A Question Every Manager Should Ask (Hint: It Has to Do With Megatrends)

The best single question companies should ask themselves if they want to innovate and succeed: “What are the potential megatrends that could disrupt my businesses in the future or make my business models obsolete?” That’s according to MIT Sloan’s Michael A. Cusumano.

“What are the potential megatrends that could disrupt my businesses in the future or make my business models obsolete?”

That’s a key question companies should ask themselves if they want to innovate and succeed in today’s landscape, according to MIT Sloan School of Management professor of management Michael A. Cusumano.

Zipcar bills itself as “the world's largest car sharing and car club service” and is an example of “the rising importance of services or service-like versions of products,” says MIT Sloan's Cusumano.

Image courtesy of Zipcar.

Two megatrends that stand out in the industries he studies: “the rising importance of industrywide platforms as opposed to stand-alone products, and the rising importance of services or service-like versions of products,” he says. Platform dynamics explain why Sony’s Betamax failed as a consumer product; service dynamics explain the rise of companies like Zipcar.

Companies also need to pay attention to the “dual trend of both innovation and commoditization,” meaning the demand for more innovation and features and the demand to pay less and less.

“They want to pay what they pay Google for searching on the Internet, which is zero. They want to pay what they pay for an open-source software product, which is zero,” says Cusumano.

Free, he notes, “creates tremendous pressure on companies to find ways to make money other than selling products. The essential question is: What will customers pay for? And, increasingly, the answer isn’t that they’ll pay for a great product. Many companies have turned to services or subscriptions or servitized versions of their products, where they’re delivering value and personalizing products in special ways.”

For more examples of “servitization,” see the recent interview with Cusumano in MIT Sloan Management Review, “How to Innovate When Platforms Won’t Stop Moving.”

(Zipcar, by the way, was co-founded by Robin Chase, who studied at MIT Sloan.)