Attractor States

 One type of accelerant is what is called a demonstration effect--the impact of in-your-face evidence on buyer perceptions and behavior.

Two complements to attractor-state analysis are the identification of accelerants and impediments to movements toward an attractor state.  One type of accelerant is what is called a demonstration effect--the impact of in-your-face evidence on buyer perceptions and behavior.  For example, the idea that songs and videos were simply data was, for most people, an intellectual fine point until Napster.  Then suddenly, millions became quickly aware that a three-minute song was a 2.5 megabyte file that could be copied, moved, and even e-mailed at will.

As an example of an impediment, consider the problems of the electric power industry.  Given the limited carrying capacity of the atmosphere for burned carbon compounds, the obvious attractor state for the power industry is nuclear power.  The simplest path would be to replace coal and oil fired boilers with modern third or fourth generation nuclear boilers.  The major impediment to the U.S. power industry moving in this direction is the convoluted and highly uncertain licensing process--at each stage, local, state, and federal authorities are involved as well as the courts.  Whereas it takes France five years to license and build an entire nuclear plant, it would probably take ten years or more for a U.S. utility to just carry out a boiler changeover.

ACTION POINT: Are there accelerants or impediments present in your industry?

Understanding What the Customer Buys

What does the customer consider value?

The final question needed in order to come to grips with business purpose and business mission is: “What is value to the customer?”  It may be the most important question.  Yet it is the one least often asked. One reason is that managers are quite sure that they know the answer.  Value is what they, in their business, define as quality.  But this is almost always the wrong definition.  The customer never buys a product.  By definition the customer buys the satisfaction of a want.  He buys value.

For the teenage girl, for instance, value in a shoe is high fashion.  It has to be “in.”  Price is a secondary consideration and durability is no value at all.  For the same girl as a young mother, a few years later, high fashion becomes a restraint.  She will not buy something that is quite unfashionable.  But what she looks for is durability, price, comfort and fit, and so on.  The same shoe that represents the best buy for the teenager is a very poor value for her slightly older sister.  What a company’s different customers consider value is so complicated that it can be answered only by the customers themselves.  Management should not even try to guess at the answers-it should always go to the customers in a systematic quest for them.

ACTION POINT:  What do your customers consider most valuable about the product or service you provide?  If you don’t know, find out.  If you do know, ask your customers if you are delivering.

Attractor States

Having a clear point of view about an industry's attractor state helps one ride the wave of change with more grace.

In thinking about change it can be very helpful to use the concept of an attractor state.  An industry attractor state describes how the industry "should" work in the light of technological forces and the structure of demand.  By saying "should," the emphasis is on an evolution in the direction of efficiency--meeting the needs and demands of buyers as efficiently as possible.

Having a clear point of view about an industry's attractor state helps one ride the wave of change with more grace.  At attractor state provides a sense of direction for the future evolution of an industry.  There is no guarantee that this state will come to be, but it does represent a gravity like pull.  The critical distinction between an attractor state and many corporate "visions" is that the attractor state is based on overall efficiency rather than a single company's desire to capture more of the pie.

ACTION POINT: How is your industry moving toward meeting the needs and demands of buyers as efficiently as possible?

 

Incumbent Response

They tend to fall in numerous patterns of incumbent inertia.

This guidepost points to the importance of understanding the structure of incumbent responses to a wave of change.  In general, we expect incumbent firms to resist a transition that threatens to undermine the complex skills and valuable positions they have accumulated per time.   They tend to fall in numerous patterns of incumbent inertia.

In business, inertia is an organization's unwillingness or inability to adapt to changing circumstances.  Even with change programs running at full throttle, it can take many years to alter a large company's basic functioning. 

ACTION POINT:  Avoid inertia and adopt a willingness and ability to change when circumstances do.

Predictable Bases III

...they predict that the future winners will be, or will look like, the current apparent winners.

A third common bias is that, in a time of transition, the standard advice offered by consultants and other analysts will be to adopt the strategies of those competitors that are currently the largest, the most profitable, or showing the largest rates of stock price appreciation.  Or, more simply, they predict that the future winners will be, or will look like, the current apparent winners.  Examples are:

• As aviation was deregulated, consultants advised airlines to copy Delta's Atlanta-based hub-and-spokes strategy.  But, unfortunately for the copycats, Delta's profits had come from subsidized prices on the short-haul routes to rural towns it served from Atlanta--subsidies that were disappearing with deregulation.
• While WorldCom's stock price was flying high, consultants urged clients to emulate the company and get into the game of putting fiber-optic rings around cities.  That advice had to be withdrawn when sleepy telephone companies awoke and began to cut prices.  WorldCom then crashed and burned.
• In 1999, the Web start-up advice was to create a "portal" such as Yahoo! or AOL--a website the acted as a guide to the internet and provided a protected "playground" or specialized Web pages that users were herded toward.  But although these companies were the stars of the moment, their initial strategies of capturing and channeling Web traffic were soon made obsolete by the sheer scale of the expanding Internet.

ACTION POINT: Recognize that times of transition may change the entire face of what future winners will look like.