The American automobile industry long evinced a
rigid adherence to a specific paradigm, particularly after World
For all practical purposes, there were only
three major domestic competitors, and competition from abroad was
unheard of. Ford, Chrysler, and GM were firmly entrenched, and
little happened to change their market shares—so much for real
Consumers hurried to buy what was offered,
primarily big gas guzzlers, and the auto companies were somewhat
lax in improving their operations. Gas was cheap and plentiful,
and their paradigm became the paradigm. Little need for
change was seen.
Then, things changed quickly and dramatically—a
paradigm shift. The Arab Oil Embargo reduced the supply of
gasoline and drove the cost for what remained through the ceiling.
The old rules no longer applied, and everyone went back to zero.
Consumers now started to think about things such as fuel economy,
and the U.S. manufacturers had not made this a high priority item.
Enter the Germans and Japanese, whose cars previously had been
viewed as mere toys by American consumers. In light of the new
gasoline rules, however, they took on new value. This allowed them
to get a toehold in the U.S. market, and the rest is history.
The existing paradigms of the Big Three had
paralyzed them and prevented significant action. They failed to
see the seriousness of the situation and were unprepared to
respond quickly. By the time U.S. manufacturers had responded to
this new need (in almost token fashion), it was almost too late,
and the rules had changed again. Not only were Japanese and German
cars fuel-efficient, they were more desirable to Americans in
other respects—style, size, quality, and price. The foreign
manufacturers had listened to customers and to consultants like
Deming and Juran, and responded. The Big Three's paralysis had
nearly been fatal.
Similar situations have occurred in other U.S.
industries (motorcycles, steel, copiers, televisions, and
cameras). Existing paradigms froze companies in these
industries, with some fatalities.
A more dramatic example is offered by Barker. [
1 ] The Swiss have historically been the world's leaders in
watchmaking. At one time they controlled the world market, yet
today they are a relatively small player. What did them in was
paradigm paralysis. They simply could not see through their
existing paradigm of mechanical watches to the technology of
quartz movements, although, ironically, they invented them.
Yet there is hope in all this misery. Several U.S. companies on
the verge of death—Xerox, Harley-Davidson, Ford, Motorola, and
Allegheny Ludlum—overcame paralysis and developed new paradigms,
regaining their status in the world marketplace.
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