Right now, many internet companies are still at Phase 1 (Discover or “Formative”) – they haven’t figured out or ‘discovered’ a pattern of success. One sign of this Phase is the complaint that they can’t monetize. But, they are convinced they will figure it out and they spend a lot of time and energy trying.
And, all sorts of companies are really hurting at Phase 3 (Re-Think and Modify “Integrated”) – where things that used to work aren’t working anymore. This includes American car companies, the record and film business, the radio business as well as ‘old’ tech companies like Microsoft.
Many companies at Phase 3 waste a lot of time and energy trying to figure out how to recreate Phase 2 (Duplicate the Pattern of Success “Normative”) where they made so much money simply duplicating what they discovered in Phase 1.
A lot of businesses never get out of Phase 1 formative (because they can’t figure out the what and how). Many ‘promising’ start-ups die.
And, a lot of businesses get clobbered at Phase 3 Integrated (because they don’t ask ‘why’ soon enough). They wait too long because they still believe the ‘big, easy money’ of Phase 2 normative will come back.
There is a lot of consolidation between the end of Phase 2 and Phase 3 as businesses try to ‘buy’ market share to hang on to Phase 2 profits. Over time, according to management genius Peter Drucker, very few of these consolidations work.