Industry Evolution

Disruption? Or windows of opportunity?
Rich Walker
October 18, 2017
COLUMN : Industry Watch | Strategies & Practices

Illustration of man watching with a telescope

Although the term “disruption” sounds vaguely apocalyptic—conjuring asteroid impacts, nuclear war or some folks’ vision of climate change­­—in business, it refers to innovation that creates a new business model and market that eventually disrupts an existing one, displacing established market-leading firms, products and alliances.

Many have been blindsided by disruptive change in the past (think Kodak, Blockbuster, Borders and retail malls). Today, a host of new technologies and business models are poised to reshape entire industries, if not the entire global economy. Consider the current and potential effects of smartphones, social media, Uber, self-driving cars, drones, new payment systems like bitcoin, online distance learning via “digital universities,” robotics, artificial intelligence, additive manufacturing, 3D printing, and others impacting the way entire industries do business. 

By comparison, fenestration appears to be a mature technology experiencing largely incremental change around the edges, in the form of material advances and performance improvements. Such a series of individual moves combine to rejuvenate an old mature industry and make it young again, a process dubbed by some as “dematurity.” Perhaps this more accurately describes the type of change that our industry is seeing.

Responding effectively to such a departure from an established comfort zone requires that executives dispense with old assumptions about how value is built and sustained in their markets. Questions should be asked about the industry that others believe have already been fully answered, and non-traditional answers pursued. 

According to consultant John Sviokla with PwC, a professional services firm, more than 80 percent of self-made billionaires made their fortunes in mature industries by: introducing a product attuned to new consumer habits; changing production technologies; adopting ideas from another industry; adapting to new regulation; changing the distribution system, or some combination of those moves. For example, what will be the fenestration industry’s ultimate role in meeting today’s challenges to the built environment to provide a lifestyle that is affordable, sustainable, healthy, and satisfying for as many people as possible? 

We are already looking at photovoltaics, or dynamic glazing, as an element of the so-called “Internet of Things.” But what else is to come? This question invites some “thought experiments,” to use Einstein’s term. Will installers end up making the windows and doors they install? Will manufacturers fabricate components on site via 3D printing instead of obtaining them from multiple suppliers? Or is there something totally “else” that will usurp the function of a window or door—maybe force field windows that use no glass and are installed by electronics gurus? Much of this sounds like science fiction. But, then again, The Jetsons' creators never anticipated the internet. 

Steve Jobs famously said he would never ask a customer what they wanted because they don’t know. CEOs should have a better idea, however.

Transforming an existing company in the face of disruptive change is the hardest challenge facing today’s executives. CEOs are often focused on the shorter-term results, i.e., next quarter’s earnings report. Traditional approaches create organizational silos that discourage idea gestation. 

Also, in the fenestration industry, the recent calming of the many consolidations that occurred in the wake of the 2008 meltdown, coupled with resurgent growth, may understandably breed confidence or maybe even a new round of complacency. Furthermore, we are inextricably linked to the construction industry, which has traditionally been slow to adopt new technologies such as building information modelling and, over the past 50 years, has undergone no fundamental change. 

There are plenty of excuses for inaction, but “it’s the way we’ve always done it” was always a lame excuse. Now, it may be downright suicidal. “Have vision,” Sviokla urges. “Don’t just tinker around with the current process. Identify critical strategies, and allocate financial and human resources to turn today’s ambiguity into tomorrow’s opportunity.” 

While this is a daunting challenge, it also creates tremendous opportunity. Today’s commonplace was once fantasy or, more likely, never even anticipated. Its arrival has made some folks very rich, and others barely footnotes to history.

In a recent Quartz Ideas article, pundits Scott Anthony and Mark Johnson note that “over the next few years, we expect to see significant separation between those that make the concerted, consistent efforts to drive transformation, and those whose rhetoric rings increasingly hollow as the competitive landscape rearranges.”

As an industry, let’s not be among the latter. 

Rich Walker, who after 22 years of service to AAMA, announced his retirement from the position of President & CEO.