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jerryking : obsolescence   14

Business Development Not-to-Do #5: Live In the Past | JD Supra Perspectives -
April 21, 2017 | JDSupra | by Mike O'Horo, co-founder of RainmakerVT. O'Horo has trained 7000 lawyers in firms of all sizes and types, in virtually every practice type. They attribute $1.5 billion in additional business to their collaboration. His latest innovation, Dezurve, reduces firms’ business development training investment risks by identifying which lawyers are serious about learning BD.]

If you’re seeing more competition for each engagement, greater pressure on rates, more involvement by professional buyers in the Purchasing Dept., and perhaps worst of all, longtime clients putting out RFPs for “your” work, your work has reached the Maturity stage of its Product Cycle. If you fail to change, you’ll ride a downward spiral until you can no longer make money on that work.

What is the product cycle?  Introduction ->Growth -> Maturity -> Decline. Revenue and profit follow a fairly predictable path through this cycle. Most buyers understand that, among the three forms of value -- Good, Fast, Cheap -- they can only have two. During the Introduction and Growth phases, they opt for Good and Fast. At Maturity, they favor Good and Cheap. At Decline, they may demand all three......

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Defending market share becomes the chief concern.
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At the maturity stage, sales growth has started to slow and is approaching the point where the inevitable decline will begin. Defending market share becomes the chief concern. Most lawyers don’t know how to do that other than by reducing their price to try to hold on to the work. Additionally, more competitors have stepped forward to challenge you for every engagement, and offer a lower price. This can touch off price wars. Lower prices mean lower profits, which will cause some wise lawyers to discontinue offering that service altogether. The maturity stage is usually the longest of the four life cycle stages, and it is not uncommon for a service to be in the mature stage for several decades. Whatever you’re experiencing now is also the future.

For quite awhile, lawyers who thought about this at all could be forgiven for believing that legal services were immune from this. After all, for more than 20 years, buyers and work were plentiful, and clients accepted annual rate increases of 6-10%. All that meant, though, was that legal services had a longer Growth phase than is normal. Even during that 20-year boom, many legal services declined in value and pricing power, to the point that many lawyers lost that business to lower-cost competitors, off-shoring, or to in-house legal staffs.
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You can’t justify investing in a declining asset.
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The symptoms cited in the opening paragraph are reliable indicators that it’s time to begin reducing your dependence on that work. You can’t justify investing in a declining asset.......One of the big factors causing price pressure in mature categories is decreased risk. The first time a company tackles a type of legal matter, the perceived risk is high. They want to get it done right, and quickly, so they’re less sensitive to cost and place greater value on expertise as a way to reduce risk.

After something has been done a number of times, the risk of getting it done right goes way down, so the perceived value of the service declines, and they no longer feel the need to pay the top lawyer in the game.......

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When risk and business impact declines, so does your access...
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Once the recipe is known, the risk declines and, along with it, the buyer’s willingness to pay a premium for the wizard practitioner.

When risk and business impact declines, so does your access. While the top people pay attention to unfamiliar matters with potentially high stakes, once the risk goes down, they delegate downward and move on to emerging issues that have greater risk and impact.
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associate yourself with a business problem that triggers demand for your expertise, and opens doors to those experiencing that problem.
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Just as it’s imprudent to invest in declining categories of legal matters, it’s a bad idea to hitch your wagon to a declining industry (unless you do Bankruptcy or Restructuring). Clients in mature industries experience the same increased competition, price pressure, and shrinking margins as you do. They’ll opt for Good and Cheap.

To avoid suddenly realizing that you’re in a tough spot such as described in the opening paragraph, focus on an industry. Become an industry expert, knowledgeable about their challenges and opportunities, and keep yourself well informed so you can recognize the early signs that your Door-Opener (the problem that drives demand for your service) is maturing and declining in significance. If you know what’s going on in the industry, you’ll know which problems to shift your association toward.

Always invest in emerging issues, preferably in robust, growing industries
cash_cows  decline  industry_analysis  law_firms  lawyers  life_cycle  industry_expertise  professional_service_firms  product_cycles  obsolescence  price_wars 
6 weeks ago by jerryking
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
GE and Siemens: power pioneers flying too far from the sun
November 12, 2017 | FT | by Ed Crooks in New York and Patrick McGee in Frankfurt.

