Online shopping in Oz: American steel 30 years later...

I'm part way through reading Jim Collins Good to Great, a book based on five years of research to determine what makes certain companies succeed compared to similar rivals. There was a paragraph I read in Chapter 2 that I felt was more than relevant for Australian businesses in light of the recent online/overseas shopping trend that it being blamed for crippling the local retail sector:

'Compare Bethlehem Steel to Nuco. Both companies operated in the steel industry and produced hard-to-differentiate products. Both companies faced the competitive challenge of cheap imported steel. Yet executives at the two companies had completely different views of the same environment.

'Bethlehem Steel's CEO summed up the company's problems in 1983 as blaming imports: "Our first, second and third problems are imports". Ken Iverson [Nucor CEO] and his crew considered the same challenge from imports a blessing, a stroke of good fortune (Aren't we lucky; steel is heavy, and they have to ship it all the way across the ocean, giving us a huge advantage!).

Iverson saw the first, second and third problems facing the American steel industry not to be imports, but management. He even went so far as to speak publicly against government protection against imports, telling a stunned gathering of fellow steel executives in 1977 that the real problems facing the American steel industry lay in the fact that management had failed to keep pace with innovation'.

The problem facing the American steel industry in the 1970-80's sound almost identical to the online shopping claims made by Australian retailers of today. The question is, which Australian companies will put their hands up and innovate rather than play victim to circumstance?

Nucor can be proof that the right management and innovation can lead to a successful business - it is one of the biggest steel producers in the US today. Bethlehem Steel on the other hand filed for bankruptcy in 2001 after years of decline.

JH