When Henry Ford needed an innovative production model in the nascent automotive industry, he got his ground breaking idea of using an assembly line from the meat packing industry. Since that time, many fortunes have been built by forward thinking entrepreneurs who brought in ideas from other industries.
“Funnel Vision” is what business strategist Jay Abraham calls this entrepreneurial ability to pull in business ideas from other industries in a way that creates new competitive advantage.
1. Find new approaches to certain problem areas
Certain intractable problems that are industry-wide challenges may be overcome by looking outside your particular industry. When Henry Ford developed his assembly line model, he ushered in a new paradigm that broke the trade off between quality and cost. Before Ford, the automotive industry employed only expert craftsmen who custom-built cars that only the wealthy could afford.
2. Insight into new or impending challenges
In 1997, former Intel CEO Andy Grove heard how U.S. Steel lost its dominant position to upstart manufacturers of “rebar” (cheap, concrete-reinforcing steel). U.S. steel had originally ceded the low end of the market to these manufacturers, but those they eventually encroached to compete in higher end products.
Grove seized on the metaphor by declaring low end PC processors to be “Digital Rebar” and guided Intel on a preemptive strategy to manufacture Intel Celeron processors. This protected Intel from competitor domination of the lower end of the PC market.
3. Improving existing practices
Most businesses and most industries share the same core processes in common. Whether those processes are strategy, people, production or budgeting, there is always a strong possibility for extracting improvements from other industries. Taiichi Ohno, the foremost pioneer of Toyota’s famed production system is supposed to have invented the Kanban system after observing the shelf-stocking procedures at U.S. supermarkets.
4. Benchmarking opportunities
The practice of benchmarking (comparing your business processes to your industry’s best) is a well-proven strategy for business improvement. However, there is increasing evidence that competitor benchmarking may leak into the strategy development process and inadvertently lead to a lack of differentiation. Benchmarking to companies in alternative industries may be a way to gain the benefits of such comparisons while avoiding the strategic pitfalls.
5. Development of a learning organization
A learning organization is a more dynamic organization that has a greater ability to continually transform itself because it facilitates the learning of its individual members. Actively encouraging your employees to develop “funnel vision” is a great way to build the competitive advantages that are inherent to a learning organization.
6. Avoiding collective organizational blind spots.
A collective habit of scanning through indirect competitors can also act as an early warning system that protects against strategic business risks like a market convergence. For instance, very few day spas today realize that their allergists and dentists are likely to be their most common competitors in a fast converging future.
7. Find opportunities for expanding the market.
Looking outside your industry may help you open new markets for your products and services. One of the most important soft innovations you can come up with any business is the ability to identify new market spaces for exploration.
8. Potential for finding new partnerships and alliances.
In addition to all the benefits above, regularly scanning external industry spaces can help you identify companies to establish partnerships and alliances with. Strategic partnerships are some of the most cost-effective and powerful ways to grow regardless of the scale of your company.
Gogo Erekosima – Gogo Erekosima is CEO and lead strategist at Idea Age Consulting. Since 2001, whether as a principal or a strategic consultant, he has been responsible …
Business process modeling