Rivals GE and Siemens both face difficult challenges ahead with the threats emanating in the 21st century from the renewable energy revolution that risks rendering obsolete their century-old strengths in supplying equipment for the electricity industry.....As the costs of solar and wind power have plunged, making them cheaper than fossil fuel generation in many parts of the world, the traditional model of the industry has changed. Capital spending on the new technologies has soared. Battery storage is also starting to be a cost-effective solution for supporting the grid, challenging the market for “peaker” gas turbines that are used when demand is at its highest. Yet both groups have taken positions in renewable energy but have stumbled along the way.

The result is that GE and Siemens are being forced to drive down costs dramatically in their core power businesses. Siemens is looking to cut thousands of jobs in its power and gas unit....while both groups face a turbulent environment, the immediate outlook is considerably brighter at Siemens, which appears to be better positioned to adjust to the disruption sweeping through the energy industry....GE’s 2017 has been a disaster.....GE's CEO, John Flannery, has already moved fast to signal his intentions: clearing out many top executives, grounding corporate jets, stopping the cars provided to senior managers, cutting back the network of global research centres and promising to sell peripheral and underperforming businesses worth up to $20bn....GE's sales of aeroderivative gas turbines, used to support grids at times of peak load, were half the planned numbers, while sales of packages for improving the performance of gas-fired plants were just a third of projections.....“All major vendors got the market [i.e. for gas turbines] wrong,” ...The next big worry is servicing for turbines — once a gold mine but one that is bound to decline as new orders fall. With turbines being sold at no margin or sometimes at a loss, competition for servicing contracts is heating up, further eroding margins.

For the foreseeable future, the gas turbine market is likely to remain difficult,...“The question is whether this is just a cyclical problem, or whether there is something structural in the industry that is really starting to cause problems.”

There is good reason to think that it is structural, given the plunge in solar and wind costs. ... “a combination of rooftop solar and battery storage could make economic sense in India, African countries and other places where they don’t have well-developed power grids”......According to the IEA, in 2016 $316bn was invested in renewable energy worldwide last year, almost three times as much as the $117bn in fossil fuel power generation.....If Mr Flannery founders, then breaking up GE might come to seem like the only option left to investors. It would not magically dispel the problems of the business, and would be difficult because of the group’s complex tax position and liabilities, including insurance claims dating from before GE pulled out of the industry in 2004-2006.

To avoid a break-up, GE might follow the template Siemens created in 2014 for a more decentralised structure. Mr Kaeser calls it a “fleet of ships” model, with divisions becoming semi-autonomous and separately listed. Siemens’ largest division, its medical equipment unit, is scheduled to list next year.

“The time of old-fashioned conglomerates is over,” he says. “They are definitely not going to survive.”
CEOs  Siemens  GE  industrial_age  founders  19th_century  decentralization  conglomerates  renewable  obsolescence  solar  batteries  cost-cutting  turnarounds  divestitures  wind_power  under-performing  power_grid  electric_power 
november 2017 by jerryking
Innovation: If you can’t make yourself obsolete, someone else will - The Globe and Mail
GUY DIXON
The Globe and Mail
Published Thursday, Jun. 26 2014

