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Charles Baden-Fuller Editorial
Conquering the Unintended
We all know about the dangers of the unintended consequence.
How can we avoid the downsides, and how should we exploit the upsides? In
this issue we have four articles that approach this topic from very different
angles. They include looking at the dangers of being cautious in product line
extensions, the perils of planned change, how to get an exploratory alliance
to build a lasting competitive advantage and how to avoid the worst consequences
of patent expiry.
The opening piece by Filippo Carlo Wezel and Arjen van Witteloostuijn
look at the unintended consequences of trying to change in the face of market
pressures. Using the history of the UK Motor Cycle industry, the authors begin
by showing that firms with narrow product portfolios should beware of change.
Failure comes rather often to those who change too much, or too fast. Maybe
this seems intuitive, but their research then shows some more unexpected results.
While firms with wider product portfolios can take bigger steps without the
risk of failure, it seems that if they are too timid, they run the risk of
failure too! For these large product portfolio firms, doing too little, or
doing nothing at all, may have the unintended consequence of failure.
Julia Balogun looks at change programmes, and shows how well-laid
plans come adrift because of misunderstandings among middle managers. She
points out why failures in change can come about not because managers are
resistant to change, but because they misinterpret what is the change agenda.
As a result, the original good intentions of a change process may produce
unintended and often adverse consequences. She explains how top managers can
shape the mindsets of middle managers to reduce these risks.
Ian Hipkin and Pete Naudé trace some very positive
unintended consequences. They examine how alliances built strength from a
position of weakness. Their case is drawn from the industrial lubricants sector
where a pilot lubrication-service project with a partner developed over the
years to a full-scale collaborative high-technology arrangement with new systems
and new approaches to products and markets. The authors show how flexibility
in governance structures and alliance leadership were the key factors in creating
and exploiting changing opportunities, and why unintended consequences were
in this case turned to great advantage.
Finally, John (Jack) Pearce examines how companies can maintain
the momentum of success after patent expiry. He explores three key strategies:
launching generic products, layering innovations and creating line extensions.
Using examples, he shows how these strategies can be used to shield the firm
from some otherwise inevitable consequences of new competition.
Filippo Carlo Wezel and Arjen van Witteloostuijn From Scooters
to Choppers: Product Portfolio Change and Organizational Failure. Evidence from
the UK Motorcycle Industry 1895 to 1993 f.c.wezel@uvt
How often are researchers able to review the entire history of an industry?
This article looks at the ups and (mostly) downs of virtually a century
of motor-bike production in Britain, examining that most unarguable of success
measures e complete organisation failure. What the authors look at specifically
is the consequences for firms of increasing their portfolio width, to address
the question of ‘how much change is too much?’Examining the
pros and cons of flexibility and inertia arguments, and detailing the threats
represented by the scooter revolution and the entry of Japanese bikes into
the UK market, they conclude that, while any portfolio expansion entails
risk, the level of risk depends on the width of the existing portfolio.
For narrow-niche manufacturers, radical expansion could be fatal, as when
dabbling in the small-bike market nearly put paid to Harley-Davidson. But
where firms with broad portfolios can leverage their developed capabilities,
portfolio expansion appears to be a safer option than no change, and radical
expansions associated with lower risk than more timid ones. Thus the authors’
study of past failures yields some positive guidance for future success:
if your portfolio is narrow, advance carefully e but if is broad, it may
pay you to be bold!
Julia Balogun Managing Change: Steering a Course between
Intended Strategies and Unanticipated Outcomes j.balogun@city.ac.uk
Even the best-laid plans can result in surprising, and not always positive,
outcomes. For organisations seeking to implement a programme of change,
this is worrying, especially when some researchers put the rate of failure
of organisational change programmes to deliver against their intended aims
at up to 70 per cent. Until now, the literature that addressed this issue
has concentrated on prescriptive approaches aimed at improving the success
rates of change programmes. This paper takes a different approach. Its starting
point is the fact that change initiatives emanate from the top of an organisation,
and it is on the way down through the middle management, or the ‘‘change
recipients’’, that the original intention can become confused
and derailed. This does not necessarily mean that change recipients are
resistant; rather it means that their interpretation of the plans does not
match that of the change designers. In this paper therefore a sensemaking
framework is developed to demonstrate how both intended and unintended change
outcomes can result from the way change recipients make sense of senior
management change initiatives. This framework highlights the significant
impact of change recipients on actual outcomes, even in top-down programmes
of change, and suggests we need to reconsider both what we mean by ‘‘managing’’
change, and the way senior managers lead change. The author looks at a case
study of a privatised utility undergoing strategic change from a middle
manager perspective to illustrate how the framework can account for the
phenomenon of unintended outcomes. This shows how the outcomes develop and
therefore offers implications for the way we think about change. It suggests
that change recipients need to be viewed as active creators of change and
the translators of plans rather than passive reactors. This in turn requires
senior managers to be more active in engaging with these individuals to
gain understanding and alignment of their objectives.
Ian Hipkin and Pete Naudé Developing Effective Alliance
Partnerships: Lessons from a Case Study I.B.Hipkin@exeter.ac.uk
The industrial lubrication sector is full of competition
e so how can one firm create a competitive advantage for itself? This article
describes how a pilot lubrication service to two South African mines developed
over three years into a full-scale collaborative hightechnology alliance between
providers and end-users, covering lubrication scheduling, machine condition
monitoring and spares management. The authors define the management of strategic
objectives, technological expertise and governance structures - and their
interaction - as their three themes, arguing that the last can be the most
significant. The case study story shows how governance structures evolved
from limited initial objectives as expert partners followed their noses so
that learning, innovation and opportunistic experimentation created information
from data, and knowledge from information. Leadership of the alliance ebbed
and flowed between partners, as first technological expertise and later knowledge
management became the chief focus of alliance momentum. Governance
structure, at first too tight, and then too loose, stabilised as the knowledge-based
service was eventually defined.
John A. Pearce II How Companies Can Preserve Market Dominance
After Patents Expire John.Pearce@Villanova.edu
Patents provide market protection for companies that invent
any process or product and therefore they influence financial success. In
industries with high levels of innovation, this influence reaches a critical
level as the deadline for the end of patent protection looms because company
profit streams can run dry as quickly as they began when the patented products
were first introduced. Rival companies will be keen to jump on the success
of a product with their own, often cheaper, versions as soon as the patent
on the original expires. This article is designed for executives who want
to forestall the impact of such competition and to extend the profitability
of the product or process, thereby increasing the rewards for innovation.
The author offers three options that executives can consider in their search
for strategies that prepare them for operating without patent protection.
These strategies have been successfully implemented by patent-sensitive companies
and are therefore promising candidates for adaptation. The strategies are:
pre-emptively launching a generic product; layering innovations; and creating
line extensions. To illustrate the value and broad potential of these strategies,
each option is presented with examples of its successful implementation in
the pharmaceutical, semiconductor and software industries.
To understand why the strategies have proven successful, and to prescribe
the context in which the strategies have optimal potential, the nature of
patent protection is discussed. Special emphasis is placed on competition
from generics in the pharmaceutical industry and threats from imitators in
the semiconductor and software industries. The article concludes with a discussion
of the importance of midrange strategies, such as pre-expiration options,
in clarifying the company’s competitive stance.
This issue is available in full on-line at www.sciencedirect.com
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