Knowledge Center: Article
Are “industries” a thing of the past?3/14/2017
How would your business operate in a world without industry boundaries? Today, channel lines are more blurred than ever—for example, big-box stores are carrying groceries, and convenience stores are competing with quick-serve restaurants. A world without cut-and-dried industries isn’t far off.
Given this shift, you may be in trouble if you’re planning your business strategy exclusively within the context of your traditional industry structure. Boxing your business into a defined category can limit your perceived opportunities—you’re not only missing out on new revenue streams but also leaving your business vulnerable to disruption and competitors.
Consider Blockbuster, which paid a high price for its inability to process total industry disruption. Blockbuster was rocked by industry change as consumers abandoned VHS tapes and DVDs in favor of streaming content on demand. Imagine how differently this story could have ended if the company had looked at its business model not within the context of the videotape or DVD industry, but through the lens of customer-centricity. If Blockbuster had envisioned what their customers’ lives might look like in the future, the company would likely have been better positioned to compete as a major player in today’s world of digital media.
With increasing fluidity between industries and eroding geographic limitations, it’s more important than ever to do an industry gut check. Asking these five questions can help you move past industry limitations to develop a comprehensive, forward-looking plan for the future:
1. Does your strategy stack up from the outside in? Pay attention to the changing market conditions that are crumbling industry silos. When you look at your business through an outside-in lens, you can better appreciate how external factors like healthcare reform, emerging technologies, and new regulations might impact your business. Focusing too much on your company’s own internal issues can make you miss the big picture—along with any chance of innovation. Asking the right questions from an outside-in perspective will help you anticipate industry game changers and think beyond the status quo.
2. What business are you really in? This simple, yet critically important, question can quickly turn a business model on its head. Case in point: Harley-Davidson. Is Harley-Davidson in the business of selling motorcycles? Or is the concept of freedom at the root of its success? Harley-Davidson has recognized that the motorcycle represents freedom from obligations for middle-aged men. This insight allows the company to stay more in sync with its core customers. Challenge yourself and your teams to reframe the context of your organization by tuning into what really makes your business tick and using that to help shape your future.
3. How are your customers changing? What value can you offer in response to customers’ changing needs? Constantly asking this question is the best way to remain relevant—no matter what business you’re in. Take Stanley Black & Decker, for example. The company recognizes that it isn’t just supplying people with tools—it is fulfilling a fundamental need people have to make repairs and upgrade their homes. By exploring and planning for how this need might manifest differently in the future, Stanley Black & Decker can continue to ensure that it meets customer demands. Your company may have underutilized assets that are the key to your next great innovation waiting in the wings, but you’ll never know if you’re focused solely on core products and services. Fully immerse yourself in your customers’ needs to better anticipate consumer behavior—and use those insights to evolve your value proposition as those needs change.
4. How will innovations affect your business? Changing consumer preferences can quickly put you out of business if you’re not paying attention. For visionaries with a finger on the pulse of consumer behavior, however, changing consumer preferences have the power to fuel innovation. Technological innovations evolve at a pace much quicker than most businesses can match. Is your business prepared to turn on a dime in the face of game-changing innovation—like a new technology that could make your business obsolete overnight? Thinking about how to fend off or outpace potential threats that may affect your core business model is key to staying a step ahead.
5. How can you apply lessons from parallel industries? With industry boundaries disintegrating, much can be learned from the successes and failures of winners and losers in parallel sectors. Stay aware of happenings in closely aligned industries—this can help you see change on the horizon sooner, giving you valuable time to proactively prepare.
As traditional industry structures become a thing of the past, leaders must anticipate change to stay profitable. Framing your approach with fresh, outside-in thinking will help you develop a more effective response when an industry-disrupting trend hits fever pitch.
About the author
Samantha Howland is an alumna of Decision Strategies International, a Heidrick & Struggles company.