Strategic Options for Old-Technology Firms


 
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Strategic Options for Old-Technology Firms
Don Smith
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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Today there are many new technologies hitting the street - social media, cloud computing, etc. Does a litmus test exist for considering new technol...Sign up
 

 
Examples of Third Strategic Option
Julio Villafuerte, Student (MBA), Peru, Member
Do you have examples of companies that have applied the third strategic option recommended by Ron Adner and Daniel C. Snow?...Sign up
 

 
Examples of Companies with Bold Retreat Strategy
Jaap de Jonge, CEO, Netherlands, Editor
Clearly you have to consider old technology companies to find examples of bold retreat strategies. The authors actually mention Linjett, Continental, ...Sign up
 

 
 


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