Thursday, 17 December 2009

Challenging industry assumptions - how Kindle stole a march on everyone else

This is my first post for a while but now I've finally completed my post-graduate exams I'll now have a bit more time to focus on this yarn.

You may think that e-readers and Kindle is all I can blog about. And at the moment you are right! The reason why I'm bringing this up now is because it's a perfect example of how an industry step-change by a large, innovative company has been able to shake up the entire market place within which it operates.

A couple of points to make on this remarkable area of growth in 2009.

Kindle has really stolen a march on all the other providers e.g. mainly Barnes & Noble and Sony who seem to be the main threat, by thinking ahead of the game and being able to think and move faster than other organisations. To this extent Amazon are going to win the majority of customers (i.e. early adopters and early majority share) and give themselves a great chance to secure future revenues via the download market.

I won't bore you by repeating all that I've read on the subject (just look on websites) but it brings me round to some interesting business theory that I've read about. It's called 3R learning - (some also call it double loop.)

3R learning is a process whereby an organisation uses learning to develop superior customer value propositions and competitive advantage. Staff members are required to think "out-of-the-box" and "learn to forget the past" in order to deliver new ideas and find better ways of meeting customer needs. It's about challenging traditional views and assumptions about a market place and re-inventing yourself and your services in order to sustain future growth. The 3 stages are reflect, re-evaluate and respond.

Why am I talking about this? Well just look at what the i-pod did for Apple. The technology behind e-readers isn't particularly complex but it was the way Amazon has created a need in the market for a new and better way for many consumers to read books and various media.

Apple's revenues over the last 10 years are up from $6bn of sales to $36.54bn in September 2009 and it just goes to show how thinking differently from your competitors can change the rules of the market and make it work for you.

There are many other companies who represent this type of learning - Easyjet, Virgin, Dell have all thought differently about the market place in which they operate and delivered increased customer value by challenging long-held assumptions about their market and industry.

I suggest you try it on the sector in which you operate, you might just be surprised as to where it leads.

PS - make what you like of business theory. Some think it's a load of twaddle created by bored academics, others live by it. In my opinion, all it comes down to is someone identifying a process or behaviour and giving it a name. Having a good grounding in business theory can let you apply this knowledge to practice and help you identify which companies are able to deliver customer value and of course the potential for a solid and safe investment.