I think at the root of the problem is a deficit of ambition [JCK: i.e. a lack of chutzpah or audacity] The larger the corporation, the safer they become. What I’ve witnessed, certainly between 2008, 2009, is this deficit of ambition.....All of our research points to the fact that companies that do manage and measure innovation outperform those that don’t. You can put resources into place, and that’s where managing it comes in: deploying resources that will support innovative, new ideas; ensuring that you have a strong knowledge architecture – and that it is a formal, systemic thing, so that people access knowledge that is already developed; ensuring access to markets – that’s a structural element. Do your people have access to customers and markets?; and actively managing talent and selecting people and promoting them and ensuring that they have an orientation toward innovation and the development of new ideas....What percentage of turnover or revenue is presented by products that have been introduced in the past number of years? And for different companies, in different industries, that’s going to vary. Companies that are very successful treat that number as sacrosanct for the sales projection for next year and the bottom line for next year....Way too many companies are focused on market share versus the modern metric of, ‘Are we gaining a disproportionate share of opportunity?’ [Is this distinction something to be explored with the help of sensors, location-based services and the LBMA??] And then we’re back to this abandonment thing.
Managing_Your_Career  organizational_culture  playing_it_safe  innovation  metrics  ambitions  opportunities  market_share  complacency  measurements  talent_management  ideas  obsolescence  disproportionality  latent  hidden  self-obsolescence  large_companies  new_products  Fortune_500  brands  Guy_Dixon  outperformance  systematic_approaches 
june 2014 by jerryking
Also Stalking the Fund Industry: Obsolescence - WSJ.com
Dec. 10, 2003 | WSJ | Holman W. Jenkins.

Quiz for economists: Suppose you have a competitive, transparent industry that one day begins acting in a more short-sighted, exploitative way towards its customers. What's really going on?

Here's a hint: Think of the gradual slide toward sleazier marketing by the traditional long-distance companies. When your business has a future, you invest in customer relationships. When you see your future going away, you milk them like the wasting assets they are. Big swaths of the fund management business are behaving exactly like an industry in decline...Mutual funds exploded in the 1990s, growing from less than $2 trillion in assets to $7 trillion. A long bull market helped to conceal the fact many of these entrants brought no value to the table. Their managers were, on average, merely as lucky as everyone else to be standing in the right place at the right time.
mutual_funds  Holman_Jenkins  Eliot_Spitzer  industry_analysis  obsolescence  customer_satisfaction  financial_services  luck  short-sightedness  sleaze  customer_relationships  exploitation  bull_markets  imposters  decline  '90s  cash_cows 
december 2013 by jerryking
BlackBerrys once ruled the world - The Globe and Mail
The Globe and Mail

Published Tuesday, Sep. 24 2013

BlackBerries ruled the world briefly, but their maker failed to see that future growth lay in the consumer market and in social media, not in the e-mail-obsessed business world.

When BlackBerry tried to adapt, it did so too slowly. It took years instead of the requisite months to launch an operating system that competed with the dominant players. Its corporate DNA was as unevolved as its products, and now the world has passed it by – even though its newest products can do virtually all the same things a Samsung or Apple smartphone can do.
BlackBerry  blindsided  RIM  PalmPilot  editorials  evolution  obsolescence  adaptability  windows_of_opportunity 
october 2013 by jerryking
The middle class is good politics but a curious crusade
Aug. 03 2013 | The Globe and Mail | Konrad Yakabuski.

A “thriving middle class” won’t come from new programs hatched in Ottawa. It will come from the innovators and entrepreneurs who harness Canada’s abundant human capital and natural resources to create wealth.

as TD Economics has shown, Canada has not experienced the same wage polarization that has led to rising income inequality south of the border. Social mobility is higher here and our tax system is more progressive. The after-tax income of the top 10 per cent of Canadians was 4.1 times that of the bottom 10 per cent in 2010. The U.S. ratio was 6 to 1.

There is no doubt that globalization and technological change have rendered thousands of middle-class Canadian jobs obsolete. But there is no reversing this trend, no matter how much would-be federal policy-makers aspire to meddle. Besides, globalization’s upsides outweigh its downsides. And Canadians, among the best-educated people on the planet, stand to benefit.

“Rewards to education, to innovation and to creativity are higher than they have ever been,” notes Princeton University economist Angus Deaton in The Great Escape, his forthcoming book on the history of inequality. “Perhaps the greatest escape in all of human history, and certainly the most rapid one [is] the reduction in global poverty since 1980 … The world has done much better than the pessimists predicted.”
Konrad_Yakabuski  globalization  Chrystia_Freeland  obsolescence  middle_class  technological_change  social_mobility  Toronto  expatriates  inequality  books  income_inequality  capitalization 
august 2013 by jerryking
Growing at a Smart Pace
Growing at a Smart Pace

