-changing environments’. While the original RBV emphasised the selection of

appropriate resources, dynamic capabilities emphasise resource development and renewal.

In an approach that has parallels with architectural innovation (Henderson & Clark, 1990),

Kogut and Zander (1992, p. 371) proposed ‘combinative capabilities’ as the ‘capability of

the firm to exploit its knowledge and the unexplored potential of its technology’. Galunic

and Rodan (1998) suggest that novel capabilities can arise from synthesis or reconfiguration

and explore the antecedents of each. A firm that does not perceive itself as a bundle of

competencies that can be reconfigured generatively (Gergen, 1978) is constrained in its

ability to create new value propositions. This paper proposes the term ‘capability myopia’ to

describe this cognitive failure.

Boundary myopia

The linear, static value chain (Porter, 1980) is being ‘blown to bits’ (Evans & Wurster,

1999) and replaced with ‘value constellation’ partners (Normann & Ramirez, 1993).

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As out-sourcing increasingly ‘hollows out’ firms (Jonas, 1986) and value-adding

activities are continuously being ‘unbundled’ and ‘rebundled’ (Hagel & Singer, 1999),

a new organisational structure has evolved – the network organisation (Cravens,

Piercy, & Shipp, 1996). The network organisation is a group of firms (entirely

independent or autonomous subsidiaries) that behave as a single entity. The

significance of the computer-mediated data networks that enable such co-ordination at

arm’s length was recognised by Fulk and deSanctis (1995). The ubiquity and

standardisation of the Internet has led to the ability to easily and cheaply dissolve and

re-establish virtual co-ordinating relationships and to the development of dynamic

network organisations (Benjamin & Wigand, 1995). The huge benefit of the dynamic

network organisation is the reduced asset specificity and the resultant increase in

flexibility (Boynton & Victor, 1991). The increasingly virtual nature of organisational

structures (Davidow & Malone, 1992) and reduction of the ‘friction’ that slows the

rate of change of business interaction is creating an economic paradigm known as the

‘business ecosystem’ (Moore, 1996). A diverse population of organisations, each

tightly defined by its core competences, exists in an ‘opportunity environment’

(Moore, 1996), interacting in a constant sequence of transient relationships, each

motivated by a particular market opportunity (Brandenburger & Nalebuff, 1996).

Iansiti and Levien (2004, p. 4) note that ‘rather than focusing primarily on their

internal capabilities [ . . . ] they emphasize the collective properties of the business

networks in which they participate’.

General Systems Theory (von Bertalanffy, 1968) is a multidisciplinary approach in

which a system can be seen as embedded in a larger ‘super-system’ and comprised of

smaller ‘sub-systems’. This paper adopts a systems thinking approach in the

organisational context (Kast & Rosenweig, 1986). Ashkenas, Ulrich, Jick and Kerr

(1995) proposed the notion of the ‘boundaryless firm’ in which the capability set of

a firm is broadened through access to external competences and new ideas for value

creation are more readily generated – more ‘generative’ (Gergen, 1978). In

Chesbrough’s (2003) paradigm, in contrast to traditional vertically integrated research

and development, organisational boundaries are porous to licensed technologies that did

not originate within the organisation but are relevant to its core business. The imperative

to own and control is being superseded by the imperative to find and collaborate. The

best known example of this paradigm is open source software (e.g. the Linux operating

system and Firefox browser) but many other examples exist such as Procter and

Gamble’s ‘connect and develop’ programme, InnoCentive (a web-based community

matching top scientists to relevant R&D challenges facing leading organisations),

Thinkcycle (an academic, non-profit initiative engaged in supporting distributed

collaboration towards design challenges facing underserved communities and the

environment), the Search for Extraterrestial Intelligence (SETI) project and even beer

(free-beer.dk). Customers may also be a valuable source of innovation, for example,

followers of extreme sports have become expert at adapting and refining the equipment

they use (von Hippel, 2005).

‘Emergent properties’ are defined by Flood and Jackson (1991) as those ‘which relate

to the whole of the system that are not necessarily present in any of its parts’.

By reframing the organisational boundary to include the super-system of external

capabilities, a dissolution (Ackoff, 1999) of capability gaps may emerge. However,

factors such as the ‘Not Invented Here’ syndrome (Katz & Allen, 1982) and ‘spatial

learning myopia’ (Levinthal & March, 1993) may constrain the firm’s ability to adopt

such an approach. SME managers, in particular, tend to work with people they know and

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trust leading to insularity (Zhang, Macpherson, Taylor, & Jones, 2004). This is an

example of high ‘bonding social capital’ (Putnam, 2000) but low ‘bridging social capital’

(Putnam, 2000) whereby the ‘ties that bind can also be the ties that blind’ (Cohen &

Prusak, 2001, p. 56). This paper proposes the term ‘boundary myopia’ to describe this

form of cognitive failure.

