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Will you surrender to ‘creative destruction?’

December 21, 2010
Filed under Service Providers

In business, the term “creative destruction” applies to successful new ventures rising out of the ashes of other failed businesses. We watch a typewriter manufacturer go out of business, but find that its building and its employees are snapped-up by a new supplier to the computer industry. Or newspapers lose circulation and layoff journalists who instead find jobs making online publications successful. How does the “creative destruction” concept apply to the motorcycle industry?

Last week at the Long Beach Motorcycle Show, products appeared from some manufacturers that we simply would not have seen three or four years ago. A great example was a sharp-looking, entry-level 250cc sport bike from Honda, with optional ABS. During the same week, we heard from J.D. Power and Associates that the average age of U.S. motorcycle riders had climbed from 40 to 49 over the past nine years. Or in other words, the same group of motorcycle buyers purchasing new bikes today were the ones buying bikes back in 2001.

What does this tell us? That the U.S. motorcycle industry world is in the process of major change. Call it creative destruction, because some motorcycle businesses — both manufacturers and dealerships — will follow the lead of the typewriter companies, while others will find themselves succeeding in a very different industry three or four years from now.

What can you do to make sure your business does not surrender to creative destruction? Customers are the answer. Make sure you are selling what your customers are willing to buy, and make sure that you understand what your customers are willing to buy. Nowhere is it guaranteed that what worked three years ago is what will work for the next three years.

Comments

One Response to “Will you surrender to ‘creative destruction?’”

  1. Larry Little on December 21st, 2010 5:18 pm

    Hey Fran,
    It needs to pointed out that the JD Power release was a bit misleading in that it is not the average age of US riders that is climbing (actually the opposite is true for the first time in many years), rather that the average age of NEW motorcycle purchasers increased.
    Given the historic challenges of selling a new unit, it is believable that the most likely purchaser of a new unit is someone with cash, or outstanding credit – baby boomers.
    The Motorcycle Industry Council’s most recent survey of owners (not new purchasers) found instead that the average age has decreased for the first time in many years – and that the influence of Gen Y is being significantly felt for the first time. Of course, they’re clearly more likely to be buying a used bike, but the good news is that they’re riding, and likely to be a good prospect for a new unit down the road.
    And, given the creative destruction you describe, this younger generation will need a much different marketing communications approach than we’ve traditionally seen. Good blog…

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