I'm assuming that everyone has heard the buggy whip analogy, one of the most shopworn pieces of conventional business wisdom. One of the underlying assumptions, sometimes made explicit depending on who's doing the telling, is that you are always better off abandoning even the best company in a declining industry in order to make the move to a field that's new and growing.
It's important to note that even in declining industries you can find companies that continue to turn a profit for a long time while even in industries that do proved to be the wave of the future, lots of individual companies don't last that long.
Or, put another way, you can still buy a buggy whip from the Westfield Whip Manufacturing Company, but they stopped making Lamberts a long time ago.
Years ago I read an article in Forbes about one of the major buggy whip companies. When automobiles started taking over, they developed a washing system with a tank, sink and solvent for cleaning one's hands, tools and parts. Unlike horses and horse stuff, where soap and water worked fine, cars have stuff covered with grease and motor oil. Since most garages were converted stables, they already had a distribution network and customer base. They were still going strong in the 1980s when the article came out.
ReplyDeleteI imagine they continued to sell buggy whips even as they sold more and automobile related stuff. There's an old saying about not selling the bodega.