The Economist has just posted an article that explains why it is becoming increasingly difficult to distinguish between the legacy airlines and low cost carriers. This is partly because the former have cut their costs, and hence their prices, in order to respond to competition from LCCs; whilst LCCs have started to shift more upmarket in an effort to attract the business traveller.
The story reminded me of a ground-breaking book by Davis and Meyer – Blur: the speed of change in the connected economy. Picking it off my book shelf I was amazed to find that it was published 15 years ago. But many of their ideas are as relevant today as they were then. At the heart of this is the idea that electronic communication and especially the internet is enabling two things. First, it has created new ways of operating commercially and doing business. Second, it has enabled organisations to respond more quickly to consumer needs and change what they do more rapidly. As a result there is a ‘blurring’ of what is a product and what is service; who is the buyer and who is the seller; and what is a cost and what is income. One outcome of this is that competition in a market also become blurred, as each operator seeks to outperform each other with regards the newly emerging order winners.
All of which makes it essential to understand that any successful firm’s operations strategy is DYNAMIC – what wins them customers today will not be the things that win them customers tomorrow.