Industry and Market Structure

Peter Drucker described the market and industry structures as a source of innovation opportunity as “brittle.”

He argued that one small scratch and they disintegrate, often quite fast.

Often industry and market structures appear so solid that the people in an industry consider the structure to have the ever-lasting enduring power.

Think about the US Postal Service before the UPS and FedEx.

Think about the newspaper industry before the Internet-based publishing.

Think about the taxi industry before Uber and Lyft showed up.

A change in market or industry structure is a major opportunity for innovation.

Drucker also asserted that, in industry structure, a change will require 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, after having been successful and unchallenged for many years, tend to be complacent or even 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.

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