Self-concept specificity

Asset specificity (Williamson, 1983) refers to the relative lack of transferability of assets

intended for one use to other uses. Highly specific assets represent sunk costs that have

relatively little value beyond their use in the context of a specific function. High asset

specificity creates high exit barriers (Porter, 1979) that cause a firm to remain in an

industry, even when the venture is not profitable. Asset specificity is thus a huge strategic

drag and constraint on agility. Deep pockets buy time to overcome the threats of paradigm

shifts (e.g. IBM missing the personal computer, Microsoft missing the Internet) but for

many firms high asset specificity is a mortal danger (for example ‘old cotton mills useless

for any other purpose’, Ollerenshaw, 2006).

This paper proposes to use the specificity concept but apply it to the firm’s self-

concept and thus its cognitive schema (Fiske & Taylor, 1991). An unnecessarily

restrictive self-concept (in terms of the marketing, capability and boundary myopias

described above) may be termed ‘self-concept specificity’ and prove a similar drag

on strategic flexibility. This is an example of Vickers’ (1970, p. 15) dictum that

‘a trap is a function of the nature of the trapped’. This proposed construct is

composed of the three forms of cognitive myopia discussed above: marketing,

capability and boundary.

Xerox provides a classic example of cognitive specificity (Smith & Alexander, 1988).

Though Xerox’s Palo Alto Research Centre (PARC) is famous as the birthplace of many

ground-breaking innovations such as the ‘windows and mouse’ user environment, Xerox

only commercialised innovations that fitted its copier and printer business model. Tripsas

and Gavetti (2000) illustrate how the cognitive frameworks of managers in Polaroid

effectively precluded the company from taking advantage of its technological knowledge

in the digital imaging market. Apple, on the other hand, thought ‘outside the box’ and has

very successfully transferred its core competences in digital technology, design and

marketing from the personal computer domain to music with the iPod. The low specificity

of these competences and of its corporate brand were not crushed by cognitive specificity

in strategy formulation.

The adaptation paradox

Network organisations often consist of a dominant focal organisation that out-sources

much of its operations (e.g. the automobile industry). The focal organisation has

long-term relationships with its suppliers, allows them access to its computer systems as

necessary and involves them in strategic planning, effectively administering the network

organisation as a virtual hierarchy (Wigand, Picot, & Reichwald, 1997). Dynamic

networks are common in industries where responsiveness to the market is critical

(e.g. fashion, publishing, toys), where appropriate resources change rapidly (e.g. biotech)

or both (e.g. motion pictures). In such organisations, an ‘integrator’ firm identifies and

assembles assets owned by other companies. Typically the integrator’s core competence

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is understanding the market. These dominant firms pick and choose subcontractors

ruthlessly and will seek to ‘employ’ the best firm from the niche (the ‘best of breed’) that

most precisely fits their requirements at that time (Hagel & Seely-Brown, 2005).

The downside of being ‘best of breed’ is the risk of high asset specificity due to

specialisation (e.g. in a certain technology or process). When that contracted requirement

has ceased the dominant firm moves on to the next opportunity with no need to concern

itself within the on-going viability of the subcontractor. This is in conflict with the need

of the subcontractor to ensure its own future viability (potentially imperilled by high

asset specificity).

There is thus a tension between the two imperatives, namely, to be as specialised

as possible (e.g. Iansiti & Levien, 2004; Miles & Snow, 1978; Porter, 1980) and to be as

agile as possible (e.g. D’Aveni, 1994; Schumpeter, 1934; Teece et al., 1997). These

antagonistic imperatives were recognised by the philosopher Archilochus (seventh-

century BCE) who noted that ‘the fox knows many things, but the hedgehog knows

one big thing’ in a fragment of verse made famous by Isaiah Berlin (1953). Collins

(2001, p. 91) rehearsed Porter’s ‘focus’ generic strategy by arguing for ‘the clarifying

advantage of a Hedgehog Concept’. However, ‘hedgehogs’ are cognitively limited –

they are so focused that they see the world through their limited and limiting cognitive

‘lens’ and may miss very significant external changes. Levinthal and March (1993)

recognised the dangers of becoming over-focused, leading to ‘temporal learning

myopia’.

Given Ashby’s (1965) law of requisite variety (that the internal regulatory

mechanism of an open system must possess at least the variety of possible states of its

environment), there is thus a paradox: firms that adapt perfectly to their environment

imperil their future by being unable to adapt to further change (analogous to the

over-specialisation of species in ecological niches and their resultant vulnerability to

environmental shock e.g. the Giant Panda). The network organisation (the ‘super-

system’) sees any constituent firm as a tightly focused ‘black box’ component

(the ‘system’) providing a capability required to fulfil a specific requirement at the time

(i.e. low variety). However, for its own survival, it is imperative that such a firm sees its

capabilities as reconfigurable ‘sub-systems’ that support its on-going viability and

autopoietic identity (Seidl, 2005) (i.e. high variety).

