During the 70’s the Swiss watch industry was suffering. Why you ask? Were not Swiss watches the “gold standard” in precise, accurate and much desired timepieces? Well, yes and no. Yes, because for decades the Swiss enjoyed the prestige and profits of their finely made mechanical watches. They believed their watches to be of superior quality and stubbornly maintained the same mechanical technology, this despite the fact that they had also invented the quartz and tuning fork movements. No, because a Japanese watch manufacturer by the name of Seiko came screaming into the picture. Seiko was the leading watch producer in Japan in the 60’s. However, they were minority players in the world market. Seiko aspired to be the global leader in the watch making business. The company tinkered with alternate technologies, ultimately developing high quality, low cost watches run by quartz movement. This bold move changed the worldwide watch industry as quartz movement became the standard. Seiko prospered and the Swiss watch makers suffered.
This story leads me to businesses that have too much inward focus. The Swiss watch makers are a good example of this type of thinking. They indulged themselves in the spoils of their past success and had a “we are the best” philosophy. They didn’t look beyond their own internal mechanisms and they never saw Seiko coming. This created three problems and three reasons that you may want to re-evaluate your mindset.
1. Missed new opportunities – The Swiss already had the technology of quartz movement. Instead of developing a monopoly they ended up having to play catch up
2. Ignorance of threats from competitors – As I mentioned above, they never saw Seiko coming. They also didn’t realize that Seiko wasn’t the only Japanese watch maker who could cause them trouble. Many followed Seiko’s lead and supplied even greater competition to the Swiss.
3. Lack of awareness of changing customer needs – Not everyone could afford a fine Swiss watch. Seiko sold to the masses, and the masses bought them like crazy.
Jack Trout makes mention of this inward thinking in his book titled “Repositioning – Marketing In An Era Of Competition, Change, and Crisis”. Although he refers to it in a different context, the idea is the same. The market is located out there, not within your business. Don’t allow inward thinking to blind you to the external reality.