The overwhelming majority of businesses have a blind spot or a blindside. It is born from the history of how things have been done as well as a narrow focus on where the company is going. Major companies have been taken out due to their blindside. Blockbuster was certainly well aware of Netflix by the time it went bankrupt but how long did they ignore its existence before Blockbuster executives realized they must act?
What is the Blindside?
For organizations, the blindside 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 Zappos’ entrance into the shoe market. Zappos is an online retailer that ships shoes for free and allows free returns. It has had a growing impact on shoe retail with online/catalog sales a mere 5.6 percent of the industry in 2008 with growth of 16 percent a year in the last five years causing Forbes.com to name online shoes as one of the top 8 Hot Industry Startups in 2013.
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. 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 re-invent themselves with many seeking to vertically integrate to expand services and develop new profit centers.
Need more examples?
- 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 living care facilities are struggling to re-define 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.
- EBay and Craigslist 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.
Avoid the Blindside!
Companies that want to avoid the blindside need to keep their antenna 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.
The McKinsey Global Institute study, Disruptive technologies: Advances that will transform life, business, and the global economy, 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. One of them is 3D printing. For just a minute think about how it can change our world as we know it. It can rock manufacturers by allowing consumers to create products at the point of sale, as well as redefine how they ideate, and develop supply chains. It enables short run prototyping, unit productions of one and puts design closer in time and place to the end user. Will it blindside you?
The best defense is a good offense. To be able to invoke an offensive growth plan, it is imperative that you understand where the market is today and be able to place informed bets about where it is going. If you need help identifying your blindside, get in touch.
What other blindside examples are you aware of? Share in the comments below.