Verve! Management Consulting

How to Save a Dying Industry

By Ziv Navoth

"It isn't the incompetent who destroy an organization, it is those who have achieved something and want to rest upon their achievements who are forever clogging things up."

Childish complaint or the real barrier to corporate change? Read on to find out.

1886 was a good year for the American ice harvesting industry. Household demand for ice had been growing at a steady pace and recent innovations enabled ice "farmers" to cut increasing amounts of ice from frozen ponds and deliver them to customers in locations as far as India. "The ice trade...has been growing and extending itself with no successful competitor for more than half a century," boasted one industry leader, "And there is reason to think it is yet in its infancy."

Nothing could have been farther from the truth.

Unbeknownst to the ice harvesters, advances in thermodynamics and chemistry had just led to the invention of an ammonia compression machine, also known as a "refrigerator". While the ice harvesters continued to make incremental improvements to their saws, industry outsiders began manufacturing ice. Some ice harvesters recognized the tectonic shifts around them and transformed themselves into ice manufacturers. But most did not, and by the mid 1920s the natural ice industry was gone for good.

I hear what you're saying: "It's easy to criticize an industry with 100 years of hindsight." But there are many examples of how today's industry's are in the exact same position ice harvesters were a century ago. Consider the following three anecdotes:

1. Southwest Airlines, with its uniform fleet of 737s and its always low prices, is now more profitable than the top three largest airlines combined. "An industry analyst laid it out for us last night," wrote Barron's magazine last week. "The analyst figures the heavily indebted old name airlines like US Air, United, American, Delta, Northwest and Continental will have to winnow down to maybe three survivors by this time next year."

2. Markos Moulitsas started writing a daily political web-log two years ago. Today his "Daily Kos" attracts more than 300,000 readers a day and eight million unique visits per month, making Moulitsas one of the most widely read commentators in the world. "In journalism since the mid-nineteenth century, barriers to entry have been high," notes Jay Rosen, chair of NYU's Journalism department, "With the weblog, barriers to entry are low: a computer, a Net connection, and a software program like Blogger or Movable Type gets you there."

3. Skype, which offers free internet phone calls, was founded only a year ago. Yet over 25,000,000 people have downloaded its software. “I knew it was over when I downloaded Skype,” explained Michael Powell, chairman of the Federal Communications Commission. “When the inventors of KaZaA are distributing for free a little program that you can use to talk to anybody else, and the quality is fantastic, and it’s free – it’s over. The world will change now inevitably.”

I know - realizing your industry is going through a major transformation is one thing. Doing something about it is another. So what can your company or industry do if its future is foggy? The Industrial Designers Society of America (IDSA) offers a clue.

For years the profession had regarded itself as second to none. And while internal competition was fierce, designers always managed to extract a premium for their creativity. Those days are gone. Competition from China and Eastern Europe is already eroding profit margins and many breakthrough designs fail to change the strategic direction of the companies introducing them, leaving designers with the non-strategic role of, well, designers.

IDSA realized that unless the industry developed a clear plan for the future and began acting on that plan today, it would run the risk of becoming another footnote in the history of industry transformation.

"I knew it was over when I downloaded Skype. When the inventors of KaZaA are distributing for free a little program that you can use to talk to anybody else, and the quality is fantastic, and it's free- it's over. The world will change now inevitably. "

Michael Powell

Chairman and CEO

Federal Communications Commissionl

So last summer IDSA invited the top 50 industrial designers to think about what the future could look like, what it would mean and how they could take advantage of it. The result - a collection of road maps to fit numerous possible futures. Using these maps, industrial designers can now not only begin positioning themselves strategically with their customers, but also collaborate on a set of common objectives.

IDSA followed 5 simple, yet powerful rules to prepare itself for the future:

1. Take a diverse group of highly opinionated people, throw a huge challenge at them and lock them up in a room.
IDSA wanted to make sure it invited a disparate set of people to its summit. So instead of limiting attendance to the industry's current leaders, it invited up and coming designers and members of the academia. IDSA also made sure to include people with strong personalities, knowing they'll create the friction necessary for raising and debating tough questions.

2. Provide a strict framework, then let people loose.
Thinking about the future can be a fun, if not inspiring experience. But without a clear process, the exercise can quickly turn into a game of "what if". By using tools such as scenario planning and reverse timelining, IDSA was able to develop alternate visions of the future and work its way back to the present - understanding what professionals need to do today in order to be prepared for tomorrow.

3. Rule out nothing. Capture everything.
One of the first rules of brainstorming is that no idea is a bad idea. Accordingly, IDSA made sure that no idea about what the future could look like would be shot down too early into the summit. Equally important was the ability to record these creative ideas and so mixed in with workshop attendees were numerous scribes, whose role was to capture the rich scenarios developed by the participants. Capturing all this information also meant it could be shared with the broader design community once the summit was over.

4. Start with big ideas but leave with very specific plans.
Coming up with ideas is easy. Executing them isn't. From the get-go, IDSA wanted to leave its summit with clear priorities that the industry as a whole, and IDSA as its elected body, could act upon. For example, summit participants decided to develop an MDA program (Master's of Design Administration) and engage more in projects that combine global thinking with local design.

5. Remember that saving your industry isn't a popularity contest.
Five hundred years ago, political theorist Nicolo Machiavelli issued the following warning: "It must be remembered that there is nothing more difficult to plan, more doubtful of success, nor more dangerous to management than the creation of a new system. For the initiator has the enmity of all who would profit by the preservation of the old institution and merely lukewarm defenders in those who gain by the new ones."

Thinking about the future can be a dangerous exercise, as I personally found out when I guided IDSA through the process. But if you're trying to save an industry from dying and don't experience some kind of resistance along the way, you're doing something wrong.

"It must be remembered that there is nothing more difficult to plan, more doubtful of success, nor more dangerous to management than the creation of a new system."

Nicola Machiavelli

Want to Know More?

You can see IDSA's action plan for staying alive, along with some fascinating views of the future here.

Markos Moulitsas' Daily Kos can be found here. He and the other bloggers that are transforming journalism were featured in a recent New York Times article.

If you want to know which warning signs your company should watch for, start by looking at history. One of the most valuable books on industry transformation is James Utterback's "Mastering the Dynamics of Innovation".

One of the best articles written on how industries can be blind-sighted by their current position is Theodore Levitt's "Marketing Myopia".

Before you get your industry's smartest brains to think about what the future could look like, make sure they're mentally prepared by reading something out of the ordinary.

If you're interested in following some current trends, Trendwatching is a good place to start.

Ziv Navoth helps organizations improve their performance by creating a unique and valuable position in the marketplace. He is the Managing Director of Verve! (www.verve.nu) and can be reached at ziv@verve.nu.