Understanding your industry
Realistically reading new industry developments can help an executive plan effectively when a career change may be in order.
Kathy Buckner is the founder and President of Forte Leadership Inc., a Provo, Utah-based management development and leadership training consultancy.Over the last twenty years she has designed and implemented talent management processes and systems for large organizations including Estee Lauder, General Electric, Philips, DuPont and Bloomberg.
Here she sets out an Industry Issues Inventory designed to help executives identify risks and opportunities that exist or are developing in their industry, thereby helping them plan prudently when a career change may be in order.
Almost as important as understanding the risks associated with the organization you work for is understanding the dynamics and critical forces in your industry. In many cases industry factors can have as much impact on an organization’s fate (and an individual executive’s fate) as issues within the firm. For example, even well-run financial services firms were hard hit during the 2009 financial crisis because they were exposed to risk simply because of the sector they were in. Likewise, the burst of the technology bubble in 2001 had as much to do with a loss of confidence in the industry overall as it did with the performance of individual companies. Another example of important industry dynamics is the oil and gas industry, which succeeds and fails based on oil prices which may or may not be driven by obvious market forces.
An executive’s value to their organization is significantly increased by an understanding of and ability to respond to industry forces. What’s more, a leader’s value increases in other organizations in the same industry as their ability to manage and respond to industry trends increases. Effectively reading new industry developments can also help an executive plan effectively when a career change may be in order.
Some industries are more open than others in the sense that leaders can move across sectors more easily from some industries than from others. For example, the oil industry and the auto industry tend to require a lifetime commitment; few outsiders move in to lead organizations in those types of businesses and executives from these industries often face great challenges in trying to move outside their industry base. The retail, insurance and service sectors tend to have more permeable boundaries.
Industry insight and experience becomes more important at senior levels in the organization. Often, transferring experience from one industry to another becomes harder the longer one has been in a particular sector. The purpose of this commentary is to help you identify risks and opportunities that exist or are developing in your industry. Thus, you can prepare for changes and take advantage of opportunities. The inventory asks you to consider the growth rate of your industry, new technologies or processes that are emerging, the overall health of your industry, issues in related industries, and the intensity of competition.
Industry issues inventory
Rate your industry along each of the following dimensions as objectively as you can.The value of each number on the scale is::
1 – Strongly disagree
2 – Disagree
3 – Don’t know
4 – Agree
5 – Strongly agree
|My industry is expanding rapidly; new players emerge frequently.|
|The competitors we worry about today are very different from the competitors we worried about five years ago.|
Technology and process changes
|There are major new technology developments in our industry every year.|
|In the next five to ten years I expect that major process innovations will change the rules of the game in our industry by increasing efficiency and/or effectiveness.|
|We consistently benchmark our competitors and suppliers to identify technology and process improvements.|
Overall Industry health
|Firms in our industry are generally known for being well managed.|
|The standard for ethics in our industry is very high.|
|Our industry is not burdened by excessive regulation or bureaucracy.|
|Most organizations in our industry are open to change and innovation. Their long-term outlook is good as they actively try to adapt and change.|
|Cost management makes it possible for most firms in our industry to operate profitably and without excessive debt.|
|Most firms in our industry have productive relationships with their suppliers.|
|Most supplier firms in our industry are known for being well managed.|
|Most of our industry’s customers or customer organizations are well-managed and thriving.|
|Our industry sells something that customers can’t do without.|
Competition within the industry
|Firms within our industry generally compete with each other by improving processes and products rather than by cutting prices.|
|Firms in our industry find ways to collaborate (e.g., joint ventures, partnerships, industry groups, etc.) despite the market competition between us.|
|Although our industry is very competitive, other firms within the industry generally play fair.|
Analysing your industry issues inventory
Based on the results of the assessment you just completed, answer the following questions.
- What are the greatest strengths of your industry? What factors will make it viable for the long term?
- What are the greatest risks in your industry? What developments threaten the long term success of your firm and others like it?
- How do the strengths in your industry affect you personally? How can you take advantage of those strengths in planning your career?
- What weaknesses in your industry do you feel affect you personally? Is there anything you can do to minimize the impact of those weaknesses on your career?
- Given the strengths and weaknesses in your industry and your ability to take advantage of strengths and address weaknesses, how would you assess your long-term opportunities? How long can you continue to have a successful career in this industry, or is there another industry where you might be better placed?