Preston Smith's Corner

What do you mean by market shifts when you speak of flexibility?

January 2008 Quick Tip

When discussing product development flexibility, I assert that flexibility is important because the environment in which we develop new products is becoming more turbulent. Change is increasing in three areas: customers, markets, and technology. People generally appreciate that customers change their minds and that technology is advancing rapidly, but how are markets changing?

A good example is what is happening in China today. Recently, Chinese manufacturers were content to manufacture products from designs supplied by the West. More recently, design has shifted to China, where Chinese designers and engineers work from specifications sent from the West. But increasingly, Chinese companies are creating the product and the business from scratch, and when they do this, often they don’t follow the “rules” that those in the West follow. Chinese companies like Huawei, Haier, and Lenovo are changing the markets they operate in by applying their cost advantage to areas such as engineering, marketing, and customer service that extend beyond their traditional manufacturing cost advantage. You can read about such market changes in Dragons at Your Door.

Another example of market shift is the one described in the popular book, The Innovator’s Dilemma, wherein new, disruptive technologies spawn whole new markets and ways of doing business. One more is described in the book, Blue Ocean Strategy, in which an upstart disrupts a market by recombining product features in a totally new way, thus creating an uncontested market and making incumbents look obsolete.

Each of these types of market change is becoming more common and is disruptive because it changes the fundamentals of a market.

(c) Copyright 2013 Preston G. Smith. All Rights Reserved.

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