Bear with me. Let me start today’s blog post with an anecdote.

In 1987, I attended a lecture by Pier Abetti, a renowned scientist and technologist who applied his expertise to the study of business management and entrepreneurship.

He shared an insight that has resonated with me ever since. He related for his audience that day the story of the rise and fall of major industries and individual companies.

In particular, he focused on the American Locomotive Company. This company, based in Schenectady, New York, United States, was an enormously profitable manufacturer of locomotives.

A turning point in its corporate fortunes occurred when it declined to adopt an innovation presented to it. The young innovator was A.C. Diesel, and yes, he demonstrated the superior potential of the diesel engine over the then dominant steam technology.

The rejection of his invention was based on two realities:

  1. Steam locomotives and the infrastructure to support them were the overwhelmingly dominant technology carrying rail passengers and freight. Scaling up to manufacture diesel locomotives would be costly, and then scaling up the infrastructure even more so.

  2. The American Locomotive Company was wildly profitable, as evidenced by its opulent executive offices with wood paneling and thick carpets. It had no intention in straying from the status quo and risking that profitability.

The American Locomotive Company continued to profitably manufacture steam locomotives for a while, but ultimately went into decline and no longer exists. It failed to innovate because it was too focused on immediate profitability (and the fancy wood-paneled offices with thick pile carpet).

Pier’s study of cases like this lead him to a profound insight and the development of a management theorem he claimed was as fundamental to management science as Einstein’s e = mc2 was to physics.

Abetti’s theorem, MI = 1/CT, indicates that management innovation is inversely proportionate to the carpet thickness in executive offices.

While it sounds like a joke and does have a tongue-in-cheek approach to the topic, it holds true more often than not.

Struggling companies embrace innovation and adapt to change quickly. Successful companies lose their focus, paying more attention to margins versus market share and marketplace; to profits versus products and to cost versus customers or competition.

I applied Pier’s insight in my role as a newspaper executive. Ten years after his lecture (or so) I found myself in Dallas, Texas, taping a programme for the Newspaper Satellite Network on integrated marketing solutions, a very successful, multi-media, client/customer centric approach we had developed at Hearst Newspapers’ Times Union.

Essentially, we were offering a portfolio of products and services that enriched and strengthened our client relationships.

To the left is an opening slide from a 1996 presentation I found in my archives.

By the mid-’90s we were offering mass/class reach print advertising opportunities, zoned pre-print distribution, voice information services, online visibility, database/direct marketing support, event marketing options, community relations applications, specialty publishing/collateral design, and multi-media planning support along with co-op support, market research, print brokering, and creative design services.

Our “We’re Your Source” multi-media consumer news brand applied equally well as our business-to-business brand.

In 2003, that B2B approach had evolved and matured to the point that we essentially acquiesced to client requests and began to function as a full-service advertising agency. In fact, in 2005 I presented on this initiative at INMA. To the right is the opening slide, also from my archives.

In the presentation, I detailed the evolution of the agency concept, the execution (using a case study), the skill sets needed to execute, and the revenue growth attributed to the programme.

To the right is an integrated production process/workflow diagram from the same presentation.

The presentation concluded that “customer intimacy” and being a source of “solutions” provided “revenue growth driven by relationship management.”

As I write this article/blog post today in late 2014, Scott Stines has a post up on titled “Creating a Customer First Company Culture,” asking us to focus on what our customers need and want rather than on internal issues.

Also at, Steve Gray’s “Thinking Bigger Than Native Advertising” blog post states: “One of the biggest challenges legacy media companies face today is learning to think big enough to meet the real, 21st-century needs of advertisers.

Both articles reference the problems and the opportunities legacy media continue to struggle with today and Piers Abetti discussed nearly 30 years ago in his lecture.

Scott and Steve have been preaching and teaching about being profitably customer-centric and disruptive/innovative in our thinking as long as I can remember. But our industry is mired in a cultural orientation that very rarely focuses on customer success metrics (see my earlier blog post “Focus On Your Client’s Success To Ensure Your Own Success”).

Instead, we focus on short-term sales quotas and sales metrics that foster short-term thinking because we attach no importance to the outcome for the client.

I have recently returned to university teaching after a 14-year hiatus from the classroom. One of the first and most significant changes to the textbook was the way it defined marketing:

“Marketing is the process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return.”

How are you creating value for your customers? Are you building stronger relationships through your interaction with the customer?

Please respond and let me know how you would answer those questions.