Viability – lessons from Studebaker

They started making wagons for farmers, miners and the military in 1852. Incorporated in 1868 under the name Studebaker Brothers Manufacturing Company, they entered the automobile business in 1902 making electric vehicles. By 1904 they were making gasoline-powered vehicles and for the next 50 years became a major player in the business. With a reputation for quality and reliability, Studebaker produced some of the most iconic cars in America’s Golden Age of the Automobile.

They’re gone now. A bloated and sluggish manufacturing system, poor capital management, and an ill-advised merger finally did them in with the last vehicle rolling off an assembly line in 1966.

But they’re not the only company or organization to disappear from the scene. Blockbuster is gone. So are Woolworth’s, Kresge,  E.F. Hutton, Pullman (plush railroad cars),  Lionel (electric toy trains), Zenith (radios and televisions), Montgomery Ward, and American Motors are but some of the many that were once viable companies. To be viable is to be capable of working successfully. But a company or organization may be capable of working successfully in a shrinking market or for a changing constituency. What worked well back then, may not work so well next year.

Why? Because one must maintain viability.

Viability – the ability of a thing (a living organism, an artificial system, an idea, etc.) to maintain itself or recover its potentialities.

This concept, this definition is precisely why I’ve been hammering on the topic of vision and emphasizing that strategies and tactics MUST follow vision, not the other way around. Viability means your company or organization possesses the following things and does more than offer mere lip service to them.

Relevance – the product you offer, the services you provide must have meaning and necessity to those for whom you provide them. Those people or companies must have an emotional engagement with that product or service. You know that sales are almost never logical. They are almost always emotional.  But even that is insufficient. There must be a need for what you offer. This should be evident in your promotional materials which should, if they are written effectively, describe the benefits your product or service provides. To maintain relevance is to maintain an ability to satisfy the needs of the user. This involves more than the product. It also demands the acquiring experience. Look at the evolution of supermarkets through the years. Today’s prosperous companies have well-lighted stores, wide aisles, and products appropriate to their local customers desires. Just consider the development of online business to see how relevance plays such a critical role.

Relief – there is a pain/promise element to every 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 salesman 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. They have a problem, we solve it and get paid to do it. That pain may be multi-level. Someone may be in the market for a car but need transportation and more. 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 their manufacturing plants. At the time of their demise, their plant had a break even number at 500,000. The company made no money at all until a half million cars were sold! This is the particular domain of leadership to envision and management to enact.

Effectiveness is gauged by measuring all three – relevance, relief, and efficiency.  A comprehensive vision born out of real world circumstances and cunning prognostication pursued by responsible management of resources and a light on your feet adaptability adds up to a viable company.


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