The best proxy that a company knows the loops of it and its market is whether they've ever done a full transition of their primary source of profit
This is not right. First of all, take Blackberry. It's had to transition its source of profit completely, not because it understood its market, but because it didn't, until it was too late.
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I thought implicit in this was doing it well. But yes I don't mean things that just die
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Okay contingent on the company not dying in the original market? Still don't think it's totally right. I can't think of any counterexamples that you'd recognize, but I can tell you from my own operational experience that this is not true.
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Second, if you understand your market, you stay in it, because market understanding is advantage in the market. You only leave when you see something better, or when you make a misstep that forces your hand.
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I'm not saying people shouldn't stay in their market. But that that doesn't actually give strong signal on their understanding of their loops. If you hit huge goldmine you never *need* to learn it well. Just stay put. But those that transition well demonstrate understanding
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