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How Industries Evolve: Principles for Achieving and Sustaining Superior Performance
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Sales rank 973,460
Customers rating (based on 7 reviews)
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An Insightful Model for Understanding Industry Change From Xerox to K-Mart to Sotheby's, great companies have failed to translate extraordinary innovation into better profitability. Why does this happen? Anita M. McGahan argues that great companies fail to profit from investments in innovation when they break their industries' rules for how change can take hold. In this book, she shows how to develop a strategy that is aligned with the rules of industry change. By understanding and operating within the rules, executives can better appreciate the tradeoffs that are unique to each company's evolutionary path-and consequently improve performance by making smarter, more profitable strategic bets. How Industries Evolve is based on extensive statistical studies of 700 global industries and more than twenty-five case studies. McGahan identifies four models of industry evolution-progressive, creative, radical, and intermediating-and shows how a company can diagnose which model most closely describes the trajectory of change in its industry. The book then explains how company strategists can use their understanding of this model to carefully coordinate choices about R&D, alliances, internal venturing, leadership style, compensation, modularization, and time-to-market. By supporting executives' efforts to recognize and respond to shifts in industry structure, this book will ultimately help companies to achieve and sustain superior performance.
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| Publisher | Harvard Business Press | | Release date | 11/2004 | | Availability | Usually ships in 24 hours | | Edition | Hardcover |
| | List price | $35 | | Our price | $23.1 (you save 34.00%) | | Used price | from $2.88 |
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Understand the Status Quo - then Blow it up!
One of the first steps I take in analyzing a company is to timeline its' industry. McGahan offers up a detailed model of the various stages and life cycles of industries. Within How Industries Evolve, McGahan identifies four models of industry evolution; progressive, creative, radical, and intermediating.
My recommendation is to read this in conjunction with Blue Ocean Strategy. Some of the concepts mesh well in that you are either leading or following at any point in time. It's also true that you must either create sustaining innovation or reposition yourself by expanding into new territory.
Seven chapters create the core of How Industries Evolve:
1) Introduction and overview
2) The four trajectories of industry evolution
3) How change unfolds on each trajectory
4) Assessing the nature and stage of evolution in an individual industry
5) Conforming to the rules of change within an industry
6) Creating a business-unit strategy that exploits the opportunities in industry evolution
7) Diversifying across businesses to capitalize on industry evolution
No matter what your business, your success depends largely in part to overall industry dynamics. More importantly, understanding how other industry players think will go a long way towards achieving a distinctive competitive advantage - and keeping it.
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Michael Davis, Editor - Byvation
"Business Success through Innovation"
 Academic but worth it
This book was written by a b-school professor based on many years of research. The framework takes a little while to absorb. We read and reread the book several times. Once we "got it," though, this really made a big difference in helping us understand how our business threatened larger firms. We made much better pricing decisions after reading it.
Even radical change takes a long time
The best aspect of this book is that it offers a detailed model for the stages of radical and intermediating change. It deals with the emergence, convergence, co-existence and eventual dominance of one industry over another. The book explains that each of these stages may take a long time on the order of decades. This provided us with a very helpful way of thinking about what is happening in our business.
 Excellent framework
While the framework is nicely structured, I was not able to get a good picture of how to implement the idea. As a startup's founder, I find the book of little help - maybe for established incumbents it would be different.
 Interesting Thoughts on how Industries Evolve and Making it Work
Prof. McGahan (BC and HBS) has written an interesting book on how industries evolve and how a business executive can identify those trends and make $ out of it.
These are the key insights from the book,
1. 4 types of industry evolution patterns - Progressive (retail), Creative (pharma), Radical (fedex) and Intermediating (financial brokers).
2. These rules can be applied across core assets or core activities.
3. Two categories of phases of changes - [Fragementation, shakeout, maturity, declining]or [Emergence, Convergenc, Co-Existence and Dominance]
4. Her prescriptive approach to apply it to the industry,
- Identify what is your industry
- Determine Evolutionary Trajectory
- Determine nature of change - architectural/foundational
- Determine phase of change
- Apply principles of competition for each type
5. 2 kinds of tradeoffs - Leading vs. Following, Repositioning vs. Sustaining.
As you can well see these perspectives are not driven from lot of data and hard stats but more conjectures and hypothesis that are not well proven. I am not sure using this approach will help you make $ of money of these trends but it can get you tenureship at the local university.
FGS
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