Business strategy will not be effective unless it takes into account the current state of an industry as well as how that state is changing. Professor Anita McGahan of the Boston University School of Management argues that industries follow one of four evolutionary trajectories: progressive, creative, intermediating, and radical. If companies are to profit from strategic moves and investments in innovation, they must follow the rules of their industry for how change can take hold. By diagnosing which model most closely describes the trajectory of change in its industry, a company can better understand the tradeoffs it faces and make more profitable strategic bets.

The particular type of change affecting your industry will affect the optimal choices for R&D, alliances, internal venturing, leadership style, compensation, modularization, and time-to-market. Executives can use this model to identify the relevant type of change by assessing threats to their industry’s core activities and by determining the nature of the change and what phase it is in. They can then apply the principles of competition for each type.

Click the View button above to download a three-page summary of the model (PDF format), complete with a ManyWorlds commentary that discusses the effectiveness of the model.