The history of business is full of stories of entire industries cut off at the knees when some natural, political, or market catastrophe felled them.
Consider the way we have lit our homes over the years. In the 19th century, whale oil lamps were common, until the whale oil industry was wiped out as kerosene lighting ignited the rise of the petroleum industry.
Then Edison threw a light switch, and the world changed again. No one wanted the foul smell and dangerous flame of kerosene lanterns in their homes when they could have clean and easy electric light. Demand for fossil fuels plummeted, and only rose again with the advent of the automobile. Now, the ramifications of climate change threaten the automobile, utilities, and oil industries.
For those who develop innovative new products in response to market-driven circumstances, these are unsettling stories. The idea that unpredictable, revolutionary forces can sweep away entire industries is daunting. No less daunting are the unforeseen, industry-specific shifts: the rise of an agile disruptor that changes the playing field for an incumbent who, typically, didn’t see the threat coming. Never mind the difficulty of responding to a larger discontinuity, such as the 9/11 attacks, or the global financial contraction of 2008 and the subsequent evaporation of consumer demand in Western markets.
How can a business meet unexpected threats such as these?
The key to responding to such cataclysmic shifts is to focus the kind of ingenuity and creativity that companies now devote to product innovation to devising innovative new business models to take those new ideas to market.
That may sound just as daunting as the challenges themselves. But that’s because so few companies have devised a systematic and predictable way to go about it.