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Chapter 11

chapter 11 MGM102.docx

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Dave Swanston

A paradigm shift occurs when a new technology or business model comes along that dramatically alters the nature of demand and competition Paradigm shifts appear to be more likely in an industry when one or more of the following conditions are in place: 1. the established technology in the industry is mature and approaching or at its natu- ral limit. 2. a new disruptive technology has entered the marketplace and is taking root in market niches that are poorly served by established companies that use the estab- lished technology 3. a company develops a new business model that is radically different from that used by competitors, enabling it to capture more demand and put its rivals on the defensive when a technology approaches its natural limit, research attention turns to possible alternative technologies. Christensen uses the term disruptive technology to refer to a new technology that gets its start away from the mainstream of a market and then, as its functionality improves, invades the main market Christensen noted that a new network of suppliers and distributers typically grow up around new entrants business model- refers to the way in which an enterprise intends to make money punctuated equilibrium- holds that long periods of equilibrium, when an industry’s structure is stable, are punctuated by periods of rapid change when industry structure is revolutionized by innovation organizational inertia- we mean internal and external forces that make it difficult to change the strategy or organization architecture of an enterprise. These inertia forces include cognitive schemata, internal political constraints, organizational culture, strategic commitments and capabilities, and external institutional constraints. cognitive schemata- which are mental models of the world their enterprise inhabits These mental models include beliefs about what works and does not work in their business and about what is important and unimportant. These models are based on experience management teams with a shared cognitive schema tend to ignore events, data, and suggestions that fall outside their schema Strategic commitments­ a firm’s investments in tangible and intangible assets to support a  particular way of do­ ing business (a particular business model Once a firm has made a strategic commitment, it will have difficulty responding to new  competition if doing so requires a break with this commitment. When established firms have  deep commitments to a particular way of doing business and have developed supporting  capabilities, they may be slow to imitate an innovating firm’s strat­ egy or adopt radical new  technology by their early success that they be­ lieve more of the same type of effort is the way to future  success: They develop powerful cognitive schemata about what works. Unfortunately these ideas  can be invalidated by the rise of new technologies, but the managers may not recognize this until  it is too late. organizations are characterized by considerable inertia forces that impede organizational  adaptation to new competitive realities the failure of organizations to adapt rapidly to new market realities is a major cause of corporate  decline. there are four steps in a successful organizational change process:  1. leadership committed to change • Organizations cannot change unless their leaders recognize the need for change and are  committed to pushing it through 2. unfreezing the organization • Unfreezing an organization involves confronting all employees with the need for change  and getting them to believe that change is necessary. 3. moving the organization toward a new strategic and organizational configuration • Moving an organization entails changing management, strategy, organization architec­  ture, and employee behaviour. Movement requires action. 4. and refreezing the organization in its new configuration • Refreezing an organization involves trying to solidify its new strategy and architecture so  that the desired employee behaviour becomes second nature quantum innovations­ Innovations that incorporate new technology and disrupt competition,  shifting the dominant paradigm incremental innova
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