Conquering the industries of the future It’s rare for big established companies to create radical new markets. Why? Costas Markides and Paul A. Geroski look at how the markets of the future can be created, shaped and colonised effectively.
Many ideas have been developed in the last fifty years on how big established companies could create entirely new markets. This advice has been hungrily consumed by large, established corporations as well as smaller firms. After all, which company does not want to become more innovative and which CEO does not dream about leading their organisation into virgin territories, discovering in the process exciting new markets?
Yet despite all this advice and good intentions, it is very rare to find a big, established company among the innovators that create radical new markets. Why not?
The simple answer is that the advice given is either inadequate or plainly wrong. What people often forget is that “innovation” is not one entity. There are different kinds of innovations, with different competitive effects. For example, what a firm needs to do to achieve product innovation may be entirely different from what it needs to do to achieve process innovation. Lumping the two kinds of innovation together is like mixing oil with water.
What this implies is that the generic question, “How can the modern corporation be more innovative and create new markets?” only gets us generic answers – and these answers may or may not help the company achieve the kind of innovation that creates radical new markets. In other words, prescriptions to help a firm become more “innovative” may or may not be the ones that lead to radical new market creation.
It’s virtually impossible to offer proper advice on how to create or colonise radical new markets without first understanding where these kinds of markets come from, what they look like and what it takes to succeed in them. A better opening question is, “Where do radical new markets come from, what are their structural characteristics, and what skills are needed to create and compete effectively in them?” This helps us identify the skills and competences needed – and the strategies that must be adopted – if a firm is to be a successful coloniser of radical new markets.
In fact, as we show in our book Fast Second: How Smart Companies Bypass Radical Innovation to Enter and Dominate New Markets, the full extent of what established companies need to change to be successful pioneers is such a formidable challenge that many of them are better off not even trying.
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