The railroads thought they were in the railroad business. They were in the transportation business — and missed it! The original cautionary tale of defining your game too narrowly.
o1/ The PlayIn his 1960 Harvard Business Review essay “Marketing Myopia,” Theodore Levitt used the American railroads as his lead example. They let themselves decline, he argued, not because demand for transportation fell — it grew — but because they defined themselves as being in the railroad business rather than the transportation business. Cars, trucks, and planes ate their market while they protected track.
This is a flag on strategy, not execution. The railroads were product-oriented instead of customer-oriented: they asked “how do we run more trains?” instead of “how do people and goods want to move?” A too-narrow definition of the business blinded them to where the customer was already heading.
03/ The Ref’s CallRed flag, fifteen yards, and the textbook example every founder should know. Ask what business you’re actually in — the job the customer hires you for — not the product you happen to ship today.
The railroads defined themselves as being in the railroad business, not the transportation business, and protected track instead of following the customer.
Demand for transportation grew, but cars, trucks and planes took the market. A too-narrow definition of the business blinded them to where customers were heading.
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