Using Dynamics VI

You must dig beneath this surface reality to understand the forces underlying the main effect...

When change occurs, most people focus on the main effects--the spurts in growth of new types of products and the falling demand for others.   You must dig beneath this surface reality to understand the forces underlying the main effect and develop a point of view about the second-order and derivative changes that have been set into motion.

For example, when television appeared int eh 1950s it was clear that everyone would eventually have one an that "free" TV entertainment would provide strong competition to motion pictures.  A more subtle effect arose because the movie industry could no longer lure audiences out of their homes with "just another Western."  Traditional Hollywood studios had been specialized around producing a stream of B-grade movies and did not easily adapt.  By the early 1960s, movie attendance was shrinking rapidly.  What revived Hollywood film was a shift to independent production, with studios acting as financiers an distributors.  Independent producers freed from the nepotism and routines of the traditional studio, could focus on assembling a handpicked team to make a film that might be good enough to pull an audience off of their family-room sofas.  Thus a second-order effect of television was the rise of independent film production.

ACTION POINT: Look for second order effects behind the waves of change in your industry.