Responding to disruptive innovation may be one of the greatest challenges managers in established firms face. On the one hand, they've been warned that disruption can sneak up and destroy their business. On the other, experience tells them that disruptions can take years, even decades, to play out. And some that threaten never occur at all. Whether a company moves too early to adopt a disruptive technology or too late, it ends up wasting resources and squandering competitive advantage. In this article, the authors outline an effective way to mange the uncertain transition from an established technology, service, or business model to a disruptive one. Companies should develop hybrids, which combine elements from a disruptive technology with the current technology to create a new offering that sits between competing innovation generations: Think Prius, which combines elements from both internal combustion and electric engines. The authors identify seven types of hybrids that companies can use, depending on whether a disruption is already under way, just getting started, and/or a distant possibility.
A superior new technology emerges on the horizon, threatening your existing business. Do you strive to make a seamless transition to it or, perhaps, try to fight and defeat it? Both of those responses can be losing strategies. A third, frequently superior, option is one of "bold retreat," whereby your company cedes most of the established market to the new, dominant technology and instead pursues less vulnerable positions - not as a "turn tail and run" reaction but as a proactive, strategic alternative to head-on competition. There are two types of bold retreats: (1) retrenchment to a niche of the traditional market, where the old technology has an advantage over the new one in addressing customer needs; and (2) relocation to a new market, where the old technology is the inherently superior offering. You can even incorporate both moves into an effective strategy. Like a transition to a new technology, a bold retreat requires significant organizational change. That includes revamping your cost structure and talent base, not to mention selling the very idea of "retreat" to your internal stakeholders. Despite such challenges, a bold retreat that is carried out with foresight can be both a survival strategy and a success story.
Columbus Tubing must choose to improve an old technology (steel) or to develop a new material (carbon fiber). The decision must take into account a complicated context: increased demand for the "old" steel products made in Italy, increasing power of carbon fiber manufacturing partners in Asia, growing wage rates in Asia, and high wage rates in Italy. Two plans have been presented to the CEO, Antonio Colombo. The first is to push development of all of the company's technologies, perhaps even seeking new markets for them. The second is to rationalize operations and to redirect R&D resources to marketing of stylish, lower-tech bicycles. The company's future hangs in the balance.
When a new technology appears, the old one experiences a sudden leap in performance. Whether you are an old- or a new-technology company, understanding how that phenomenon works can help you win during this critical transition period.
While facilitating a complex clinical approval process over the next two to three years for a family of new cancer drugs, Genentech must develop a long-term capacity plan for a major class of new cancer products. Adding to the complexity and uncertainty is the fact that the lead time for planning, building, and certifying a new $600 million plus production-scale facility is five years. In addition, ensuring that the best process technology is incorporated into such a new plant makes the task facing David Ebersman, the senior vice-president of products operations, and his management team a daunting one. Frames the issues Ebersman and his team face and outlines the approach to date.
Scharffen Berger, a premium brand chocolate, is growing rapidly and must decide where and when to add capacity in the production line and with what technology. The company must consider the demands of marketing, the impact on quality and reputation, and the economics of alternative approaches to increasing output in both the short term and long term. Provides an opportunity for students to examine the existing process technology and flow, to understand the determinants of product quality, and to make recommendations about changes that will expand the capabilities of the firm in supplying its premium products to a rapidly growing market segment.
Students in a technology transfer class identify a promising application for a dormant university technology. In the process, they alienate the inventor, who threatens legal action. What exactly are the problems, and how should the professor teaching the class proceed?