There was a fascinating article in the NY times recently, Hollywood’s Tanking Business Model. It is a thorough and well written piece on how the summer blockbuster season strategy has all but killed Hollywood and why this is a self-inflicted wound. Hollywood never asked the customer when they wanted to see these movies, they just went with conventional wisdom and disregarded facts.
Businesses are constantly faced with decisions regarding timing a release, buying more inventory or changing a price. The common method of decision-making is to ask “what did we do last year”? Businesses must be careful not to take the easy path of conventional wisdom. An example of this is the auto industry in the mid 2000s building more and bigger SUVs based purely on their profitability. They disregarded economic trends that were obvious, ignored other product lines like small cars and assumed there was no upper limit to the market for SUVs.
The simple act of asking customers what they think along with challenging the assumptions behind the “last year” decision will go a long way in preventing death by conventional wisdom.