changing environment and inertia Flashcards
sustaining technologies
technologies that do not require a new business model to be utilized commercially
disruptive technologies
technologies that do require a new business model to be utilized
inertia
tendency to do nothing or remain unchanged
dimensions of successfully adapt a business to changing competitive landscape
Phycological
Technological
Relational
Phycological dimension
managers needs to be psychologically convinced that change is needed and ready to implement necessary change actions
Technological dimension
companies should be able to develop necessary technological capabilities
relational dimension
Companies need to have relational capabilities to develop and manage their collaborations with external partners
Population ecology theory
in order to survive and grow organizations need to develop processes that allow them to replicate their outputs consistently and efficiently. This cycle makes organizational processes more efficient but also rigid. When the environment changes radically, existing processes are no longer effective
sources of inertia
strategic frame rigidity
routine rigidity
resource rigidity
Strategic frames of managers
the mindsets that shape how managers see the business world and how they believe customer value should be created
Strategic frame rigidity
managers of established companies are too fixated on how they learned to do business and on old ways of doing business that brought success in the past
organizational routines
established procedures to carry out organizational tasks
routine rigidity
when processes become routines they enable efficient operations but hard to change or rigid as they prevent employees from considering new ways of working
Resource rigidity
firms tend to invest in resources that have been useful to develop a competitive advantage in the past and thus hesitate to invest in new resources
reasons for resource rigidity
failure to realize the importance of new resources
fear of losing current customers
constraints places by investors and capital markets
Companies approach to inertia through renewal
companies should ask what hinders us instead of what should we do and have a clear understanding of how their old formula for success would hinder them in responding to the changes
Research investments and overcoming inertia
in-house research and contract research are unlikely to lead to commercialization when the technology is disruptive due to subject to incentive structure, cognition of managers, and resource allocation processes. Alliances and acquisitions are more likely to lead to commercialization due to structurally separated research investments, involvement of outsiders in decision-making processes, incentive alignment and isolation from the demands and constraints of the current business model
reducing inertia
a new business unit with decision making authority
open innovation
strategic alliances with other organizations
acquiring smaller and innovative companies
incorporate input from outside to operations focusing on the new technology