Industry Level Pattern Recognition

I find the concept of an industry becoming “dematured” to be intriguing. I came across it in this paper in Strategy + Business. The basic idea is that many industries become disrupted not because of the stereotypical sudden change but an accumulation of gradual, prevalent, multifaceted, dynamic, interacting factors. These are just as hard to predict, even though they occur slowly, because we don’t notice them until our industry has been disrupted. It is a question of pattern recognition and change blindness, similar to what we see with banner blindness and the curse of expertise.

Dematurity is what happens to an established industry when multiple companies adopt a host of small innovations in a relatively short time. Those seemingly trivial moves combine to rejuvenate the old mature industry and make it young again.

My Take

The challenge emerges from the unconscious nature of pattern recognition. If we are familiar with a pattern, perception of a recognition threshold of attributes associated with that pattern will cause the reverberation of the appropriate long term memory schema and it will become active. But the development of the pattern’s schema is a statistical aggregation process that develops over time. Put simply, we see a bunch of details together in time and space, over and over again in our experience, and gradually they lump together into a single entity that we can recognize all at once in aggregate. This is the basis of recognition primed decision making.

If our experience gradually shifts over time, those changes will become automatically and unconsciously incorporated into the schema. We still recognize the pattern, but we don’t realize that there is a difference because it is the same schema that activates. Only if some salient consequence draws in our attention will we search for the source and perhaps identify the change if it is relevant to the consequence.

The solution that is prescribed by John Sviokla in the S+B article is to develop a finer precision in the organization’s sensitivity to change. I can see this as a feasible activity in an organization with regard to trends in its industry, although much harder as a metacognitive skill within an individual. An organization can identify in advance the key attributes that define the industry, the organization’s own value proposition, the relevant customer lifecycle and user scenarios, and specific touchpoint customer experiences.

He specifically calls out five changes to look out for:

  • Changing customer habits (akin to what I called user scenarios I think). He suggests looking for customer workarounds as a signal of change.
  • New production technologies. This would change the value proposition. It could also change the whole lifecycle, for example 3-D printers in the home.
  • New lateral competition. He uses the example of CVS and Walgreens health clinics as competitors in health care. What about what Netflix is doing to the broadcasters and cable channels in television?
  • New regulations. What if ANSI or ISO changed a major human factors standard?
  • New means of distribution. The music industry got hit with this when we moved to physical CDs to downloaded mp3s and now streaming. When you have constant cheap mobile bandwidth, who needs to own music?

Then the challenge becomes one of organizational inertia. How would the team responsible for identifying dematurity risks make sure that they are built into future organizational strategic and tactical planning? Especially since they start out so small and slow. At first, they wouldn’t be worth much time, attention, or resources to address. But if you wait until it’s too late, well then it’s too late, isn’t it?

Your Turn

So what do you think of the concept of dematurity as a slow and gradual pattern recognition challenge due to change blindness?

Is it happening in your industry? How would you know?

Image Credit: Unsplash

3 thoughts on “Industry Level Pattern Recognition”

  1. Wasn’t familiar with the basis of recognition primed decision making, thanks for that. Now I can ‘recognize it’ if I see it.

    It’s valuable to apply the process of Dematuring in a gradual sense in business, it’s not an intuitive thing. There is a metaphor here that every parent in the world is familiar with – we know our kids well, we don’t notice the gradual changes until suddenly we get smacked with how different they are. I think you’re describing exactly that process in the business world.

    1. That is a fantastic example. I often see my nephew (who is 13 years old) about once a week and hardly notice the changes (except maybe for a new hairstyle). But sometimes I go a month or so when I get really busy or when he does. Then, all of sudden he is 3 inches taller.

Leave a Reply

Your email address will not be published. Required fields are marked *