Companies tend to use past experiences to forecast the
future and ultimately come up with business strategies to meet their goals. Lately,
there has been a lot of focus on data and how it can be used to find trends and
other meaningful inferences. Though learning from the past is a good idea, it
of utmost importance that companies don’t overlook the power of unanticipated actions.
Being aware and prepared for the unknown – both in terms of competition and the
next shift in trend is fundamental to the success of a business.
This principle can be applied to major disruptive technologies
that have caused complete shift in trends. With the current scale of growth and
volatility, companies cannot depend on the past anymore to come up with strategies.
The world has become so dynamic that something that worked in the past might
not work anymore. For example, the first iPhone was truly revolutionary as it
changed the way people perceived a mobile – a one stop gadget for internet,
utility, and telecommunication needs. This caused a change in the industry dynamics
as they were the first ones to do it and other mobile phone companies did not
see that coming. Since then, every improvement and iteration of the iPhone has
been a hit. But lately, iPhone sales have been dropping [1]. One can speculate
that Apple’s strategy of creating “thinner, faster, lighter” phones might not
be relevant and that effective anymore due to increasing competition, changing
needs of consumers, and slow innovation.
Porter’s five forces, which is an excellent way of analyzing
competition and the overall industry, is also based on the fact that some
factors cannot be predicted by intuition or historical evidence. Instead, one
needs to have the ability to look at the future and think of a unique way to
take advantage of the competitive forces. History is testimony to the fact that
companies who have gained the greatest success and caused a major shift in trend
are the ones who were least expected to do so. Back in the 80s, had companies
like Kodak and Canon considered the threat of substitute products and rise of technology,
they might have been able to hamper Sony’s entry to the market.
Overall, it is important for companies to focus more on “What
can we do to change the way people think of product X” and “Company A, B, C are
my direct competitors. Who are my indirect competitors” rather than “Company A, B,
C is doing this thing. How can we do it better?”.
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.