Organized whale hunting began in the US by the end of the seventeenth century. The primary reason for hunting these mammals was to extract oil. The oil was used in lighting lamps and heating homes. It was a small industry then.
The industrial revolution began in Europe in the eighteenth century. Machines in the factories needed lubrication. Whale oil was a perfect fit for this application. The demand surged. The whale hunters started building bigger ships and larger teams. Soon, the explorers stayed up in the sea for the entire year. They built processing plants right on the ships. Venture capitalists started investing in this industry.
In 1847 James Young distilled a light, thin oil suitable for use as lamp oil. He also obtained a thicker oil suitable for lubricating machinery. This was the advent of the modern petroleum industry. Refineries were set to distill crude oil into its various fractions. This new substitute for whale oil was scalable, efficient, and economical.
Two and a half centuries of reckless hunting had diminished the whale population. Many organizations lobbied to ban whale hunting. Today, barring a few rare exceptions, whaling is prohibited by most countries around the world.
We see 4 distinct stages from infancy to the end of the whaling industry:
- Initial (low volume, local reach)
- Demand Growth (high volume, larger reach, venture investments, mechanization/automation. Also, growing environmental/sustainability concerns)
- Product Substitute (Scalable, Economical, Efficient Product Alternatives. Pressure on margins as demand shrinks)
- Obsolete (Few niche applications, low volume)
The whaling industry was lucky to survive and grow for a couple of centuries. Today, no industry is that lucky. The lifecycles of products are shrinking at an alarming rate. So, what can we learn from the whaling industry:
- Know which stage your business is at this stage
- Constantly scan the horizon for new products and substitutes
- Adopt new technologies
- Make sustainability a core value of your business
- Invest in R&D
- Be ready for the Black Swan Events.
Subodh
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