Climate

While understanding the competitive Landscape is extremely helpful, it’s also important to understand the Climate — the external forces acting upon it. These are the broader rules of the game, the patterns of the seasons, and competitor actions.

Below are two patterns you’ve already encountered. 

Pattern 1: Everything Evolves Through Supply and Demand Competition

If the conditions exist that a person or groups of people will strive to gain some form of advantage or control over others due to a constraint (i.e. a limitation of a resource or time or money or people) then we have competition.

If competition exists then the components effected will evolve until they become industrialised. This impacts everything from activities (what we do), practices (how we do something), data (how we measure something) to knowledge (how we understand something).

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Genesis

Custom

Product
(+rental)

Commodity
(+utility)

Focus on exploring

Focus on learning and developing the craft

Focus on refining and improving

Focus on ruthlessly removing deviation, industrialising, and increasing operational efficiency

Pattern 2: Characteristics Change as Capabilities Evolve

The characteristics of a component in the uncharted space are not the same as the characteristics of the same component when it becomes industrialised.

A company has to manage both the extremes along with the evolution between them. It’s really important to remember that there is a transition from uncharted to industrialised. Don’t organise by the extremes alone.

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Uncharted Industrialised
Chaotic Ordered
Uncertain Known
Unpredictable Measured
Changing Stable
Different Standard
Exciting Obvious
Future Worth Low Margin
Unusual Essential
Rare Ubiquitous
Poorly Understood Defined
Experimentation Volume Operations
Differential Operational Efficiency
Competitive Advantage Cost of Doing Business

Table of Climatic Patterns

Below are Climatic Patterns that can be studied and integrated into strategic thinking about Competition, Components (Capabilities), Finances, Inertia, Prediction, and Speed. Mouse over each cell for more detailed descriptions.

Competitors Competitors actions will change the game Most competitors have poor situational awareness
Components Everything evolves through supply and demand competition Evolution consists of multiple waves of diffusion with many chasms No choice over evolution Commoditisation does not equal Centralisation
Characteristics change as components evolve No single method fits all Components can co-evolve
Financial Higher order systems create new sources of value Future value is inversely proportional to the certainty we have over it. Efficiency does not mean a reduced spend Evolution to higher order systems results in increasing energy consumption
Capital flows to new areas of value Creative Destruction
Inertia Success breeds inertia Inertia increases the more successful the past model is Inertia can kill an organisation
Prediction You cannot measure evolution over time or adoption The less evolved something is then the more uncertain it is Not everything is random Economy has cycles
Two different forms of disruption A “war” (point of industrialisation) causes organisations to evolve
Speed Efficiency enables innovation Evolution of communication can increase the speed of evolution overall Change is not always linear Shifts from product to utility tend to demonstrate a punctuated equilibrium

Courtesy of Simon WardleyCC BY-SA 4.0.

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