Complacency bad. Foresight good.

Why do firms fail when faced with new technology or innovation? Clayton M. Christensen’s theory of disruptive technology asserts that the dominant/incumbent firm dismisses the early version of the technology as inferior and fails to respond to its development. But a study titled “Demystifying Disruption,” by Ashish Sood and Gerard Tellis, finds that incumbents produced disruptive (replacement) technologies just as often as those pesky up-starts.

The results of their analysis suggest that many aspects of the disruptive technologies theory are exaggerated.

In fact, the incumbents produced more than half of the new technologies that superseded the previous dominant technology.

In other words, Tellis says, the start-up slaying Goliath makes a good story, but represents only a small fraction of all cases.

Despite finding that the hazard of disruption from new entrants is less than previously thought, the authors caution incumbents not to get complacent, according to an article in the Marketing Science Institute’s bulletin Insights from MSI (Winter 2010). Sometimes new entrants do have surprising capabilities to be disruptive and trigger an incumbent’s loss of market dominance. The losers are the ones with the complacent internal culture. “Put simply,” the article says, “complacency regarding the potential appeal of of new technology to consumers is more damaging than the advent of new technology itself.”

Survival, Sood says, often depends on “how well a company predicts its future trajectory on one or more dimensions of technology performance.”

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Twitter: RT @mitchbetts When dominant vendors get beaten by newcomers, it’s a sign they were complacent, short-sighted. http://wp.me/p5bxZ-7O

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