‘Overnight Implosion’ of Yellow Pages Industry Could Predict Fossils’ Future
Huge industries “can decline faster than anyone might imagine,” and the oil and gas industry may be no less vulnerable to rapid change and disruption than the once-mighty Yellow Pages, analyst Kathy Hipple argues in a post this week for the Institute for Energy Economics and Financial Analysis.
“I know because I was there,” Hipple writes. “As a board member some years ago of the national Yellow Pages Association, I had a front-row seat to the almost overnight implosion of an industry whose leaders and investors ignored glaring signs of impending doom.”
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There are differences between the two collapses, she acknowledges, since fossils will still retain some importance for decades to come. “Yet a head-in-the-sand mindset persists across the declining fossil fuel industry similar to the one I saw take root in the Yellow Pages business, which only 20 years ago was a robust, $17-billion enterprise,” she says. “Then, in what seemed like a nanosecond in historical terms, Yellow Pages companies went from Wall Street darlings to dinosaurs, vying with horse-and-buggy whip makers for the dubious distinction of best symbol for Luddite businesses.”
She says Yellow Pages execs went wrong when the doubled down on print publishing, rather than recognizing the Internet as the “existential threat” that it was and pivoting while they still could. “Given their massive cash flows, telephone company Yellow Pages companies could well have bought a brand-name search engine, and indeed publishers considered acquiring Yahoo, then a formidable competitor to Google,” Hipple recalls. “But they did not.”
From that experience, she distills nine reasons to predict a similar fate for oil and gas companies. Among the highlights:
- They’ve ignored or at best downplayed the rise of renewables and electric vehicles.
- Their mostly white, male executives are “lifers”, with little or no knowledge of other industries or openness to outsider views.
- They’ve reacted slowly and tended to “circle the wagons” as business pressures have mounted.
- Companies are intensifying competition within the industry, rather than cooperating to modernize and evolve.
- Legacy fossils are largely missing the opportunity to reposition themselves as diversified energy companies.
- Those that are somewhat embracing renewables are only devoting a small share of their capital spending to the effort.
- Fossils’ corporate cultures reward managers for staying the course, rather than abandoning business models that worked for them in the past.