The overwhelming majority of companies have a blind side. It is born from a history of how things have been done as well as a focus on where they are going. Major companies have been taken out due to their blind side. Blockbuster was certainly well aware of Netflix by the time it went bankrupt, but how long did they minimize its threat before Blockbuster executives realized they must act?
The blind side is what you don’t see coming
For organizations, the blind side is the nontraditional market entrant they don’t see coming. Established companies expect acknowledged competitors to undercut margins, steal customers and develop new products or services. What they often don’t expect is a new approach to the industry or a change that requires an entirely different business model. Sometimes the industry is large enough to accommodate the shift. An example of this is the entrance of Zappos into the shoe market. Zappos is an online retailer who ships shoes for free and allows free returns. It has had a growing impact on shoe retail; online and catalog sales were a mere 5.6 percent of the industry in 2008 but with growth of 16 percent a year in the last five years, Forbes.com named online shoes as one of the top eight hot industry startups in 2013.
When the old model changes
As an industry is transformed and demand for the old model begins to shrivel up, price slashing begins, which further deteriorates the value and drives many out of business while others are swallowed up by larger players in consolidation.
Reinventing yourself, and swiftly
This is happening today in the printing business as digital communications begin to transform the need and usage of printed materials. Newspapers, books, greeting cards, posters, and brochures are being replaced by online and digital communications. Those in the industry are scrambling for ways to reinvent themselves with many seeking to vertically integrate to expand services and develop new profit centers. They are officially at or even past the point at which the organization needs to generate next stage growth if it is to survive. They will need to move swiftly if they are going to reinvigorate growth rather than just slow down decline.
Need more examples?
More industries facing disrupters:
- FedEx transformed how we ship packages. Not only did the US Postal Service not see it coming, the business plan was laughed at when submitted in a college course.
- Traditional religious denominations are threatened by declining numbers of congregants who are either becoming unchurched or flocking to non-denominational churches. This trend appears greatest with young people.
- Senior-care facilities are struggling to redefine their models based on changes in attitudes and needs of their customers, which include a commitment from seniors to retire on their terms and not live in an “old people’s home.” To date, the market is open, as there doesn’t appear to be a clear winner in a new model.
- Craigslist and eBay are the new want ads.
Apple now has the most popular cell phone, although they originally were in the computer industry, not the cell phone business.
- Airbnb is redefining hospitality. Traditional hotels are responding with new select service models, geared to provide the most valued services, like Wi-Fi and eliminating others like valet parking.
Companies that want to avoid the blind side need to keep their antennas up and monitor trends in other industries, as well as their own, to ensure they understand what could be changing and how it might impact them.
Twelve potentially disruptive technologies
The McKinsey Global Institute study mentioned earlier identified twelve potentially-economically-disruptive technologies that are rapidly advancing or experiencing breakthroughs, have broad potential impact, could impact economic value significantly, and have the potential to disrupt the current economy.
More and more companies will be challenged by technology and market conditions. They will need to reinvent themselves or slide down the slippery slope of descent. Will you?