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Industry and Market Structure

Market and industry structures are quite brittle. One small scratch and they disintegrate, often fast.

Industry and market structures appear so solid that the people in an industry are likely to consider them foreordained, part of the order of nature, and certain to endure forever. A change in market or industry structure is a major opportunity for innovation. In industry structure, a change requires entrepreneurship from every member of the industry. It requires that each one ask anew: “What is our business?” And each of the members will have to give a different, but above all a new, answer to that question. Large, dominant producers and suppliers, having been successful and unchallenged for many years, tend to be arrogant. At first they dismiss the newcomer as insignificant and, indeed, amateurish. But even when the newcomer takes a larger and larger share of their business, they find it hard to mobilize themselves for counteraction.

For example, the U.S. Poster Office did not react when UPS and FedEx took away larger and larger shares of its business. What had made the Post Office so vulnerable was rapid growth in the demand for urgent delivery of time-sensitive documents and packages.

ACTION POINT: Never stop asking yourself, “What is our business?”

Innovation and Entrepreneurship
Driving Change (Corpedia Online Program)

* Source: The Daily Drucker by Peter F. Drucker

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