FOUR

Third Law: Customers and Profit Pools Don’t Stand Still

Change is the law of life. And those who look only to the past or present are certain to miss the future.

—JOHN F. KENNEDY

NOW AND THEN COMPANIES THAT SEEM TO BE WELL MANAGED—companies that obey the first two laws, that manage to the experience curve and tailor their performance-improvement plan to their competitive position—find themselves in serious trouble. They are caught flatfooted by what appears to be a sudden shift in the marketplace. That’s what happened in the mid-1990s in the consumer photography business.

We described in chapter 2 how Polaroid failed to execute quickly enough on the consumer shift to digital photography. This particular shift had actually been going on ...

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