By Bill Matthies on Apr 28 2009 - 12:58pm


Industry Upheaval: The Ultimate System Reset

What do you do when your wireless router doesn’t work? You pull the plug, wait 15 seconds and plug it back in: system reset. The "memory" is blown, effectively taking it back to ground zero, a new beginning.

Now let’s take a look at consumer electronics manufacturing from the 1930s through the 1960s: Admiral, Airline by Montgomery Ward, Bulova, Crosley, GE, General Television, Magnavox, Curtis Mathis, Philco, RCA. These and a few other leading names were the brands consumers valued. In their day they were unassailable market leaders, the companies whose banners we would have seen above their International CES booths had the show existed back then.

But sometime in the late 1960s to early 1970s the majority of them were replaced by new market leaders, including Alpine, Craig, Emerson, Goldstar (LG), JVC, Jensen, Kenwood, Kraco, Panasonic, Pioneer, Samsung, Sanyo, Sony, Superscope and so on. And some of these brands are now gone too, supplanted by Apple, Drobo, Hewlett-Packard, Moxi, Vidabox, Vudu and the like. System reset.

On the retail side, our parents bought their phonograph records from department stores until the record shop was born. Places like The Music Box, The Record Box, Tower Records and Wallach’s Music City in Southern California where I live, which were later replaced by Best Buy, Circuit City, Target and Wal-Mart, and now more recently Amazon, Blockbuster, iTunes, Netflix and other online and on-demand services for music and video.

Our parents bought their record players, radios and TVs from Montgomery Ward and Sears, which were soon followed, at least in my market, by Cal Stereo, Federated, Leo’s Stereo, Pacific Stereo, University Stereo and, of course, Best Buy and Circuit City. Not many of them still around, are there? System reset.

What causes this change? Is there some natural life cycle, as there is with technology, which demands the demise of manufacturers and retailers and their succession by new companies? Maybe. But if so, the current cycle is not going to be a normal CE system reset. No, this time we’re in the middle of the Big One, apocalyptic change, and there is no hyperbole in those words given all that’s going on with the global economy. I’m talking worldwide system reset, nothing less.

But you probably know the system-reset analogy really doesn’t work with the CE industry. When you pull the plug on your router you get a fresh start, not a new router. But when social, political and economic conditions "pull the plug" on your company, you’re done, and most likely a new company takes your place.

So what can you do to stay viable?

Nowhere is it written that breakthroughs of the magnitude of iPod and online retail can only come from outside the established order. They do because existing players become complacent with what is, rather than looking for what could be.

Don’t let that happen to you, no matter how good things may be. And certainly if they are not good, continually and obsessively look for new ways to do things. System resets are inevitable, but it doesn’t have to be your plug that gets pulled.

While there is great uncertainty in today’s economy, one thing is clear: Only those who find new ways will survive. Sure you have to watch what you spend, but I’m talking about much more than cash flow. I’m talking about system resetting your own business.

Are you ready? o

William Matthies is the CEO of Coyote Insight (www.coyoteinsight.com) and can be reached at wmatthies@coyoteinsight.com or at (714) 726-2901. Visit the Coyote Insight blog at http://coyoteinsight.blogspot.com and Business Wisdom at http://businesswisdom101.blogspot.com.

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