Where the Money Moves: Skating to the Next Opportunity Before Your Profit Disappears

In the middle of a competitive industry—say, personal computers—it’s common to see profits at first clustered with the companies assembling the final product. But as customer needs are easily met and commodities rule, profits leak elsewhere: first to operating systems specialists, then to chip makers, and eventually to companies building key background technologies. In some years, fortunes are made in the software, next in the ecosystem of service, later perhaps in the channel or logistics. Meanwhile, late movers still focus on the old, drained profit pools, fighting over scraps.

The few who systematically review the flow of value—who assemble literal diagrams and chase signals about rising difficulties or new unmet needs—are the ones who redeploy talent and capital in time to benefit. Waiting until it’s proven in the press or clear from loss statements is too late; the trick is to invest as soon as you see a profit basket start to fill. The principle is so robust it’s become known as the law of conservation of attractive profits—money doesn’t disappear, it relocates. The challenge is being there first.

Pull out a big sheet of paper and map out every major segment in your product or service's value chain, making sure to clearly mark where profits are accumulating now and where they have dried up. Each year, check whether formerly juicy areas are now cutthroat and look for pain points where customer needs are no longer being fully met. If you spot a new subsystem or adjacent stage about to become critical, prepare yourself to jump there with resources, people, and strategy—don’t wait until the money has already migrated and competition is fierce.