The Paradigm Shift



The American automobile industry long evinced a rigid adherence to a specific paradigm, particularly after World War II.

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 competition.

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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