Driven by the pressure to innovate, companies facing major technological change have wholeheartedly embraced management gurus’ advice on how to develop creative, breakthrough products. As a result, corporate America is flush with incubators, skunk works and innovation silos.
But has the pendulum swung too far? New technologies are obviously important, but even in today’s fast-paced environment, they can take a long time to substitute for the old. In the meantime, incremental innovation based on old technologies can help a company survive.
When Sony announced its Mavica electronic camera in 1981, headlines trumpeted that “Film Is Dead.” But it took 28 more years for Kodachrome, the film immortalized by Paul Simon, to finally die this past June.
E-book software by companies like Electronic Book Technologies was released in the early 1990s. Yet despite the recent buzz over the Kindle and other electronic reading devices, e-books are still less than 5 percent of overall book sales.
The reality is that most technologies eventually die. But unlike the ancient Greeks, who believed their destiny was controlled by the Fates, today’s managers need not assume that an old technology’s fate is predetermined. Companies can proactively manage the innovation endgame. Continuing improvements to extend the life of technology, particularly given the attractive margins on the old, can be a wise business decision — and not necessarily a reflection of narrow-mindedness.
The key is to extend the profitable life of the old just long enough to have a fighting chance in the new. But how?
Customers move at different speeds, so investments should be focused on market segments that most value the old. Criticisms of Kodak’s digital strategy abound, but one overlooked strength has been its ability to maintain its market position in segments like motion pictures, which, though small, are moving to digital more slowly.
History provides another illustration. Mechanical machines that used molten lead had dominated the typesetter industry for more than 60 years when photography-based machines were introduced in 1949. Along with many new entrants, the leading old-technology companies, Mergenthaler Linotype and Intertype, invested heavily in the new technology.
But the mechanical technology “was well known by the people who were using it,” Carl Schlesinger, a former typesetter operator for the New York Times and author of two books on the history of printing, said in a recent interview. The new technology required customers, particularly unionized newspapers, to make huge investments in retraining.
LINOTYPE
So throughout the 1950s and 1960s, Mergenthaler Linotype and Intertype continued to develop highly innovative mechanical machines, Herb Klepper, a lead engineer for Mergenthaler at the time, said in a recent interview. The speed of the old machines more than doubled, and newspapers kept using them. By 1978, when the Times retired its old mechanical machines, Mergenthaler Linotype was an established leader in the new technology, and Intertype, while not a leader, had survived to move on to yet the next generation of technology, digital typesetters.
Now, of course, newspapers are struggling to extend the life of print so they can develop new capability and business models for the Web and other forms of electronic distribution.
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