What Every CEO Should Know About Creating New Businesses
1 Ultimately, growth means starting new businesses.
Most firms have no alternative. Sectors decline, as they did for Pullman’s railroad cars and Singer’s sewing machines. Technology renders products and services obsolete—the fate Polaroid suffered, as digital cameras decimated its instant photography franchise. Markets saturate, as Home Depot is now finding, after establishing more than a thousand stores nationwide.
2 Most new businesses fail.
3 Corporate culture is the biggest deterrent to business creation.
New ventures flourish best in open, exploratory environments, but most large corporations are geared toward mature businesses and efficient, predictable operations.
4 Separate organizations don’t work—or at least not for long.
5 Starting a new business is essentially an experiment.
6. New businesses proceed through distinct stages, each requiring a different
7. New business creation takes time--a lot of time.
8. New businesses need help fitting in--"bridging"--with established systems and structures.
9. The best predictors of success are market knowledge and demand-driven products and services.
10. An open mind is hard to find.
growth  Thomas_Stewart  HBR  CEOs  Junior_Achievement  hard_to_find  start_ups  failure  organizational_culture  experimentation  trial_&_error  life_cycle  tacit_data  entrepreneurship  dedication  obsolescence  demand-driven  infrastructure  new_businesses  bridging  large_companies  customer-driven  market_saturation  Home_Depot  Fortune_500  mindsets  open_mind  decline  Michael_McDerment  Polaroid  digital_cameras 
december 2012 by jerryking
Go Ahead, Take a Risk
June 22, 2004 | WSJ | By ADRIAN SLYWOTSKY

What are the risks you should be taking but aren't? Most managers treat risk as an unwanted byproduct of the business. They think narrowly of financial, operating, and hazard risks, such as currency fluctuations, employee fraud, and earthquakes. And they defend themselves through practices like hedging, internal controls, and insurance.

But disruptive strategic risks can be a much larger source of value destruction for a firm. I looked back to the bull market of the 1990s to analyze movements of the Fortune 1000 stocks; even then, before the market collapsed, 10% of stocks lost over one-quarter of their value in a single month, primarily because of strategic-risk events.

The most successful companies do not try to simply minimize strategic risk; they embrace such risk by making prudent bets in their growth-oriented strategies. Strategic risks include not just the obvious, high-probability events that a new ad campaign or new product launch will fail, but other less-obvious risks as well: Customers' priorities will change quickly -- as when baby-boomer parents quickly migrated from station wagons to minivans, catching most automakers off guard. New technology will overtake your product -- as mobile telephony has stolen market share from fixed-line voice. A one-of-a-kind competitor will render your business model obsolete -- as the Wal-Mart tidal wave has washed over mid-range department stores.

Although insurance and hedging can't address strategic risks, there are an array of countermeasures that can, including these three:
1) Smart sequencing for new growth initiatives. Look for incumbents that are moving deliberately, leveraging existing assets and customer relationships to gain the experience, knowledge, and reputation necessary to take the next step with confidence.
2) Proprietary information to reduce the risk of each new initiative. Gather and generate proprietary information that produces a depth of insight into the customer's needs and activities that traditional suppliers cannot match. This will make you a supplier of choice, reducing bidding volatility and allow you to plan with greater certainty.
3) Double betting to minimize the risk of obsolescence. When several versions of a new technology are competing to become the standard, it's impossible to predict which will prevail. So smart managers make double bets. Betting on both Windows and OS/2 positioned Microsoft to be the winner, regardless of which operating system prevailed.

