Innovators' Dilemma in Dell and Kodak Companies - Case Study Example

INNOVATION SP MANAGEMENT By Name Course Instructor Institution Location Date Question 1 Innovators dilemma according to Govindarajan (2016 pg 23) refers to situations when the new technologies causes the well established firms to fail. This refers to the illustrations on how successful and outstanding firms do everything right but lose their market share and prowess to upcoming firms. Innovators dilemma in the case of Kodak company as discussed by Schwerte et al (2016 pg 11) is a situation whereby despite market leadership in the film industry by the company a slight change in the photography from being based on chemistry to being based on bits let to the crush of the company that once enjoyed lucrative film products. The change in the technologies as argued by Bessant (2016 pg50) has led to the fall of the giant company and the company has reduced on its workforce. Govindarajan (2016 pg 34) further purports that innovators dilemma can be seen to take the form of big company failing to make market transitions to redefine their markets as new technologies emerge. Also in the case study innovators dilemma can be related to the case of Kodak company where the previous films employed the use of cheap technologies which resulted to only black and white films, their cameras portrayed low quality and could only store a few images at a slow rate, the cameras were bulky and had a poor battery life as shown by Ali (2016 pg 33). The dilemma comes in since the customers were well suited to this incumbent technology by the firm to levels that the firm ignored to venture in digital photography. Then came new technology in the film industry with a shift from analog to digital and today the film products offered by Kodak as argued by Pandit et al (2016 pg 21) are facing disruptive technology impacts, the digital cameras have wiped out the use of films which has led to Kodak recording low sales on the film product as also agreed by Shih (2016 pg 13). The innovators dilemma according to Ritala & Aarikka (2016 pg 31) is also a situation where the market is faced by the disruptive technologies which threaten the incumbent technologies. Despite the incumbent technologies having a large customer base, over the time the disruptive technology overtakes the market with myriad of innovations leading to the irrelevance and less value by the incumbent technology which has been the cause of the fall of Kodak company. Question 2 As discussed in the case study big firms fail as a result of innovators dilemma which is failure to see the disruptive innovations as a threat to their businesses but rather do what the company management strategizes through policies as shown by Ghaffari et al (2016 pg 94). The big firms tend to listen to the current customers and implement the customer’s feedback into procedures and practices. Because the incumbent technologies offer the customers values and is attractive the current firm’s customers do not want the firms to invest in the disruptive technologies because the technologies come with poor performance and the disruptive technologies have poor margins as compared to the dominant incumbent offerings as purported by O’Reilly & Tushman (2016 pg 26-28). The big companies fail to explore the new markets and do not dedicate the resources to develop the potential technologies in nurturing the needs of the new customer base. The failure to focus on the future customer needs and a keen emphasis on the needs of the current customers can therefore be argued as the main reason why big firm have collapsed while others have registered massive losses as supported by Birkinshaw & Haas (2016 pg 76). The big firms focus on the cash cow projects that generate faster financial gains and meet the immediate customer’s needs. The strategy pays faster, though it fails to incorporate strategies that cater for long term sustainability and performance of the firm. Bessant (2016 pg 45) argues that the technical teams in the big firms find it so hard to start a project that will commence on low incomes but later generate the firms needed competitive advantage. This can be attributed to the greed nature of the big companies to generate income over a short time span. The firms fail to forecast the current market technological needs and the firm’s future potential customer needs and only concentrates on satisfying the rational current customer demands (Sampere et al 2016 pg 55). As opposed to the big firms, startup firms will want to exploit the disruptive technologies rather than sticking to the dominant incumbent technologies and at the time the new market is well set the new firms would have been in the market for quite long and therefore tapped the expertise that aids in the acquisition of the large customer base argues Grant (2016 pg 21). The new technologies created widens market benefits increase which makes the new firm to gain the competitive advantage over big firms and hence the collapse of the giant market leaders. Hynes et al (2016 pg 112) stresses that some big firms such as yahoo have failed in the market as a result of fear to take part in technological advances that seem risky on the onset. For instance, if yahoo had advocated for new technologies by engaging new research and financing the project then elements such as WhatsApp and Instagram would be some of their innovations. The failure of the new CEO to acknowledge the need of research which is tied to innovator dilemma is the cause for the stagnation in the operation of yahoo recommends Govindarajan (2016 pg 54). The new manager opted to disband its mobile group which formed a team of talented engineers to work on the project. Due to disruptive dilemma he termed the projects unprofitable and disbanded the mobile team. Question 3 To my opinion Kodak company failed as a result of the top management inability to grasp how the world of photography was changing. Schwerte et al (2016 pg 76) agrees that the management always perceived that their customers will never part with hard print and that the customers developed value for film photos will never change due to the high quality of the film photos. The management stayed in long denial for change which can be attributed to minimal research on the customer’s needs. The management based on the current customer demand and failed to embrace technological advancement that could suit the potential customers base (Shih 2016 pg 32). To me the fall of Kodak is as a result of failed efforts to see digital