Peter Drucker said that in strategy "if we get the assumptions wrong, nothing else matters.” We now know that often our strategies are based on outdated – hence wrong – assumptions. Important new technologies, and other changes, happen rapidly that create “punctuated equilibriums” in our markets. At these times of disruptive innovation the market changes dramatically, due to this externality, very quickly. Sony was the world leader in the video tape and DVD business. But after spending 35 years building dominance, the emergence of high speed bandwidth led to streaming innovation, which made the old technology (and Sony) obsolete in 18 months. Disrupted, Sony then entered 6 years of profitless decline and market value destruction. While Netflix entered a new phase of rapid growth and value creation. To succeed our strategy process must observe trends to forecast future changes in assumptions, allowing us to change strategy (pivot) and prepare for the market shift to extend our value creation.
