What Do Mount St. Helens and Industry Disruptions Have in Common?

Posted by Leonard Fuld on Oct 8, 2013 12:00:00 PM

Source: Bloomberg Businessweek

1003 St Helens 630x420

Photograph by Gary Braasch/Corbis

I recently watched a couple of YouTube time-lapse videos about the eruption of the Mount St. Helens volcano. From space or from ground level, you see a verdant landscape that suddenly fills with ash. When the smoke clears, whoosh, you see devastation. The time-lapse film renders this change in a mere couple of minutes, but in reality this change occurred over 24 years, from the initial 1980 eruption to the renewed activity in 2004. On the surface, environmental conditions eroded over a few days or weeks—a geologic blink of an eye. Under the surface, shifts in dirt and magma had been going on for two decades; we simply did not see it take place.

Big disruptions of industries mimic their geological cousins. The dawn of consumer digital photography began with Sony’s introduction of the Mavica camera in 1981. By 2005, Eastman Kodak was suffering its first losses and laid off thousands. Elapsed time: 24 years.

Telephone deregulation in the U.S. occurred in 1984. Yet landline phones still dominated with modest but increasingly improving features such as call waiting, call forwarding, and voice mail. But the cell phone began to change the mobile market forever, and the truly versatile iPhone broke it wide open. As of 2009, for the first time the number of U.S. households opting for cellphone-only use exceeded landlines. Elapsed time: 25 years.

When the 1973 Arab oil embargo hit the U.S. and Western Europe, with gasoline prices reaching all-time highs, the talk of electric cars began in earnest. But it wasn’t until 1997 that the first Toyota hybrids came on the market, followed by a spate of new electric alternatives over the following years. The market had begun to shift for automobiles. Elapsed time: approximately 25 years.

A lot of factors drove those industry shocks, including changing legislation, industry restructuring, and a host of new technologies. But make no mistake: These disruptions were driven by a market need. The companies that were able to spot the evolution early—Toyota in cars, Canon in cameras, and Apple and Samsung Electronics in phones—were winners years later. And in each case it was the incumbent that lost the most: Chrysler, Kodak, and the old former monopoly, AT&T.

What can you do to watch these shifts and anticipate the changes that may bubble to the surface over the coming 25 years?

First, forget about predicting the specific time and date of a disruption. That’s the kind of foresight found only in science fiction.  All these disruptions could have brought many different opportunities to the marketplace—sooner or later or even in another form. The real trick is not to look for a single future story but to watch the indicators—the story elements that could come together to create that disruption. That is exactly what makes a little-known detail of the Kodak digital photography failure so fascinating.

Minoru Ohnishi, appointed president of Fuji Photo Film in 1980, witnessed two events—both early warning indicators of the digital imaging revolution. First, the Hunt brothers attempted to corner the silver market, and because silver is a critical ingredient in film stock, manufacturers faced a temporary shortage. Second, Ohnishi witnessed the introduction in 1981 of the first digital camera by Sony: the Mavica. Those two indicators told him that the photography market would be forced to change very soon. It also opened up an opportunity for Fuji to gain market share on Kodak in the U.S. Subsequently, Fuji spent more than $2 billion over the following decade to develop digital cameras and, even more importantly, digital photo processing equipment that in just a few years replaced Kodak’s equipment at drug and retail stores throughout the U.S.

Not all disruption stories are as dramatic as Kodak’s, but disruptions themselves keep coming. The more current tales of Elon Musk’s entrepreneurial ventures in launching relatively low-cost but large-scale rockets through SpaceX, or his selling sleek Tesla electric cars may not become the future story for either the military industrial complex or the auto industry, but they do represent indicators that rivals need to watch.

No industry is immune from disruptions. The trick is in finding the key indicators (not just the stories), tracking them, then acting on them when the time is right. Just don’t wait too long. A Mount St. Helens will not remain dormant forever.

Read Original Article Here:

Topics: Consumer Goods, Early Warning Monitoring, Innovation, Market Analysis, Industry Convergence

Fuld + Company Blog

The material on this page draws on the research and experience of Fuld + Company thought leaders, consultants and others. Learn more about our expertise here.

Recent Posts

Request for Information

If you'd like someone at Fuld to contact you regarding your strategic competitive challenges, fill out the form below.