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Published: July 25, 2014
 / Autumn 2014 / Issue 76

 
 

How Old Industries Become Young Again

Five indicators reveal when your sector is about to be transformed by dematurity.

When contemplating possible threats to their business, many executives worry about disruption. They see competitors with new technologies poised to capture their existing customers, and they know it’s better to be a disruptor than a disruptee. But disruption is often misunderstood. In fact, as New Yorker writer Jill Lepore points out (“The Disruption Machine,” June 23, 2014), many celebrated cases have been less disruptive than they were portrayed as being. What most industries experience as disruption is typically not a sudden change from one source, but the accumulated impact of a range of interacting factors. If you want to be prepared for disruption, it’s critical to understand the more gradual, prevalent, and multifaceted dynamic that underlies it: a phenomenon called dematurity.

Dematurity is what happens to an established industry when multiple companies adopt a host of small innovations in a relatively short time. Those seemingly trivial moves combine to rejuvenate the old mature industry and make it young again. The term was coined in the early 1990s by Harvard Business School professors William Abernathy and Kim Clark. They were thinking of the U.S. auto industry, which was undergoing a profound operational renewal, spurred by Japanese competition, the quality movement, and lean management. Toyota and Honda, with their superior production methods, did not fully disrupt Detroit. They dematured it. Instead of collapsing, the Detroit Three adopted their rivals’ tools and techniques, and the entire industry advanced to higher levels of quality and customer satisfaction.

You can think of dematurity as a crescendo of mini-disruptions that add up to great effect. It will hit most industries sooner or later; it struck sectors as varied as software development, entertainment, and defense contracting. It is happening right now in the U.S. in healthcare and electric power generation. In the long run, dematurity is a great boon, but it can also be terribly threatening to individual companies. Nearly all cases of dematurity have one thing in common: the genuine surprise of executives when it happens to their industry. It is all too easy to be caught off guard—to ignore the small changes that appear one by one, to fail to believe they will affect you, and to end up at the tail of the wave, outpaced by competitors who saw the possibilities earlier.

Nearly all cases of dematurity have one thing in common: the genuine surprise of executives when it happens to them.

The solution lies in gaining better sensitivity—in other words, improving your ability to recognize and respond to the signals of incremental change. This is difficult, but not because information about the pending changes is sparse. Rather, the signals are too abundant. News breaks of deals, partnerships, and market entrances or exits. Scholars, commentators, and business leaders talk of looming disruption. Some of that talk is accurate in its foresight, and some of it is hyperbole. It is difficult to know which is which.

Here, then, to help you sharpen your mental gauge for disruption and dematurity, are five often overlooked but genuinely prescient signals of pending industry change. They reflect more than 20 years of close observation of innovation launches in a variety of industries. These phenomena tend to arise when an industry is on the verge of dematurity. Look for early signs of these five changes, and you can better recognize the impact of today’s events—and the trajectory of tomorrow’s.

New Customer Habits

In the 1980s, most people who bought telephones installed them in a single location, connected them to the telephone network with a wire, and used them exclusively to communicate via voice. By the end of the 1990s, mobile phones were available with analog transmission networks. Consumers used them as portable supplements to their wired voice lines—a widespread incremental improvement, but not a dramatic shift in people’s habits.

 
 
 
 
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