Escaping the adaptation paradox

The need for strategic flexibility (Voldbera, 1996) and the capacity for renewal

(Baden-Fuller & Stopford, 1994) is widely recognised but often elusive in practice.

The resource-based view is very helpful in addressing the adaptation paradox (Baden-

Fuller & Stopford, 1994) as strategy formulation is firm-centric and empowering,

encouraging the firm to enact its own future and adapt with the environment, rather than

the deterministic and mechanistic response of the Industrial Organisation school.

Corporate entrepreneurship literature recognises that innovation, venturing and

renewal are inter-related (e.g. Floyd & Lane, 2000; Sharma & Chrisman, 1999), has

examined the tensions between selection and adaptation (e.g. Burgelman, 1991) and the

processes underlying innovation such as creativity (e.g. Bangle, 2001; Hargadon & Sutton,

2000). However, the potential for this relatedness to be developed into a systematic and

practical methodology for strategic renewal has yet to be well developed. Normann (2001)

posits a crane as a metaphor for escaping cognitive limits and ‘reframing’ a business

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model. Mauborgne and Kim (2005) propose a framework and tools to support ‘value

innovation’ in which industry recipes are challenged.

In ‘soft systems’ methodology (Checkland & Scholes, 1990) there can exist a plurality

of views as each observer sees the system from their own subjective perspective, a

phenomenon recognised in the ‘appreciative systems’ approach of Vickers (1965). This

perception derives from the observer’s ‘weltanschauung’ or ‘world view’. Corporate

self-identity establishes such a weltanschauung. As upper-echelons theory (Finkelstein &

Hambrick, 1996; Hambrick & Mason, 1984) revealed, after early commercial success and

initial learning, managers may commit psychologically to ‘comfort zone’ strategies that

are congruent with their world view (‘temporal learning myopia’, Levinthal & March,

1993). High levels of shared experience among managers may foster a ‘group think’

phenomenon (Allinson & Hayes, 1996; Janis, 1972). These senior managers may lack the

agility of mind to formulate adaptive (or pre-emptive) changes other than incremental

changes or imitative responses (Wiersema & Bantel, 1992).

Guth and Ginsberg (1990, p. 5) define ‘strategic renewal’ as ‘the transformation of

organisations through renewal of the key ideas on which they are built’. This paper promotes

the view that a key element of strategic renewal is the re-framing of the self-concept of an

organisation. Interpretists see identity as an aspect (Fiol, Hatch, & Golden-Biddle, 1998) or a

product (Salzer-Morling, 1998) of sensemaking (Weick, 1995) that is self-focused.

To Pankow (1976, p. 20) ‘self transcendence’ meant ‘the ability to jump over one’s shadow’.

For Jantsch and Waddington (1976, p. 9) those capable of self-transcendence were ‘capable of

representing themselves and therefore also of transforming themselves’. Scharmer (2001,

p. 137) describes self-transcending knowledge as ‘the ability to sense the emerging

opportunities, to see the coming-into-being of the new’ and emphasises the need for

‘generative dialogue’. Strategic renewal literature recognises the significance of the social-

cognitive theory of learning perspective, the importance of cognitive diversity and the

parallels with double-loop learning (Argyris & Schon, 1978). For example, Govindarajan and

Trimble (2005) propose that a key challenge is ‘forgetting some key assumptions that made

the current business’. Mitroff and Linstone (1993) propose ‘assumption surfacing’

techniques. Crossan and Berdrow (2003) suggested that four processes (intuiting, interpreting,

integrating and institutionalising) are important for strategic renewal. Barr, Stimpert and Huff

(1992) have modified Lewin’s (1951) ‘unfreeze–change–refreeze’ framework for the

renewal context.

Conclusion

New schools of strategic thought and new organisational forms have the potential to

increase greatly an organisation’s ‘degrees of freedom’ for strategy formulation in

comparison to the rigidities and determinism of vertical integration and the Industrial

Organisation school. In an ecosystem of network organisations the capability set of a firm

is potentially broadened through access to external competences and new ideas for

value creation may be more readily generated. That potential may never be realised if a

highly bounded concept of a firm is held by its senior management that results in

cognitive myopia. Through insights provided by systems thinking and organisational

learning, senior management may be made aware of their current organisational self-

concept and its constraints, to challenge its assumptions, to reframe it and so generate

more innovative strategic options. This paper proposes a conceptual framework to

support discussion. The framework may provide the basis for the development of metrics

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and the creation of an empirical tool for auditing the specificity of an organisation’s

self-concept.

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