An attractor state refers to a way of thinking about an industry's future evolution. It was proposed by the strategist Richard Rumelt in his classic, “Good Strategy, Bad Strategy” and can serve to inform both business strategy and career planning.
Rumelt suggests two ways for how businesses can gain the high ground: breakthrough innovation or exploitation of a wave of change. A wave of change is a transformative shift that affects whole industries. It cannot be created and is beyond an organisation’s control. Rather, it is the net result of technological advances, market dynamics and shifts in consumer values and preferences. After a wave has passed, it is easy to recognise it, but often too late to act on it. It’s crucial to perceive and deal with a wave of change in its early stages of development to take advantage of it. This is where, according to Rumelt, skills in strategy are most valuable:
“Working with industry-wide or economy-wide change is even more advanced than particle physics – understanding and predicting patterns of these dynamics is difficult and chancy. Fortunately, a leader does not need to get it totally right – the organisation’s strategy merely has to be more right than those of its rivals. If you can peer into the fog of change and see 10 percent more clearly than others see, then you may gain an edge.”
To navigate the “fog of change” Rumelt suggests five “mental guideposts” that can offer orientation. They are behaviours and market dynamics that trigger a largely predictable set of events. For example:
Rising costs, particularly in product development, can lead to industry consolidation.
Newly deregulated monopolies will likely abandon profitable product lines because years of subsidised price setting conceal the real costs even from them.
Businesses with rapid growth tend to project the same rate of growth into the future (e.g., Amazon and Meta believed that accelerated growth would continue even after the pandemic waned).
Incumbents are likely to resist a transition that threatens to undermine the complex skills and valuable positions they have accumulated over time (i.e. Innovator's Dilemma).
An attractor state is another mental guidepost, which stands out in Rumelt's list because of its disruptive potential. According to Rumelt, it describes how an industry “should” work in the light of technological forces and the structure of demand. “Should” emphasises evolution toward efficiency - meeting the needs and demands of buyers as efficiently as possible. An attractor state provides a sense of direction for the future evolution of an industry. There is no guarantee that this state will manifest, but it does represent a gravity-like pull. Examples of attractor states include:
Cisco Systems "IP everywhere" during the 1995-2000 period. The “IP everywhere” vision was an attractor state because it was more efficient and eliminated the margins and inefficiencies attached to a mishmash of proprietary standards.
Netflix’s departure from its rental-by-mail distribution model in 2007 and its focus on movie streaming. Streaming has now become an industry-wide norm for entertainment.
The advent of digital banking, which caused the decline of traditional banking at branches. Mobile banking is quickly becoming the norm because it is cheaper, faster, and more convenient.
In contrast, instant grocery shopping was not an attractor state, even if investors and start-ups believed it to be ("The world is moving toward instant and Gopuff is at the forefront of that" Gopuff’s co-founder, Yakir Gola, told the New York Times in April 2022); it proved to be highly inefficient for fast delivery start-ups (and in addition didn’t solve an aching problem for mainstream customers, which would justify paying a premium on a regular basis) because of bad unit economics, bad margins and complicated and unprofitable infrastructure.
You can think of an attractor state as a new convention that drives a habit change, which happens when people replace old habits with new ones. “In the future everybody will be … “ can be a useful prompt when thinking about an attractor state for your industry. If an emerging convention derives from efficiencies that companies can pass on to their customers in the form of simpler, cheaper, and more convenient offerings, then it is likely to disrupt your business and should be therefore on your radar.
However, recognising an attractor state is only part of the challenge; adapting to a new reality is equally testing. According to Warren Berger in "A More Beautiful Question", when companies are facing disruptive change, old habits and traditions can get in the way of progress. Asking challenging questions can help leaders remove those constraints, if only briefly, and allow for clearer thinking.
When the market for computer memory chips, on which Intel was founded, began to slow down, Intel's co-founders, Andy Grove and Gordon Moore, asked the question, "If we were kicked out of the company, what do you think the new CEO would do?" After pondering this question, Intel shifted its focus to microprocessors, setting the stage for subsequent growth. To help leaders let go of "stuff they've already invested in" and consider new possibilities, "Innovator's Dilemma" author, Clay Christensen, suggests they ask "What if the company didn't exist?" It's not easy to move away from what companies have successfully built in the past, however, when facing disruption from an attractor state, holding on to history and routine can impede a company's future.
Check out "Good Strategy, Bad Strategy" for more on using systems dynamics as a source of power.
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