Reversing Course: Competing Technologies, Mistakes, and Renewal in Flat Panel Displays

Strategic Management Journal, Forthcoming

42 Pages Posted: 22 Jun 2010 Last revised: 26 Jun 2015

See all articles by J. P. Eggers

J. P. Eggers

New York University (NYU) - Leonard N. Stern School of Business

Date Written: June 25, 2015

Abstract

Research Summary: The study explores renewal in a novel but understudied context – an era of ferment with competing technological options. It focuses on IBM’s transition from market leadership in a failed path (plasma) to leadership in the emerging dominant technology (LCD) in the 1980s. Interviews and internal documents offer two primary factors explaining renewal at IBM. First, IBM Research had a hybrid structure that captured the benefits of both centralized and decentralized R&D. Second, middle managers shaped senior management cognitive frames to focus on business-related issues instead of specific technical issues, thus bypassing biases often resulting from failure. The study offers an integrated framework on what facilitates flexibility at the technology, organization, and decision making levels. This flexibility helps firms survive a turbulent era of ferment.

Managerial Summary: Firms facing technological uncertainty may need to recover from unlucky bets. But responding to failure is politically and organizationally difficult. This study explores how IBM recovered from its failed bet on plasma displays to lead the LCD display market. This study identifies six key factors, highlighting two. First, IBM’s researchers received centralized funding, but could also receive funding directly from division managers. This structure helped preserve options and variety. Second, internal LCD champions focused on the business case for displays, and not technology. This fostered technology agnosticism and helped avoid managerial biases from failure. For managers looking to use real options to maintain flexibility in an uncertain environment, this study offers clear suggestions related to design and decision making that can foster flexibility.

Keywords: strategic renewal, failure, real options, competing technologies, era of ferment

Suggested Citation

Eggers, J. P., Reversing Course: Competing Technologies, Mistakes, and Renewal in Flat Panel Displays (June 25, 2015). Strategic Management Journal, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1628239 or http://dx.doi.org/10.2139/ssrn.1628239

J. P. Eggers (Contact Author)

New York University (NYU) - Leonard N. Stern School of Business ( email )

44 West 4th Street
Suite 9-160
New York, NY NY 10012
United States

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