“Strategies for survival in fast-changing industries”, by C. M. Christensen et al, Management Science 44 (12), December 1998, pages S207-220 In a fast-changing industry, knowledge of certain type of technologies become obsolete much faster than the other industries, hence it is important to know the different technology strategies which will determine its posterior success. Christensen used the disk drive industry in his paper to illustrate his hypothesis that both the technological and market strategies that an entrant applies are interrelated and that their joint effect is crucial to whether the firm can survive.
One of the strategies that are mentioned in the paper is for firms to incorporate elements of dominant design in their new products to reduce the probability of failure in a fast-changing industry such as disk drives. Yet, I beg to differ. The adoption of a dominant design in a fast-changing industry will indeed cause the firm to gain a lot of market share. However this will only apply for firms if the change is elements of its products, in Christensen case, the hardware design and function.
Despite the changes made, people will find it easier to continue to utilize the product since they are familiar with the basic structure of the product. After all, the basic product has been tested and proven. On the other hand, there are other fast-changing industries which are impacted by their fickle consumer market. For this, the firms have to adapt to the ever-changing environment where consumers’ brand loyalty is low. There will be a need to incorporate personalize features into their products to suit the market.
An apt example would be the fragrance industry (perfumes) where firms have to adjust to the seasonal changes in preference of the customers. Hence a dominant design will not aid a company to gain market share in this case. Also, this strategy will only be applicable to firms if identity is not a determining factor for sustainability. In the case of disk drive, there is no need for firms to establish their identity except for the functionality of the drive itself. So the focus would just be on the improvement of the echnology therefore they can afford to adopt back the similar dominant product. However with firms whereby branding is crucial, this strategy will not work. This can be seen in the fast-changing fashion industry. For example, if an unknown retail outlet was to adopt a particular design from a renowned brand, it will still not be able to sell its product as efficiently even if it is a dominant design in the branded market. Another strategy mentioned by Christensen is for firms to improvise on proven innovations in new yet similar market segments.
It is said to be more secure as compared to those firms that enter established markets with new component technologies. However, I feel that this is an unfair comparison. It is inequitable to compare the technology in the product under different circumstances. With most of the consumers having a similar product, it is hence apparent for a new innovation to fail in an established market. Right from the start, unfair conditions like the presence of monopoly/oligopoly, limited consumers’ support, doomed the new technologies in product even if they have superior functions.
Instead comparison should be made, either, at the entry of both new and proven technology in a new market or otherwise. In this case, a more accurate and objective contrast can be shown. The entry timing is another crucial point in Christensen’s paper. He mentioned the existence of “window of opportunity” or “window of learning” in which it is a period when firms should enter the industry to increase their probability of survival. This period occurs just before the emergence of a dominant product design.
However, one would ask, when will this “window of opportunity/learning” appear? With the limited ex-ante knowledge of an individual, no one would be able to predict accurately this period of time. No doubt, such an opportunity for firms would enable them to gain the most but as a strategy for survival, it is useless. It is impossible to predict the occurrence of this chance and before anyone can enter, it would be to late. Hence this would be the hardest for an entrant to apply so as to survive.
Despite these loopholes in the above strategies, Christensen’s hypothesis still provides clear insights to the requirements to steer afloat in a fast-changing industry. It is important to know there are no clear and direct strategies for survival especially in a fast changing industry. Improvisation and improvement to the existing technology to better suit the needs of the market is crucial. Only this, can the firms maintain their competitive edge over the others to survive in the long run.