Laws of Paradigm Shift
Markets can change overnight. One morning you wake up and you are dead in the water.
- Mike Wright (Super Valu)
Eternal success without any conceptual changes in product and process is a dream of every successful businessman; quantitative changes, such as expansion of business and growth of profits, are desirable changes, though. In good old days, this dream, probably, came true to many businesspeople: some products didn’t change conceptually for decades, centuries or even millennia. Nowadays, with enormously fast changes in products, services and processes, this dream is as unrealistic as… I don’t even know what is comparably unrealistic in contemporary world. However, businesspeople continue dreaming about lifelong doing-the-same successfully growing businesses.
Why this dream is unrealistic? The reason is threefold:
Customers expect permanent improvements in satisfaction of their needs;
Competitors can differentiate themselves only by offering better and better products; and
Every way to improve a product has limits; further improvement can be made by new physicality, with broader limits.
The first reason comes from the Law of Steady Increase of Degree of Satisfaction of Need; it manifests the deeply rooted feature of human nature. The second reason comes from nature of business relationships: a company can “steal” customers from competitors only by promising a better satisfaction of customers’ need. The more competitors crowd in the specific market, the more often they have to offer new improvements. The third reason has its roots in the nature of real-world physicality: it can be modified only to some physical limit; while being modified, it produces some side effects that could be tolerated only to some threshold; and ability of its modifications to produce an expected improvement is limited, too.
As a result, sooner or later the changes of the same physicality in the same industry-wide accepted way come to one of these limits. Then, no competitor can offer an improvement substantial enough to attract customers. Customers become more and more dissatisfied with lack of improvement. Industry faces a crisis.
Then, some “crazy mind” finds out that replacement of squeezed to the bone physicality with a new one provides an opportunity to improve the customers’ satisfaction. Such shift from old physicality to the new one, while being counterintuitive to the industry experts, is taken by customers as a natural way to satisfy their need better. While customers see nothing but expected improvements, industry goes through paradigm shift: experts’ conceptions of product’s nature change, some expertise becomes outdated and unneeded, while new expertise comes into demand. Nature of product steadily changes, and industry landscape changes with it. Then, for some period of time, industry stabilizes in new paradigm – for as long as another limitation of physicality allows.
The Laws of Paradigm Shift describe the fundamental principles of industry dynamics: why industry faces crises, why these crises are inevitable, and how industry renews itself by overcoming the culprits of these crises. Without these Laws, there is no way to foresee the upcoming crisis; the ongoing crisis is taken as unlucky events rather than an opportunity; and overcoming this crisis becomes a “mission impossible.”
Law of Limitations explains where to look for root causes of crisis: natural limitations of physicality involved in realization of current paradigm.
Law of Evolutionary Bottleneck shows how to zero in the physicality that limits further evolution of entire industry, and why such focusing provides the breakthrough opportunity.
Law of Double Negative describes the method of discovering the solution to the Evolutionary Bottleneck: ideal vision of new situation that is free of current inherent problem, new paradigm as physicality capable of realizing the ideal vision, and shift in power that provides the determined innovator with unbelievable influence in the industry value chain.