Strategic Options for Old-Technology Firms




Disruptive Innovation
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Don Smith, USA

Strategic Options for Old-Technology Firms

What should be the strategic response of old-technology firms when a promising new technology shows up? Typically firms respond by either
1. Fighting the new technology, or
2. Trying to make a transition to the new technology.
Ron Adner and Daniel C. Snow recommend a third strategic option in their article worth reading "Bold Retreat - A New Strategy for Old Technologies" in the Harvard Business Review of March 2010:
3. Bold retreat. Proactively give most of the established market to the new technology and instead pursue either a:
3a. Retrenchment to a niche of the traditional market (where the old technology has some advantage over the new technology), and/or
3b. Relocation to a new market (where the old technology has some advantage over the new technology).
Main advantages of a bold retreat strategy are that it may allow the firm to continue to make money on a smaller scale. This may give it a later option to invest in another growth opportunity. Drawbacks are the need for a significant organizational change process and a tough communication job to explain this strategy to current stakeholders.
 

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Consultant, Ghana
 

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Kirk C. Heriot
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Thomas Shehu, Nigeria
 

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Jim Kaiser
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Julio Villafuerte
Student (MBA), Peru
 

Examples of Third Strategic Option

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Jaap de Jonge
Editor, Netherlands
 

Examples of Companies with Bold Retreat Strategy

Clearly you have to consider old technology companies to find examples of bold retreat strategies. T... Sign up

   

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