Incumbent inertia. Want to Maintain Your First 2022-10-27
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Incumbent inertia refers to the tendency of existing companies or organizations to resist change or new innovations. This can be a significant barrier to entry for new firms trying to enter a market or disrupt an industry.
One reason for incumbent inertia is that established companies often have a lot to lose if they adopt new technologies or business models. They may have invested heavily in their current operations and are hesitant to make changes that could potentially disrupt them. Additionally, these companies may have a large customer base that is accustomed to their current products or services, and changing them may alienate these customers.
Another reason for incumbent inertia is that established companies may have a significant advantage over new entrants due to their size and resources. They may have a stronger brand, more capital, and deeper networks, which can make it difficult for new firms to compete. In some cases, incumbents may even actively try to block new entrants from entering the market by using their resources to lobby against them or by suing them for patent infringement.
Incumbent inertia can also be perpetuated by the people within the organization. Employees may be resistant to change due to fear of the unknown or a lack of incentives to try new things. Management may also be hesitant to adopt new technologies or business models because they do not want to risk disrupting the status quo.
Despite the challenges that incumbent inertia presents, new firms and technologies can still succeed in disrupting an industry. This often requires a combination of persistence, innovative thinking, and the ability to offer a superior product or service. In some cases, regulatory intervention may also be necessary to level the playing field and allow new entrants to compete.
Overall, incumbent inertia is a common phenomenon that can pose a significant barrier to innovation and change in an industry. It is important for both established companies and new entrants to be aware of this dynamic and to work to overcome it in order to drive progress and growth.
Introduction (Chapter 1)
The findings contribute to extant literature by showing the influence of individual knowledge sources on the problem-solving likelihood of external knowledge search efforts, and the contingencies regarding the organization of these efforts conditional on the commitment of individual knowledge sources to the resultant technological change. Typically the definition is the latter, since plenty of firms spend millions in research and development that never result in a product entering a market. The opportunity was immense, since Maersk transported one-fifth of all seaborne freight but sold land-based logistics products to fewer than 20% of its ocean-shipping customers. Part of its advantage lies in asset ownership, which translates into control over the outcomes it promises to customers, and its ability to orchestrate end-to-end visibility through a wide array of data, such as real-time information on inbound and outbound cargo, shipment tracking, bottlenecks, the impact of weather on shipping routes, and delivery schedules. Amazon established one-click shopping early on, and customers quickly came to expect easy internet shopping. Despite the prevailing ethos that disruption is their inevitable fate, large legacy firms do not need to wither and die. We use this information to create a better experience for all users.
By conducting four case studies, he identifies new causes of inertia and reveals the role of top management teams in improving incumbent firms' responsiveness. The name of the 117-year-old company adorns cargo ships all over the world. Sony's products offered lower storage, 100+ songs and high-fidelity. A future study should better delineate the differences between first-mover advantages and other advantages that a firm may have, such as superior manufacturing, or a better marketing scheme. By drawing on external knowledge sources such as universities, suppliers, users and even competitors, firms can access new knowledge and incumbents can thereby reduce the above-described inertia Rosenkopf and Nerkar 2001; Rosenkopf and Almeida 2003. But Deere sought to do more than merely optimize input and maximize output for farmers.
One firm that did this was A. The innovative entrepreneur compensates for incumbent inertia by embodying innovations in new firms. Indeed, having a profitable installed base can make supply-side inertia worseover time since the incentive to stay incremental becomes even stronger. However, Deere persevered, using its deep knowledge of customers to target leading-edge farms for initial adoption, establishing proof that technology helped them operate more efficiently, and then spiraling out to the rest. Instead of embracing a defensive posture, established companies should adopt a mindset and a set of behaviors we call strategic incumbency. To save this book to your Kindle, first ensure coreplatform cambridge.
