If Facts Don't Fit the Theory, The Theory Probably is Wrong

Facts sometimes don't fit theories that purport to explain those facts.When that happens, it is likely theory is wrong, in some way.That might appear to be the case for one theory about the strategies any industry has to embrace at any stage of its lifecycle.


Of course, some of you will look at the chart and sense a huge anomaly. The telecom industry is over 150 years old and long ago would have passed beyond the "scale" stage, for example.


One observation might be that the theory "fits" non-regulated industries, but does not fit very well for highly-regulated industries such as utilities. Others might note that airlines, which were deregulated in the 1980s, have had 30 years of mergers already. The theory suggests the entire process of moving through all four stages should take about 25 years. 


Note also that the theory claims to apply for any industry that is formed, or is deregulated. Aviation has been a distinct business for much longer than 50 years. 


Of course, it is always possible to force the facts to fit by artificially changing the definition of what an industry is. One might argue that "smart phones" represent a different industry that that of feature phones, or voice-only phones, or analog phones.


One might argue the older telecom business using step switches was different from the business using electromechanical switches or digital switches or now IP switches. 


But that's probably a case of straining to make the facts fit a theory, rather than acknowledging there is something wrong with the theory.