Traditional risk management seeks to contain losses. But that's just one-half of the growth equation. By embracing strategic risk, Cardinal, JCI, and other risk-savvy companies have raised their growth potential in addition to reducing their economic volatility. That's important at a time when aggregate market growth is sluggish: The biggest risk of all is not to take the right growth risks for the business.
leaps_of_faith  Adrian_J._Slywotzky  risk-taking  proprietary  sequencing  scuttlebutt  information  growth  strategic_thinking  Mercer  Oliver_Wyman  product_launches  nonpublic  low_growth  slow_growth  insights  customer_insights  value_destruction  disruption  insurance  new_products  obsolescence  countermeasures  volatility  customer_risk  one-of-a-kind  hedging  overly_cautious  risk-aversion  de-risking  double_betting  risk-management  bull_markets  customer_relationships  dark_data  risk-savvy  internal_controls  financial_risk  risks 
june 2012 by jerryking
Publishing's New Math: 14 > 13 - ISBN - Book Industry Study Group
Dec 19, 2007 | Fast Company | By: Alyssa Danigelis. Will the
publishing industry finally get its data in sync with the rest of the
world? The book-publishing business is famously anachronistic. Tom
Clarkson and his friends at the Book Industry Study Group aim to rescue
the industry from its self-perpetuated obsolescence. "Anytime you have
to do anything out of the ordinary it's an extra cost," says Clarkson,
director of supply-chain technology for Barnes & Noble.
obsolescence  publishing  Gadi_Prager  supply_chains 
november 2009 by jerryking
Bridging exploration and exploitation
November 24, 2009 | Report on Business | SIMON HOUPT.
Interview and book review by Simon of Roger Martin's latest book, The
Design of Business. In his latest book, Roger Martin advocates the
importance of innovation for companies - or the risk of irrelevance.
Why do successful companies wither and die? Martin suggests that too
many companies are too comfortable with merely exploiting their
innovations rather than engaging in the necessary work of innovation and
exploration. There are two solitudes: exploration and exploitation.
Exploration being highly creative people in various kinds of creative
organizations that have a heck of a time turning their ideas into
something that allows them to continue their creative activities
sustainably. Exploitation being people in the business world who are
honing and refining, running their algorithms, wondering why they slowly
expire.
innovation  design  Roger_Martin  creativity  book_reviews  Simon_Houpt  experimentation  explorers  exploitation  obsolescence  complacency  bridging  creative_types  irrelevance  exploration 
november 2009 by jerryking
Is MIT Obsolete?
February 3, 2009 | SEEDMAGAZINE.COM |by Neil Gershenfeld

To fill this void, the fab lab network is now inventing new
organizations: a non-profit Fab Foundation to support invention as aid, a
for-profit Fab Fund to provide global capital for local inventors and
global markets for local inventions, and an educational Fab Academy for
distributed advanced technical education.

The Fab Academy is a network rather than a place, with teachers and
students in fab labs around the world linked by broadband video, shared
online information, and common technical capabilities. The heart of
MIT is its intellectual rather than physical infrastructure: a research
culture that creates room for new ideas by emphasizing their evaluation
through rapid reduction to practice, and by mixing short-term
applications (both serious and silly) with long-term research.
mit  obsolescence  Colleges_&_Universities  distance_education  voids 
may 2009 by jerryking
globeandmail.com - Corporate survival: Be ready to chart a new course when industry winds blow
Oct. 1, 2007 G&M column by Harvey Schachter on Anita
McGahan's suggestions on how to interpret the signals of industry
change.

Determine whether your core activities or core assets are threatened - or both. Core activities are those actions that have historically generated profits for the industry, such as owning dealerships in the auto industry, which is less significant in an Internet era. Core assets are the resources, knowledge, and brand capital that have made the organization unique, like blockbuster drugs in the pharmaceutical industry.

(1) Radical Change.our core activities and core assets are both threatened with obsolescence. This is similar to the concept of disruptive change outlined by Harvard's Clayton Christensen in his writings.

(2) Intermediating Change. Core activities are threatened while core assets retain their strength. Sotheby's, for example, remains top notch at assessing works of art but because of technology eBay can challenge on the matchmaking side of the business.

(3) Creative Change. Core assets are under threat but core activities remain stable, as in pharmaceuticals or oil and gas exploration, where relationships with customers and suppliers are fairly steady but assets turn over constantly. Innovation occurs in fits and starts.

(4) Progressive Change. Both core assets and core activities are stable, but significant change still threatens, as in discount retailing, long-haul trucking, and commercial airlines.
assets  Clayton_Christensen  Harvey_Schachter  strategy  industries  structural_change  preparation  readiness  warning_signs  howto  interpretation  core_businesses  obsolescence  taxonomy  change  pivots 
january 2009 by jerryking

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