Wednesday, December 4, 2013

Adaptation for survival

From common knowledge we understand that disruptive technologies initially are of poorer quality and do not have a clear potential market. Yet, the ability for companies to prepare for and maybe adopt certain disruptive technologies is key to their survival. The Article " why good companies fail to thrive in fast moving industries" explains that the same criteria that shows great management and produces profit for many large companies is and can be the reasons for its failure. the articles mentions Xerox and Sears as a case in example. 
The article explains that these companies choose to lay more emphasis on markets and products that were mature and already proving to be profitability, while ignoring the threats and trend of emerging disruptive technologies. Another example is Kodak, who owned most of the patents of digital photography (which was the disruptive technology), they chose to focus on film technology which was the industry leader, and shelf the digital photography idea. this proved to be an enormous oversight and cost Kodak major market shares and their leadership position. In contrast, IBM is another company who while in a position of leadership was faced with challenging disruptive technologies. According to the NY times article " lessons in longevity". IBM like many other industry leaders have continuously been faced with challenging disruptive technology, according to the article the key to their survival is adaptation. IBM chose to evolve beyond past success unlike Kodak and Sears, and adapt their core capabilities to the emerging disruptive technologies. they focused on what they knew best and channeled it into developing services and products.  "So, then, what broader insights are to be drawn from the I.B.M. experience?
One central message, according to industry experts, is this: Don’t walk away from your past. Build on it. The crucial building blocks, they say, are skills, technology and marketing assets that can be transferred or modified to pursue new opportunities. Those are a company’s core assets, they say, far more so than any particular product or service. In I.B.M.’s case, the prime assets included strong, long-term customer relationships, deep scientific and research capabilities and an unmatched breadth of technical skills in hardware, software and services."
this ability to focus of core competences and channel them into emerging markets and technologies is key in sustaining a good company in fast moving industries. the article "lessons in longevity, from IBM" associates this with IBM success and ability to continue to grow. this posses its own question, can all companies in different industries use this approach? And since disruptive technologies typically initially are of lower quality and smaller markets are there situations where ignoring potential disruptive technology have proved to be beneficial to companies?


Reference
Clayton Christensen, excerpt from "When new Technologies cause Great firms to fail", HBS 

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