Managing through cycles of convergence
Anderson and Tushman (1991) note that top management has a tendency to pay attention to industry recessions, along with a willingness to make painful cost-cutting moves when demand drops. However, it is not that form of competition which threatens the survival of firms and its rivals. It is argued that above all technological change, not downturns in demand, are associated with shake-outs. This requires a need for maintaining the organization’s ability to navigate through cycles of technological change, characterized by technological discontinuities and implied creative destruction. After all, managerial efforts for directing the firm’s marketing and financial operations provide a solely incremental instrument for improving profitability. On the contrary, the capability to ride waves of product and process innovation affect not only the profitability, but in a more long-term perspective, the viability of the entire firm (Anderson and Tushman, 1991).
KeywordsBusiness Model Dynamic Capability Convergence Process Capability Development Cyclical Model
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- 1.In particular Teece et al. (1997) suggest that the essence of dynamic capabilities and competitive advantage of a firm rests on the three dimensions of processes, positions and paths. The process dimension of a dynamic capability is based on distinctive organizational and managerial processes, i.e., ways of getting things done through coordinating, integrating, combining or learning. In particular, the dimension describes properties on a firm’s ability to reconfigure and transform. The dimension of position refers to a firms specific assets, that represent a basis for competitive advantage. These can consist of technological, knowledge-based, complementary, financial, reputational, structural, institutional as well as market assets. Finally, the path dimension captures the idea of a firm’s position and paths ahead being a function of previous paths. Hence, the match between endogenous path dependency and exogenous technological opportunities determines a firm’s ability to develop itself into new directions (Teece et al., 1997).Google Scholar
- 3.For similar considerations on cumulative embeddedness of cyclical systems, cf. Hacklin, Lopperi, Bergman, and Marxt (2004b).Google Scholar
- 4.In examining the exogenous impetus to the organizational perspective, Tushman and Romanelli (1985) stress the alternation between cycles of organizationally convergent periods “which elaborate structures, systems, controls, and resources toward increased coalignment”, as well as mechanisms of reorientation, which consist of “periods of discontinuous change where strategies, power, structure, and systems are fundamentally transformed towards a new basis of alignment” (Tushman and Romanelli, 1985, p. 173).Google Scholar