Friday, January 06, 2006
The Demand Singularity
...is one of the key strategic problems firms face in the 21st century.
It's deceptively simple: a kind of metaconvergence is taking place across consumer industries: everyone is selling everything, which means, increasingly, that everyone sells the same things - just with different brands, and from different manufacturers.
Here are some recent examples: T-Mobile moves into laptops, Google + MS move squarely into video/media.
It isn't just restricted to digital industries - think about how everyone from Banana Republic to Ferrari sells perfumes, clothes, and pillows.
What this really is is the dismantling and convergence of entire value chains, as incumbents seek growth through scope economies. And what that, in turn, means, is that most strategically critical variables have shifted to the demand side of the value equation (aka, the Demand Singularity)
It's hard to overstate how big (big) problem this is for strategists: it means firms are finding it increasingly difficult to achieve growth through, for example, the kind of radical innovation that creates new industries or untapped market space.
At the limit, it's like attention scarcity^100000: all firms compete across the same product markets for the same share of consumers/attention/demand.
What's the answer? Edge competencies (but you knew that already :)