The railroads did not stop growing because the need for passenger and freight transportation declined. That grew. The railroads are in trouble today not because the need was filled by others (cars, trucks, airplanes, even telephones), but because it was not filled by the railroads themselves. They let others take customers away from them because they assumed themselves to be in the railroad business rather than in the transportation business. The reason they defined their industry wrong was because they were railroad-oriented instead of transportation-oriented; they were product-oriented instead of customer-oriented.
I have long taken this critique of the railroad as a matter of faith. Yet, even now as I write it, I wonder: the very industry that taught the rest of the world how to operate a successful big business apparently did not understand it had to compete with autos and planes for passenger traffic?
Could it be, as Levitt suggests, after decades of dominance that the railroad was suddenly asleep at the switch?
The other day I was thumbing through a couple of early-1950s editions of the Saturday Evening Post and was struck by what I saw. Here, for example, was what Pullman was advertising:
Yes, it’s stereotypical to the point of being racist—welcome to the good old days. But, what does the Executive Secretary of the National Association of Oil Equipment Jobbers say? “Recently, I had to go to St. Louis for a meeting. Instead of flying, as I had been doing for the past four years, I decided to take an overnight Pullman. It happened to be raining when I left. No matter. The train was exactly on time, and what’s more, I didn’t get drenched before boarding.”
Our Oil Equipment Jobber goes on to admire the big, comfortable seat, the ability to get work done, the privacy, the great night’s sleep, the wonderful breakfast, and the unwrinkled suit.
How could an ad be any better defined around the customer? Pullman seemed intent on fighting for its share of passenger traffic.
(By the way, sorry the images are clipped. I tried to define my home scanner as a “full-sized Saturday Evening Post color delivery solution” but, alas, it insists on being a simple home scanner.)
But that wasn’t all. Next, the Southern Pacific, “America’s Most Modern Trains,” invited passengers to see the Pacific Coast while dining in a car fashioned after Timberline Lodge on Mt. Hood, viewing scenery through oversized windows and walking through feather-touch doors to their reserved Chair Car seats.
Are you confused? Isn’t this the industry maligned for fifty years because it wanted to haul freight, not passengers?
Here’s another clue as to how competitive the railroad was: watch how it gets positioned in competitive ads. In fact, there appeared to be a rock-em sock-em, three-way battle going on among the train, auto and plane industries for passengers. The babies were booming and everyone wanted a piece.
Here’s a great example from a 1953 Post. The top panel of this ad is incredibly effective. It shows a scene from 1911—the distant past—and a gleaming Pierce-Arrow. Even then, the Ethyl Corporation suggests, the automobile was king. In fact, that old plane has crashed, which undoubtedly played on a widespread public fear of 1950s airline travel. And in the background? That’s a train nearly consumed by its own smoke, a dirty, wretched beast of the Old World.
Today, of course (glance down!), there’s only the auto to consider, and “it isn’t unusual for a motorist to drive from New York to California in seven or eight days.”
The airplane was no shrinking violet in this battle. This 1950 ad shows motorists stuck in the snow while (top left) the American Airlines plane flies “above ground-level weather.”
And just to complete this wonderfully vicious advertising cycle, here United Air suggests that the poor old train is a topic of humor because “you can look down and laugh at icy roads, drifts of snow and long-delayed ground transportation.”
The truth is, the battle for passengers was fully engaged, with the railroad pitching as hard as the automobile and the airplane. And, I no longer buy Professor Levitt’s assertion that the railroad defined itself poorly.
Sometimes, the limits are simply not in the definition but in the reality. From Boston today I would take a car to Portland, Maine, a plane to San Francisco, and a train (if there is any way to avoid the airport) to New York City. Each industry may define itself anyway it likes, but the reality is that there’s more definition being provided by schedules, body searches, cellphone access, weather, time and traffic than most anything Marketing can offer.
We might as well argue that the Rolodex would still command a huge market share if leaders has defined it as a networking solution. The phonograph would be competitive with the iPod if marketeers had only thought of itself as an "entertainment delivery system."
Sometimes it's Marketing, but other times its just plain reality. In any event, I’m done beating up the railroad.