The inertia of incumbency

Providers of what eventually  become seen as “Legacy” systems have the most to lose from a disruptive innovation, so they usually fight the hardest to maintain the status quo simply because they have so much to loose, and the collective vision in the business obscures the potential of the innovation to disrupt and destroy their existing franchise.

 Kodak, invented digital photographic  technology, but the margins in photo processing business were too attractive for them to disrupt themselves. Kodak simply failed to take the next step and go beyond film, and as a result is a shadow of its former self, its cash cow of film processing virtually gone.

Similarly, Polaroid “owned” instant photography, they had figured out how to apply emerging digital technology to photography, but the sunk cost of the existing business model was huge, they were a virtual monopoly, they underestimated the market  drastically, so they sat on it, believing they had too much to loose by disrupting the ststus quo. Too bad!

Look at the frantic legal rear-guard action that has been a feature of the on-line music war, and the current woes of the newspaper industry, in both cases the losers have been the former incumbents, who had the game sewn up for years, and had the resources to remake their business model.

The only way to ensure longevity, is to be the one disrupting your own market.

 

 

About strategyaudit

StrategyAudit is a boutique strategy and marketing consultancy concentrating on the challenges of the medium sized manufacturing businesses that make up the backbone of our economy. The particular focus is on their strategic and marketing development. as well as the business and operational efficiency improvements necessary for day to day commercial survival. We not only give advice, we go down "into the weeds" to ensure and enable implementation.
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2 Responses to The inertia of incumbency

  1. Pingback: The disruption of photography « Strategyaudit's Blog

  2. Pingback: “Unlearning” « Strategyaudit's Blog

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