Four Trajectories of Industry Change
(McGahan)

Knowledge Center





Summary, forum, best practices, expert tips and information sources.


The Four Trajectories of Industry Change is a model to describe how industries change. The author of the model is Anita M. McGahan, Professor of Management in Boston. She published the model for the first time in the HBR of October 2004.


According to McGahan you can't make intelligent investments within your organization unless you understand how your whole industry is changing. The need to understand change in your industry may seem obvious, but such knowledge is not always easy to collect. Companies sometimes miss or misinterpret clues and arrive at false conclusions often.


Why industries evolve

Research by McGahan suggests that industries evolve as a result of two types of threats of obsolescence:

  • A threat to core activities of the industry. A threat to the recurring activities of companies, which historically generated profits for the industry.
  • A threat to the core assets of the industry. A threat to the durable resources, including intangibles such as knowledge and brand capital, that have historically made the organization efficient at performing core activities.

How industries change

Resulting out of a combination of the above two types of threats, industries change along one of Four Trajectories of Industry Change:

  1. Radically. When core assets and core activities are both threatened with obsolescence. Advice:
    • Perform a balancing act. Aggressively pursuing profits in the short term while avoiding investments that could later prevent you from decreasing your commitments, PLUS:
    • Assess how quickly your core assets are depreciating. And determine the segments in which you can protect your competitive position from those in which your position will erode quickly.
  2. Progressive. When neither core assets nor core activities are jeopardized. Advice:
    • Develop a system of interrelated activities that are defensible because of their compounding effects on profits, not because they are hard to understand or replicate; be the biggest.
  3. Creative. When core assets are under threat but core activities are stable. Advice:
    • Assess how quickly your core assets are depreciating. And determine the segments in which you can protect your competitive position from those in which your position will erode quickly.
  4. Intermediating. When core activities are threatened while core assets retain their capacity to create value. Advice:
    • Perform a balancing act. Aggressively pursuing profits in the near term while avoiding investments that could later prevent you from decreasing your commitments.

The Trajectories of Industry Change typically unfold themselves over decades. Fighting the industry change is almost always too costly to be worthwhile. Rather organizations should reconfigure themselves for lower revenue growth and develop the ability to remove activities and resources out of the business. Systematically analyzing the business environment is not easy, but the payoff is great: better strategic decision-making for your company.


Trajectories of Industry Change Special Interest Group


Special Interest Group (54 members)

Forum about Trajectories of Industry Change  

The most recent topics about: Trajectories of Industry Change.


🔥 NEW Consolidation of Industry
What does it mean when an industry is consolidating, not just a separate company but a whole industry? (...)
4
0 reactions
 
Managing Change is an Art
Managing the vagaries of change can only be aimed towards minimising the deviation from the intended path of success. Th (...)
4
0 reactions
 
Management Mega Trends
In my personal point of view, the future in the business management world is very difficult to predict, but co-innovatio (...)
3
15 reactions
 
Best Practices about Trajectories of Industry Change

Here you will find the most valuable ideas and practical suggestions.


Expert Tips about Trajectories of Industry Change

Here you will find professional advices by experts.


Innovation Pitfalls

Avoiding Innovation Traps (...)
   
 
 
 

Industry’s Driving Forces

Organizational Change (...)
   
 
 
 

Pitfalls and Obstacles in Product Development Strategy

Product Development, Product Portfolio Management (...)
   
 
 
 

How to Become a Self-tuning Enterprise: Advanced Experimenters

Organizational Agility, Strategic Agility, Real Options, Emergent Strategy (...)
   
 
 
 

How Can Incumbents Respond to Disruptors?

5 Strategic Options in Reaction to Disruptors (...)
   
 
 
 

How to Identify the Trajectory of an Industry?

Predicting Industry Change (...)
   
 
 
 

Classes of Innovation | Sources of Innovation

Innovation, Creativity, Organizational Innovativeness, Lateral Thinking, Out of the Box Thinking, Blue Ocean Strategy (...)
   
 
 
 

Innovating by Reconsidering Value Delivery

Fundamental Innovation (...)
   
 
 
 

In Which Direction Should we Grow our Portfolio?

Portfolio Strategy, Innovation Strategy (...)
   
 
 
 

Determining the Optimal Breadth of your Product Portfolio

Product Portfolio Analysis (...)
   
 
 
 

Why Large Firms are Having Difficulties to Deal with Disruptive Innovations

Innovation Management (...)
   
 
 
 

The Role of Competitors in Strategy and Business Failures

Competitive Strategy, Competitive Environment, Competitive Intelligence, Industry Analysis (...)
   
 
 
 

How BOP Countries Can Disrupt Western Markets

Disruptive Innovation, Bottom of the Pyramid, Country-level Strategy (...)
   
 
 
 
Information Sources about Trajectories of Industry Change

Here you will find powerpoints, videos, news, etc. to use in your own lectures and workshops.


Scenario Planning and Risk Management in Uncertain Business Enviroment

Scenario Planning, Risk Management, Strategic Uncertainty (...)
 
 
 
 

Vertical Dis-integration

Industry Change (...)
 
 
 
 

Compare with McGahan's Four Trajectories of Industry Change: Disruptive Innovation  |  Forget Borrow Learn  |  BCG Matrix  |  Five Forces  |  Diamond Model  |  BPR  |  McKinsey Matrix  |  Core Competence  |  Profit Pools  |  Product Life Cycle  |  ADL Matrix  |  Bass Diffusion Model  |  SWOT Analysis  |  Benchmarking  |  Positioning


Return to Management Hub: Change & Organization  |   Marketing  |   Strategy  |  Supply Chain & Quality


More Management Methods, Models and Theory

Special Interest Group Leader

Are you an expert in Trajectories of Industry Change? Sign up for free

Link to this knowledge center

Copy this code to your web site:

 


About 12manage | Advertising | Link to us / Cite us | Privacy | Suggestions | Terms of Service
© 2020 12manage - The Executive Fast Track. V15.6 - Last updated: 25-9-2020. All names ™ of their owners.