photography not just as a substitute for film but as a disruptive technology in the field of photography. This digital photography came with higher financial margins as compared to the film photography and therefore seemed unattractive to venture in by the company argues Ali (2016 pg 43). The small competing firms risked to venture in this new technology and when the market for the invention grew the market leader was replaced by new leaders as a result of expertise in the digital photography. The company lost its loyal customers which let to its bankruptcy. Question 4 Demise of Dell company in the next ten years. The company operates in a high competitive environment with the market leaders being determined by the quality of the products and the management strategies to acquire a large customer base. According to Delmond et al (2016 pg 32) the company has however stuck to the same procedure and practices despite many electronic companies faulting their strategies to cater for new technological innovations. Disruptive technologies have hit the electronic field with other companies shying away from new innovations such as touch screen laptops and high processors. Over many years Dell company has avoided venture into new products such as eruption of iPhone and integrated devices with huge storage space. The poor strategies that can be exploited by other companies to outcompete this electronic giant includes, The company has failed to put in place strategies to ensure quality measurement before the electronic devices are delivered to the market. Strauss (2016pg 17) discusses that the move has led to many faulty gadgets being offered to the market. When customers purchase these devices, they face a lot of challenges such as system breakdowns, faulty processors and poor quality batteries. On the other hand, Apple and Samsung are revising their market strategies to acquire effectiveness which leads to customer acceptance. If the company fails to strategize in the near future its products will be of low value in the market and the company will lose its loyal customers. The company relies on the feedback by the dominant customers rather than focusing on the new technologies that will be costly at the onset but will grant competitive advantage in the future. Companies that have exhibited such risky innovations include Samsung on its innovation of galaxy s6. Despite continuous failure as result of low life battery and low definition camera the company has conducted a myriad of research to improve on the product. Currently Samsung’s galaxy s6 registers high profits. It is arguably true that failure of dell to take part in risky venture might serve for short term gains but very dangerous in the near future (Kaplan & Montiel 2016 pg 65). Just as yahoo has stuck to the same strategies especially on innovation and is registering poor returns Kaplan & Montiel (2016 pg 32) argues that Dell with the same research strategies in the next ten years will be no more. The company has failed to deploy funds to the research teams to exploit the electronic market and predict future technological and customer behaviors. The disbanded research teams will be the major downfall for this giant company. With this trend in the next 10 years the company will lack new products to present to the market. the faulty electronic gadgets will attract no customer interests and value will be attached to company products. The company has failed to revise its objectives and goals to match with the changing industry needs. Companies such as apple have changed their goals several times to suit the interest of both the current and potential customers (Delmond et al 2016 pg 41). Dell has held the interest of current customers and has implemented the views of stakeholders without the image of future technological needs. The incumbent technologies have served to their advantage but with new firms trying on new products it is very risky because the moment the new innovations pick a large market share the company will cease to be a technology market leader can possibly disintegrate. List of references Ali, S.A., 2016. Directions to Explore the Principles of Service Innovation: With Various Companies’ Case Study. Journal of Research in Business, Economics and Management, 6(3), pp.971-978. Bessant, J., 2016. BOOK REVIEW:" The Disruption Dilemma". Birkinshaw, J. and Haas, M., 2016. FAIL MORE FAIL BETTER. London Business School Review, 27(2), pp.34-37. Delmond, M.H., Coelho, F., Keravel, A. and Mahl, R., 2016. How Information Systems Enable Digital Transformation: A focus on Business Models and Value Co‐production Ghaffari, S., Arab, A., Nafari, J. and Manteghi, M., 2017. Investigation and evaluation of key success factors in technological innovation development based on BWM. Decision Science Letters, 6(3), pp.295-306. Govindarajan, V., 2016. The Three-Box Solution: A Strategy for Leading Innovation. Harvard Business Review Press. Grant, R.M., 2016. Contemporary strategy analysis: Text and cases edition. John Wiley & Sons. Hynes, N., Hynes, N., Elwell, A.D. and Elwell, A.D., 2016. The role of inter-organizational networks in enabling or delaying disruptive innovation: a case study of mVoIP. Journal of Business & Industrial Marketing, 31(6), pp.722-731. Kaplan, J. and Montiel, I., 2016. East vs. West Approaches to Reporting Corporate Sustainability Strategies to the World: Corporate Sustainability. Comparative Perspectives on Global Corporate Social Responsibility, p.49. O’Reilly, C. and Tushman, M., 2016. Lead and disrupt: How to solve the innovator's dilemma. Stanford University Press Pandit, D., Joshi, M.P., Gupta, R.K. and Sahay, A., 2017. Disruptive innovation through a dynamic capabilities lens: an exploration of the auto component sector in India. International Journal of Indian Culture and Business Management, 14(1), pp.109-130. Ritala, P. and Aarikka-Stenroos, L., 2016, June. Disruptive innovation in ecosystems: Path-creation and institutional barriers. In ISPIM Innovation Symposium (p. 1). The International Society for Professional Innovation Management (ISPIM). Sampere, J.P.V., Bienenstock, M.J. and Zuckerman, E.W., 2016. Debating disruptive innovation. MIT Sloan Management Review, 57(3), p.26. Schwerte, D.M., Blish, N.A. and Phinney, D.P., Kodak Alaris Inc., 2016. System for verifying accuracy of a raster scanned image of a document. U.S. Patent 9,264,558. Shih, W., 2016. The Real Lessons from Kodak's Decline. MIT Sloan Management Review, 57(4), p.11. Strauss, J., 2016. E-marketing. Routledge. Read More