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Business leaders are blinded by industry boundaries
April 22, 2019 | Financial Times | Rita McGrath.

Why is it so hard for executives to anticipate the major shifts that can determine the destiny of their organisations? Andy Grove called these moments “strategic inflection points”. For some, he wrote, “That change can mean an opportunity to rise to new heights. But it may just as likely signal the beginning of the end.”

Industry leaders would do well to focus on productive opportunities, even when they lie outside a fairly well-bounded industry. Want to survive a strategic inflection point? Stop focusing on traditional metrics and find new customer needs that your organisation can uniquely address.

Why do business leaders so often miss these shifts? Successful companies such as BlackBerry maker Research In Motion and Nokia did not heed the early signs of a move to app-based smartphones. Video rental chain Blockbuster failed to acquire Netflix when it had the chance, in 2000.

Senior people rise to the top by mastering management of the KPIs in that sector. This, in turn, shapes how they look at the world. The problem is a strategic inflection point can occur and render the reference points they have developed obsolete. Take traditional retail. Its key metrics have to do with limited real estate, such as sales per square metre. Introduce the internet and those measures are useless. And yet traditional systems, rewards and measures are all built around them.....British economist Edith Penrose grasped this crucial link, she asked, “What is an industry?” In her studies, executives did not confine themselves to single industries, they expanded into any market where their business might find profitable growth.

Consider the energy sector: Historically, most power generators and utilities were heavily regulated...The sector’s suppliers likewise expected steady demand and a quiet life....that business has been rocked by slow-moving shifts many players talked about, but did not act upon. The rise of distributed energy generation, the maturing of renewable technology, increased conservation and new rules have eroded the traditional model. Many failed to heed the warnings. In 2015, General Electric spent about $10bn to acquire Alstom’s power business. Finance chief Jeff Bornstein crowed at the time that it could be GE’s best acquisition ever. Blinded by traditional metrics, GE doubled down on fossil-fuel-fired turbines just as renewables were becoming cost competitive.

Consider razor blades: Procter & Gamble’s Gillette brand of razors had long enjoyed a competitive advantage. For decades, the company had invested in developing premium products, charged premium prices, invested heavily in marketing and used its clout to get those razors into every traditional retail outlet. A new breed of online rivals such as Dollar Shave Club and Harry’s have upended that model, reselling outsourced razors that were “good enough” and cheaper, online via a subscription model that attracted younger, economically pressured customers...... Rather than fork out for elaborate marketing, the upstarts enlisted YouTube and Facebook influencers to get the word out.
Andy_Grove  BlackBerry  blindsided  Blockbuster  brands  cost-consciousness  customer_insights  Dollar_Shave_Club  executive_management  GE  Gillette  good_enough  Harry's  industries  industry_boundaries  inflection_points  Intel  irrelevance  KPIs  metrics  millennials  movingonup  myopic  obsolescence  out-of-the-box  P&G  power_generation  retailers  reward_systems  sales_per_square_foot  shifting_tastes  slowly_moving  warning_signs 
april 2019 by jerryking
Shuttered: Digital cameras killed Kodak, but smartphones will kill digital cameras | Features | FP Tech Desk | Financial Post
Jan 19, 2012 – Jan 20, 2012 2:25 PM ET

Eastman Kodak, which invented the hand-held camera and helped bring the world the first pictures from the moon, has filed for bankruptcy protection, capping a prolonged plunge for one of the United States' best-known companies.

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By Matt Hartley and Jameson Berkow
creative_destruction  Apple  iPhone  Blockbuster  cameras  Canon  Kodak  HTC  Netflix  Nikon  Nokia  photography  smartphones  digital_cameras 
january 2012 by jerryking
Reed Hastings The Netflix CEO brings video streaming to Canada, shaking up the cable industry
Sep 25, 2010 | The Globe and Mail. pg. F.2 | John Lorinc.
Having upended the video-rental industry (Blockbuster, following years
of decline, filed for bankruptcy in the U.S. this week), Netflix moved
into streaming in 2007. This shift puts the $1.7-billion-a-year (U.S.)
firm in direct competition with the cable and satellite sector, with its
video-on-demand offerings. Consumers can stream Netflix's huge library
of movies and TV shows through their game consoles or computers.
VoD  ProQuest  Netflix  Reed_Hastings  Canada  John_Lorinc  web_video  streaming  CATV  Rogers_Media  Shaw  Blockbuster  bankruptcies 
september 2010 by jerryking

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