Note: This article was previously published in Compass Points in October 1998.
How to Think Several Moves Ahead of the Competition
by Adrian J. Slywotzky
Harvard Business School Press, 1996 – 310 pages
How can we anticipate paradigm shifts in our industry? How can we anticipate new forms of competition? Adrian J. Slywotzky’s Value Migration discusses how proper analysis enables you to position for growth and industry leadership by anticipating future changes in the marketplace.
The book is divided into three sections:
- Concepts: how value is divided into its three phases of migration:
- Value Inflow
- Value Outflow
- Patterns: how to identify the seven common migration patterns with specific case examples.
- Prescription: how to use the value migration analysis to effect change in your organization.
The case studies illustrate not only how one can take advantage of industry change, but also what happens to those who do not properly anticipate change. Examples include the steel industry (US Steel vs. plastics, aluminum, minimills, and international competion), coffee (Starbucks vs. P&G) and the airlines (Southwest vs. American).
The case studies analyze what happened; and what could have happened had change been properly anticipated by the current industry leaders.
Slywotzky identifies seven patterns of migration that help one anticipate ways in which an industry could change. These patterns include:
- Multi-directional (steel industry)
- No-profit (airlines)
- Blockbuster (pharmaceuticals)
- Multi-category (coffee)
- Integration to specialization (computing)
- Conventional selling to low-cost distribution (retail)
- Conventional selling to high-end solutions (computing)
Slywotzky highlights the need to understand how customer priorities shift over time and create new opportunities while negating formerly successful strategies. In addition he emphasizes the need to understand how external shocks will impact the industry producing new opportunities. He reviews how the change in oil prices opened the door for the plastics industry to become a major supplier to the automotive industry while the steel industry watched. This illustrates how competitive analysis including indirect competition is paramount for forecasting how the playing field will change in the future.
Slywotzky also highlights the need to defeat institutional memory. One should look for the new criteria that will define success in the future rather than focusing on formerly successful strategies and tactics. Continuously questioning the status quo will ensure that today’s success will not sow the seeds of tomorrow’s failure.
This book emphasizes the importance of understanding the change in customers’ needs and preferences and the priority of those needs and preferences. This understanding of the customers combined with a knowledge of the broad playing field helps one anticipate paradigm shifts. This book provides stimulus to further develop industry scenarios that then drive the winner’s profile. These ideas will stimulate “out of the box thinking” and aid in the development of a far reaching view of the industry. This forethought enables one to develop a course and direction that anticipates significant industry change.
Would you like to learn how to develop a course and direction that anticipates significant industry change? Attend the Simplified Strategic Planning Seminar for in-depth instruction on this subject. Simplified Strategic Planning is a lean, thorough, effective process that has been honed and improved for over 35 years.
Denise Harrison is a senior consultant for the Center for Simplified Strategic Planning, Inc. She can be reached at firstname.lastname@example.org.
© Copyright 2017 by Center for Simplified Strategic Planning, Inc., Ann Arbor, MI — Reprint permission granted with full attribution.