Sales & Marketing Management - May/June 2008 - (Page 30)

book excerpt EXCERPT FROM RULES TO BREAK & LAWS TO FOLLOW } T False Assumptions IT'S TIME TO TRASH CONVENTIONAL CORPORATE MAXIMS EXCERPTED FROM: Rules to Break & Laws to Follow How Your Business Can Beat the Crisis of Short-Termism By Don Peppers & Martha Rogers, Ph.D. he year is 1886. Gottlieb Daimler has just unhooked the horses from the front of a stagecoach and installed an engine in the back. He has created the first automobile. But it’s noisy, smelly and smoky—mostly an oddity. Daimler met Karl Benz a few years later and the two men went into business together. Then, early in the 1900s, financial planners at the new Daimler Benz automobile manufacturing company attempted to forecast the eventual size of the world market for cars, looking ahead 100 years. After careful analysis, they predicted that in another century there would be perhaps one million cars in use worldwide. But this forecast, as audacious as it must have sounded at the time, was woefully inadequate, because by the year 2005 more than 700 million cars were already in use worldwide. More than 60 million new cars were manufactured in that year alone. Granted, this was a very long-term forecast, but still: How could Daimler’s finance people have missed the number by a factor of nearly 1,000? It wasn’t the time lapse that accounts for the error. Nor was it sloppy calculation, or the fact that in those days they had no electronic calculators or spreadsheet programs. Their error was due to a completely false assumption. The planners predicted that in 100 years the world popuThis content is excerpted from Rules to Break & Laws to Follow: How Your Business Can Beat the Crisis of Short-Termism, February 2008 by Don Peppers and Martha Rogers, Ph.D., with permission from the publisher, John Wiley & Sons. You may not make any other use, or authorize any others to make any other use of this excerpt, in any print or non-print format, including electronic or multimedia. 30 SALES&MARKETING MANAGEMENT MAY/JUNE 2008 lation of chauffeurs would be about a million, and this would be a de facto limitation on the growth of the horseless carriage industry. Their prediction about the world population of chauffeurs was surprisingly close to the mark, but their assumption that all cars would have to be operated by chauffeurs was dead wrong. The error was not in the accuracy of the measurement, but in a false assumption about what they measured. Assumptions just like this one—just as carefully and accurately measured and every bit as fallacious—are every day corroding decisions about what truly limits the growth of businesses. Maybe yours. Like Bell forecasting that the market for telephones would be limited by the availability of human operators to make the connections, or IBM’s Tom Watson famously predicting that the world would never need more than about five large computers, it’s not hard to be blinded by the current business model. Even when the model is for a brand new product category. For most of a century now, three unspoken assumptions have underpinned businesses’ efforts to grow, meet financial goals and make shareholders happy. But these three assumptions about how a business creates value are false, and we call them “Rules to Break.” 1. The best measure of success for your business is current sales and profit. 2. With the right sales and marketing effort, you can always get more customers. 3. Company value is created by offering differentiated products and services. www.salesandmarketingmanagement.com http://www.salesandmarketingmanagement.com

Table of Contents Feed for the Digital Edition of Sales & Marketing Management - May/June 2008

Sales & Marketing Management - May/June 2008 Contents Editor's Letter Brian Tracy University Smart Sales Sales Strategy Smart Marketing Marketing Strategy Smart Management Management Strategy The Minister of Culture Become a Value Merchant Incentives/Motivation Streamlining Business Travel Book Excerpt The Way I See It

Sales & Marketing Management - May/June 2008

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