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The end of industry barriers means it’s time to poke your nose into anyone’s business

Violators will be rewarded. Michael Dorausch, CC BY-SA

There was a time when businesses knew where they stood. If you were a company boss, you would have a clear notion of what it was that you did, and at its most basic, of what industry you were in, to which trade association you paid your dues, and which customers you counted as yours. Thirteen years ago, I wrote about how this notion of “industry” served managers well in stable times but came unstuck during periods of rapid technological change. Now, I believe that industry boundaries have become irrelevant – no matter how calm or turbulent the backdrop.

Back in 2002, I used some data from the digital imaging industry to make my case. I pointed out how Kodak’s “difficulties” (far worse was yet to come, of course) were in part due to the company’s inability to imagine itself outside the “photographic” industry. This was a sector largely of Kodak’s creation, but it was fast being transformed by digital cameras. Kodak was unable to forget the world of chemicals, celluloid and paper, stuck to what it knew for far too long and paid the price.

Kodak.Snapped. Coleccionando Camaras, CC BY-NC-ND

It is not just Kodak who might think like this. I often ask managers to list their top competitors, and most jot down names of firms that make the same or similar products or provide similar services. That is, bankers write down names of other banks (forgetting about the huge rise in peer-to-peer lending, “alternative finance” and financing through completely different models) and manufacturers only list competitors who make the same product (ignoring new models or products that make their products irrelevant).

Skill sets

That the concept of “industry” has completed a process of obsolescence should not come as news to anyone who has watched the hit American television series, House of Cards. This series was not produced by HBO or any other traditional TV studio known for programme-making skills, but by a firm in the business of renting films. Netflix, scoffed many, had no business poking its nose into content production, nor did it have any capabilities in this field. And yet, it just went ahead and did it, blazing a trail for others. Netflix may once have been in a different “industry” with different “expertise” from content development, but luckily for them (and its millions of subscribers), Netflix treated those terms exactly as they need to be treated: labels created to misguide managers.

Shaking up an industry, one app at a time. Blake Patterson, CC BY

In 2007, I stood in front of a group of executives with the front page of the Financial Times in my hands on which Steve Jobs was shown launching the iPhone. I asked the group how many thought it would be a success. Only 30% raised their hands. The rest were unanimous: Apple, they said, had no chance because Apple knows nothing about phones, and whatever Apple can do, Nokia can do better. I wonder how many of those executives use Nokia phones these days?

The recorded music industry has had a similar unhappy experience with Apple and other disrupters. Apple refused to confine itself to its core business, which was computers, and quickly wrested control of digital music from record companies, selling single-tune downloads to consumers who had long realised that expensive albums flogged by record companies usually had at best a few good songs padded with duds.

The newspaper industry has met with a similar fate. There was a time that I would buy a quality paper and read everything from it: news, analysis, sports, classifieds, you name it. Now I go to a different source for each of these things. Newspapers for too long thought that only their traditional competition, other newspapers, had the capability to meet their customers’ needs. When their consumers turned into their competitors (as bloggers, for instance), they were caught unprepared.

Barriers to entry

All this has enormous implications for managers. First, anyone who still thinks in terms of “industry” and traditional “expertise” is doomed. It is an illusion, nothing more. Take it from me, stop going to your industry conferences: they will only convince you that things are not going to change, or that they are going to change for everyone in the same manner. Nothing could be further from the truth. Discard this identity that your industry has bestowed on you. Liberate yourself and think only about what business model you can craft – regardless of what you currently do and what you already know.

Freedom. Take the leap. Noodles and Beef, CC BY

The implications are also significant for business schools, which need to stop telling students about “banking”, “manufacturing” or “high tech” and start preaching a world that has no boundaries. Specialisation hurts, it confines. Students who pursue banking need to know as much about high tech, and vice versa. Everybody needs to be learning about industries and capabilities other than their own.

The time has truly come to blast out of your comfort zone and start poking your nose in other people’s businesses. It really is your business to do so.

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