Leadership Lost: After Mallorca's industrial revolution

The business world knows all about the concept of the first mover, the company that grabs a hold of a particular market by being the first one to enter it and therefore creating it. The first-mover concept in business bears a similarity to the now ancient one of industrial revolution. Britain was the first mover in being the first nation to undergo a true industrial revolution, and look where it is now.

The great achievements of the industrial revolution could not disguise the mistakes that were made. These mistakes were inevitable. A first mover has no model to draw on; it is making things up as it goes along. Subsequent industrial revolutions elsewhere could draw on the lessons of the British industrial revolution and create more efficient versions of their own.

The business world has been full of first movers. IBM was the first genuine mover in the computer industry. Later, despite being slow to react to the arrival of the personal computer (which IBM had pretty much invented), once it did react, it made itself the industry standard. It remains a massive business and has done so by reinventing itself in a rapidly evolving industry. The first mover has to keep changing in order to maintain competitiveness. In a similar way, Britain has had to adapt by junking much of its old industrial base, but unlike IBM it has slipped down the competitiveness charts.

Mallorca never underwent a real industrial revolution. The island had industrialised, but the real revolution occurred with the arrival of mass tourism in the 1960s. Mallorca, along with the main Costas - Brava, Blanca, Sol - spearheaded an industrial revolution in tourism. The island invented tourism as it is now understood and it, together with the Costas, was the first mover in a whole new industry.

This collision of industrial revolution and first movement brought about with great suddenness Arenal, Playa de Palma, Magalluf, Lloret de Mar, Benidorm and Torremolinos. The first-mover resorts endure but all have reputations for varying levels of naffness. To the Mallorcan resorts, one can add Lloret's reputation for having the drunkest tourists, the Benidorm of the Garveys and Johnny Vegas, and Eric Idle's Watney's Red Barrel that Torremolinos has never shaken off.

Despite the reputations, Mallorca and the Costas retained the competitiveness that came with being industrial revolutionaries and with being first movers. For years, they remained industry leaders and unchallenged until they started to lose their way. Competition grew and spread, but critically Mallorca was unable to react. It had become bogged down by the complacency of its success and by the stasis and lack of agility caused by differing interests and the absence of clear vision, especially on behalf of politicians.

IBM was willing to accept that change meant that leadership may have to be relinquished (it is behind both Apple and Microsoft in terms of market value), but the company's change was one predicated on innovation. It is this latter factor that has maintained its reputation as one of the world's great companies. But it has been a lack of innovation that has helped to undermine Mallorca, along with the fact of its own industrial revolution (that of mass tourism) having been one that other countries could observe, copy or amend. From Mallorca's mistakes came Portugal, Greece, Turkey and gradually everywhere else.

Banca March has just released a report about tourism going forward to 2030. It highlights the huge growth of near competitors - Croatia, Turkey, Egypt, Morocco -  and their anticipated growth. Banca March reckons that Croatia is in fact the greatest competitive threat to Mallorca and Spain because of easy land transport links to other European countries.

The bank observes that Mallorca does have the genuine capacity to innovate and that this resides with its hotels, and there is evidence of this in the spurt of innovation in the likes of Magalluf. But the hotels face certain pressures. Their profitability in Mallorca has been reduced for various reasons. There are richer pickings for them elsewhere, and it has been an irony that a good deal of competition that has arisen in other countries has come thanks to the exporting of Mallorcan hotel know-how and investment. Like IBM, which made its system open and so became the industry standard for PCs (and not doing this was what killed Apple's chances of being industry leader back in the early '80s), the hotels have reinvented themselves through their technology.

While the hotels have changed, Mallorca as a whole hasn't. It is crucial that it now does. If not, then like Britain, the leader of an industrial revolution will gradually slip and slip.


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