The document analyzes four trajectories of industry evolution: radical, progressive, creative, and intermediating, providing insights into how businesses can navigate these changes. It highlights the importance of understanding the threats to core activities and assets in order to make informed investment decisions and adapt strategies for long-term success. The report emphasizes that recognizing an industry's trajectory allows companies to capitalize on emerging opportunities while managing risks effectively.

1. HOW INDUSTRIES
CHANGE
by Anita M. McGahan
Submitted By :
Rumsha Anjum (15)
Mohneesh Chowdhary (11)
Class : MBA(HT) 4TH
Submitted To :
DR. Anil Gupta
Subject Code : 401
Subject : Strategic Management

2. INTRODUCTION
• The following report provides a comprehensive analysis of
industry evolution trajectories, outlining four distinct paths that
industries typically follow: radical, progressive, creative, and
intermediating. Drawing from extensive research and real-world
examples, this report aims to deepen understanding of how
industries evolve over time and the implications for businesses
operating within them. By examining the dynamics of each
trajectory, this report offers valuable insights for executives and
decision-makers seeking to navigate industry changes effectively
and capitalize on emerging opportunities.
• The article point out that one can't make intelligent investments
within ones organization unless one understands how the whole
industry is changing. If the industry is in the midst of radical

3. THREATS OF
OBSOLESCENCE
• A threat to the industry's core
activities (the recurring activities
companies perform to attract and retain
suppliers and buyers that have
historically generated profits for the
industry are threatened).
• A threat to the industry's core assets
(the durable resources, including
intangibles such as knowledge and
brand capital, that have historically
made the organization efficient at
performing core activities, are failing to
generate value).

4. FOUR TRAJECTORIES OF CHANGE
1. Radical Change:
• Radical change occurs when both core activities and core
assets are threatened with obsolescence, often due to
disruptive technologies, regulatory shifts, or changing
consumer preferences.
• This trajectory leads to a complete transformation of the
industry, with established players facing significant challenges
to their business models and survival.
• Examples include the travel industry’s shift towards online
booking platforms and the decline of the overnight letter-

5. 2. Progressive Change:
• Progressive change occurs when core activities remain
stable, but incremental improvements and technological
advancements drive ongoing evolution within the industry.
• Core assets are not threatened with obsolescence, allowing
for steady growth and optimization of existing business
models.
• Examples include long-haul trucking and commercial
airlines, where companies like Southwest Airlines succeed
by optimizing efficiency and deepening customer
relationships.
• Companies in progressive industries focus on carving out
distinct positions based on expertise and responsiveness to

6. 3. Creative Change:
• Creative change involves stable relationships with customers
and suppliers but constant turnover of assets, such as new
product development in industries like film production,
pharmaceuticals, and software.
• Companies innovate through ongoing research,
development, and commercialization of new products,
leveraging existing relationships to drive long-term success.
• While assets may change, stable relationships provide a
foundation for sustained performance and competitive
advantage.
• Successful companies in creative industries manage risk by
spreading investment across a portfolio of initiatives and

7. 4. Intermediating Change:
• Intermediating change occurs when core activities are
threatened, but core assets retain their value, leading to
shifts in buyer-supplier relationships and business processes
• Examples include auto dealerships facing challenges from
online sales platforms and auction houses adapting to online
auctions.
• Companies must find unconventional ways to extract value
from core resources while restructuring key relationships
with customers and suppliers.
• Strategies include diversification, asset sales, and
reconfiguration of core assets to adapt to changing market

9. CAPITALIZING ON INDUSTRY
EVOLUTION
• Analyzing Radical and Intermediating Change:
Companies operating in an industry that is on a radical or
intermediating change trajectory must perform a balancing
act - aggressively pursuing profits in the near term while
avoiding investments that could later prevent them from
ramping down their commitments. To get the right balance,
put yourself in the suppliers' shoes as well as in those of the
buyers. What new options are emerging?
• Surviving Radical and Creative Change: Under these
conditions, it is smart to evaluate how quickly your core
assets are depreciating. Often, this assessment yields

10. • Managing Progressive Change: Progressive change is not
simple to manage, despite the fact that neither core assets
nor core activities are threatened. For example, the standard-
bearers in discount retailing (Wal-Mart and Target among
them) have relentlessly managed incremental changes in
activities for decades. Ultimately, one of the most successful
strategies for companies in industries on a progressive
change trajectory is to develop a system of interrelated
activities that are defensible because of their compounding
effects on profits.
• Adapting to the Stages of Change: As we've noted, all four
trajectories typically unfold over decades, which means
organizations have time to outline strategic options for the
future. As change happens, fighting it is almost always too
costly to be worthwhile. Organizations must reconfigure
themselves for lower revenue growth and develop the ability
to move activities and resources out of the business.

11. CONCLUSION
In conclusion, the research underscores the importance of
understanding industry evolution and the trajectories of
change for businesses to remain competitive and profitable.
By recognizing the nature of change within their industries and
adopting appropriate strategies, companies can navigate
challenges and leverage opportunities to achieve long-term
success.
• Industry evolution occurs along four distinct trajectories:
radical, progressive, creative, and intermediating.
• Businesses must accurately identify their industry’s trajectory
and adapt strategies accordingly.

12. THANK
YOU