Evolution of Industry – How an Industry Changes Itself |
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By: Andy Mann Posted: 2006-09-30 01:39:29 |
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Change is the only thing permanent goes the old cliché and one can’t make important decision in the business until and unless one get to know the nature and pace of change in the industry. Each industry has its own rate and way of evolving. While in technology Business models can become redundant in a quarter, old companies are using tried and trusted business models for over several decades.The need to understand the change in market seems obvious but such knowledge not always easy to come by. Japanese companies failed to understand the advent of microprocessor as the dominant product and kept focusing on making the silicon chips cheaper. Small retailers failed to under the real impact of Wal-Mart moving into neighborhoods. With in a decade Wal-Mart changed the face of retailing in America running established players like K-Mart into bankruptcies.To understand where your Industry is heading you have to shut the noise from immediate competitors and popular beliefs and take a long term view of things. The most pertinent question which most companies should ask is what business they are in. Because if you don’t know what business you are in then there are even lesser chances of understanding how it will change and evolve.According to Professor Anita M. McGahan of Boston University’s School of Management there are four trajectories of change in an industry. These four trajectories are guided by two types of threat of obsolescence. First is threat to Industry’s Core activities – activities that historically generated profit for the industry. Second is the threat to industry’s assets like resources, knowledge and brand capital which made organization with in the industry unique.
Radical Change Radical Transformation occurs when both the core activities and core assets are threatened by obsolescence. Intermediating Change Intermediate transformation occurs when buyers and suppliers have new options because they have gained unprecedented access to information. Creative Change In industries of creative change the customers and suppliers are generally stable but asset turnover is constant. |
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