4 Trajectories of Industry Change - Explained
What are the Trajectories of Industry Change?
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Table of ContentsWhat is the 4 Trajectories of Industry Change?What Drives Industry Change?How Do Industries Change?
What is the 4 Trajectories of Industry Change?
The Four Trajectories of Industry Change is a model proposed by professor Anita M. McGahan (2004), explaining the how industries evolve or change over time.
What Drives Industry Change?
Industries evolve to avoid obsolescence caused by two threats:
- A threat to core activities of the industry. A threat to the recurring activities of companies, which historically generated profits for the industry.
- A threat to the core assets of the industry. A threat to the durable resources, including intangibles such as knowledge and brand capital, that have historically made the organization efficient at performing core activities.
How Do Industries Change?
Pursuant to threats to core activities and core assets, industries change along one of four trajectories.
- Radical Change. When core assets and core activities are both threatened with obsolescence.
- Progressive Change. When neither core assets nor core activities are jeopardized.
- Creative Change. When core assets are under threat but core activities are stable.
- Intermediating Change. When core activities are threatened while core assets retain their capacity to create value
Industry change is inevitable. Organizations must reconfigure themselves to allow for lower revenue growth and develop the ability to remove activities and resources out of the business.