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The "business environment" of a particular industry is often blamed for failure. Statistical evidence confirms, however, that the firm itself is critical and the industry hardly matters at all.
Percentage of business units' profitability explained by industry and strategy factors:
Choice of industry - 8.3%
Choice of strategy - 46.4%
Parent company - .08%
Not explained or random - 44.5%
Source: Abstracted from Richard Rumelt, "How Much Does Industry Matter?" Strategic Management Journal 12, March 1991: 167-186.
There is a 90% probability that variations in business unit performance are not explained by the choice of the industry.
Nearly one-half appear to depend on the choice of strategy.
The correct choice of strategy appears to be at least five times as important as the correct choice of industry.
"Many of my division general managers try to solve the entire problem, only to find that it backfires. Rather than accept the entire problem there goal is to determine which part of the situation they are responsible for… because the simple act of stepping up and saying 'I own this part' opens the door of accountability, strengthens resolve and creates an inward momentum to 'better a facet of the situation to my best ability.'" Chairman, CEO of a multidivisional multinational corporation.