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[ASM] G2 - Dynamic Strategy (ABS) (Why Do Incumbent Firms Fail or Survive,…
[ASM] G2 - Dynamic Strategy (ABS)
Strategy Over Time
How Incumbent frim face hardship and when thay face new technology that disrupt their market
Four Iconic frims
Studebaker Brother
Horse drawn carriages
60% market share
Automobile(new electric vehicle)
Remington typewriter
Typewriter maker
80% market share within New York
Kodak
Maker of flim
Flim based cameras
Lead over hundred years
still working digital imaging technology
Digital point and shoot cameras
Sears
Preeminent retailer
As catology business
Move suburban malls
Dynamic Capabilities Perspective
Fundamental idea of business strategy
No firm realizes economic rents
Economic rents dissipate as markets evolve
Economic rent core perspective
Monopoly rents
Barries to entry
Industry structure matters
Ricardian rents
Barriers to imitation
Firm structure matters
Schumpeterian rents
innovation, timing and adaptation is critical
markets work is to understand the evolutionary dynamics
markets are dynamic
Competitive Life Cycle
Common Patterns
General sense
Innovation
focused on new product features
Experimentation
lead by small entrepreneurial firms
Emerging market
Differentiation & Niche placement
Dominant design
Imitation & Competitors
weren't necessarily the pioneer innovators within their industry, but were the ones who were eventually able to take those products to scale
Ex.
EPI (the original entrant into CAT scanners)
General Electric (the one to scale and success)
Disruption emerge
Technology push
exogenous technological change
Demand pull
consumers shift their preferences
new technology / business model emerge
competitive ordering coalesces
pioneering firms wither away
Observation
it's often the older firms that are having difficulty to adapt and are often driven from the market
Analysis
How to
By draw a Circle (CLC Repeat Itself)
to map out where you might exist on that life cycle.
Questions
Disruption
How Long is the Mature Phase?
Radical or Incremental?
Annealing
How Long is The Emergent Phase?
Dominant Design or Multiple Design?
Shakeout
How Long is The Growth Phase?
Winner-take-all, duopoly, contested?
Overall
Slowly evolving or hyper-dynamic?
FIrst Mover Advantage?
How Do We Use it?
Step 2
Characterizing The CLCs For Your Business
Step 3
Assesing Your Competitor Position
Step 1
Charting Your Position
What
The Assessment of Competition within Dynamic Market Environment
Introduction
Structure
Growth Phase
Mature products and technologies
Intensive competitive(maybe)
Shakeout
Some firms exit the market
Mature Phase
Disruption
Grow slowly or even no
Emergent Phase
Annealing
Dominant Standard/Design
Lots of experiments and trying
Purpose
Understand both timing and when phase transition occur
Why Do Incumbent Firms Fail or Survive
No better positioned than new entrants
EX: Swiss Watch
Worse positioned than entrants
core rigidities
Select not to change
EX: Blockbuster Video
having planned obsolescence
making a change and try to survive
When Do Incumbent Firms Succeed?
Innovation often requires extensive capital and expertise
Not easily available to small or newly-founded firms
Customers desire the assurance of established firms
Often risk averse, unlikely to try new things
Incumbent firms may leverage complementary resources or capabilities to their advantage
Incumbent has a "dynamic capability" to adjust to changing business conditions
EX: Intel
