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POWER SHIFTS The Game of Business

Currently there is a commercial on TV by the former “Spencer for Hire,” “Deep Space Nine” captain, Avery Brooks talking about the game of chess as an analogy to the game of business.  The premise is, what would happen if the rules of the game were continually changing as the game was played?  What if you had ten rooks?  What would it be like if you had three queens?  What would happen if the rules we play by today were changed everyday?  How would you function?  How would you survive?

For anyone not paying attention, the rules of the game are changing.  In fact, the standards of business practice are moving so fast that experts from Tom Peters to Alan Greenspan are finding it tough to keep pace. In just one year, we have seen the government assault on Microsoft, a suit pending against Napsters mp3 internet site by the recording industry, the oil-producing nations lowering production volume to increase prices, and the largest international merger trend in history.

In each case, we are dealing with a change that affects how we must navigate the game board.  Microsoft has for years played the monopolistic policy game and won, ignoring the US Government’s threats to curtail its tactics.  It's peer, Intel, has played the same game but has been kind to bureaucrats and seems to be unscathed by the assault.

Napster has modified the entire music industry by allowing shared access among individuals to exchange music titles from their own hard drives to an abundance of other users for free.  The recording industries suit has merit in that someone must pay for the product.  However,  we all must accept that technology is reshaping the way we share information, music, or other data.  New profit models must be created.

The oil industry, with Saudi Arabia in the lead, has mentioned that it will raise the production of oil to ease the rate hikes that we have witnessed due to the "controlled" distribution of crude oil needed for gasoline.  The real reason for the shift in Saudi Arabia's tactics is more an issue of "product substitution" than of kindness.  The oil-controlling nations realize that if the price of oil becomes too prohibitive, alternative energy sources will be more likely to enter the markets.  Once consumers shift their buying patterns, the oil controllers may no longer have a market.

Lastly, we have gone global for a variety of reasons.  One reason in particular is that companies around the world are forming alliances at a rapid pace to meet the needs of their geographic regions as well as to be first to market.  America, South America, Europe, and other industrialized nations cannot ignore the fact that Asia has the potential to be the the largest market ever to be created.  Who will supply billions of Asians when they need televisions, computers, and cell phones?  Whose franchise or technology will be adapted as an emerging economic powerhouse begins to explode?

In each case we are looking at shifts in the game—a shift in power from Microsoft to industry, a shift in recording labels’ control to the people, a shift in oil-producers’ power to countries, and a shift in alliance tactics to take advantage of new markets.  These dynamic changes are not absolute or defined.  They just "are."  Take a look at your market leaders, and consider the realities of a changing world where products bypass traditional supply chains and go directly to customers.  Ask yourself how you are preparing your firm.

© MM David & Lorrie Goldsmith

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01.08.2019 (83 days ago)
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