More specifically, the paper analyzes the effects on the problem-solving likelihood of such efforts contingent on the involvement of incumbent firms and the enhancing or competence-destroying effects respectively. That was not the case at Maersk, however. Viellechner's new book is relevant to both researchers and managers. The good news is that a loyal customer base is often more willing to try and accept innovative new products from the firm,while also being more skeptical of innovations offered by other companies. An example of one that has, is that first-mover advantages have proven to be much more prevalent in consumer-goods, as opposed to producer-goods industries. Companies that are plugged into their customers gain insights that can help them shape the future of their industries.
Incumbent Inertia in Light of Disruptive Change in the Airline Industry by Oliver Viellechner · OverDrive: ebooks, audiobooks, and more for libraries and schools
If an organization is falling behind, it needs to change its tactics, change its pace, or change the players. By pushing too hard, leaders can demotivate people. This development results in a high degree of inertia in these firms Delmas et al. Eggers 2015; Rothaermel and Boeker 2008; Tripsas 1997. This conventional wisdom—that corporate disruption and death are inevitable—has put many market leaders in a defensive stance.
SEARCH AND DESTROY: THE EFFECTS OF INCUMBENT INERTIA ON EXTERNAL KNOWLEDGE SEARCH
But in doing so, they fail to recognize their edge. Entrepreneurs cannot innovate effectively because incumbent firms have better complementary assets. Managers who opt to be followers have to pick the right method of attack on the pioneer of the product. Innovative entrepreneurs help overcome two types of institutional frictions. Harnessing Complexity Although complexity has a negative connotation, it has both good and bad facets. Here the role of the leader is critical in moving an organization from passive to active incumbency.
Incumbent companies spend years establishing skills, knowledge, routines, and assets that help serve their current markets, but this experience base can be ill-suited for anything other than incremental innovation. In doing so the paper combines the literature on external knowledge search e. To answer those questions, we conducted a three-year study of global incumbents across a variety of industries. For most of the 20th century a company that had been in business for many years and had a strong market share and a large employee base was viewed positively. Strategic incumbents build on strong relationships to have deep conversations with stakeholders about how their needs are evolving, critical issues that should be addressed in the future, and the interests that they and the company have in common. In the early 2010s, Deere began focusing on game-changing digital technologies such as artificial intelligence and machine learning, which made farming decisions on a plant-by-plant level in real time.
The remainder of the paper is structured as follows. Still, some issues have risen with this definition, specifically that dis-aggregate profit data are seldom obtainable. Several sources have been noted for this inertia, such as the tendency to myopically focus on exploitation of existing competences and out-dated mindsets of managers that reduce proactive embracing of new technology Levinthal and March 1993; March 1991; Tripsas and Gavetti 2000. Instead they must learn to tap into their inherent strengths and behave like strategic incumbents. Incumbents often neglect to adapt to the latter type of technological change despite the high risk of failure from not proactively reconfiguring their competences to accommodate new technologies and business models. Finally, I show that incumbents who proactively lead technological change and engage in reconfiguration of their competences have positive effects in competence-destroying technologies. These followers are also aiming to gain market share; however, most of the time the first-movers will already have an established market share, with a loyal customer base that allows them to maintain their market share.
They set up a new unit dedicated to disruption in a remote location, with a flexible structure and a new leader; staff it with new talent; and give it different performance metrics such as the number of new ideas seeded, new concepts proved, or partnerships formed with start-ups. Whereas passive incumbents get caught up in quarterly performance, strategic incumbents strive to balance delivering in the present with preparing for the future. These prevent us from entirely accepting that a company gains a clearly defined benefit from being the first to produce and market a particular product. No start-up could hope to localize so many products for so many regions. Through this, the paper examines whether the interdependent nature of external knowledge search results in a negative effect of incumbent involvement related to the destroying technologies in opposition to those with competence-enhancing effects, and whether this can be mitigated by incumbent proactiveness towards technological change. It saw that its longtime shipping business and existing relationships with thousands of customers gave it a tremendous advantage as it expanded into land-based transport—and within the short span of four years it had redefined its value proposition and moved into a new market. The innovative entrepreneur addresses frictions in markets for inventions through own-use of discoveries and adoption of innovative ideas.