Chapter 5

1. Chapter 5 Give Responsibility for Disruptive Technologies to Organizations Whose Customers Need Them

2. Introduction • It is a company’s customers who effectively control what it can and cannot do. • Evidence suggests that companies are willing to spend enormous amounts on technologically risky projects when customers need the resulting products. • However they are unable to execute simpler disruptive projects if customers don’t need the products.

3. Resource Dependence • Resource dependence theory posits that a company's freedom of action is limited to satisfying the needs of those entities outside the firm (customers and investors, primarily) that give it the resources it needs to survive. • It draws on concepts biological evolution. • Organizations will survive and prosper only if their staffs and systems serve the needs of customers and investors by providing the products, services, and profit they require. • Survival of the fittest will be those people and processes that are attuned to giving customers what they want. among

4. Resource Dependence Theory • Because firms provide the resources upon which the firm is dependent it is the customers rather than managers who really determined what the firm can do. • The theory is very controversial. • It implies that we don’t matter.

5. What should we do? • Option 1: Convince everyone that the firm should pursue the disruptive technology. • Demonstrate the in importance of its long-term strategic implications. • Option 2: Create an independent organization embedded among emerging customers that need the technology.

6. Which works best? • Option 1 lends itself to creating problems with the organizational power structure. • Option 2 allows for harnessing rather than fighting the organizational structure. • Evidence suggests that the second option offers far higher probabilities of success.

7. Additional Organizational Implications of Disruptive Technologies • The team should be structured to facilitate cross functional interaction. • In the initial phases of an industry’s history most technological energy is expended or architectural innovation. • Product designs tend to be integral.

8. Continued • Overtime the patterns of interaction and communication between the individuals and groups within the organization will come to mirror the manner in which the components themselves interact within the product architecture. • This works well as long as the innovations are modular that is, as long as the technological change is largely self-contained within each component.

9. Group C Group A Group B Group E Group D Group F Product Architecture Organizational Structure Component C Component A Component B Component E Component D Component F

10. Organizational Structure • When a project involves a new architectural design the well-defined patterns of communication and interaction can become barriers rather than facilitate effective innovation. • When the way departments interface must change then a strong team structure is important.

11. Two factors • There are two factors that determine what type of organizational structure will facilitate a project’s success. • 1. The extent to which the innovation will require people in groups to interact differently. • 2. The extent of disruptiveness inherent in the technology.

12. Appropriate Position of Responsible Commercial Structure Autonomous Organization Integrated with Mainstream New Autonomous Teams Requirements for Interaction and Coordination Amongst Individuals and Groups Integrity of Development Teams that Is Appropriate Heavyweight Teams Lightweight Teams Functional Organization Customary Sustaining Disruptive Nature of Technological Change