The Incumbent’s Advantage
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MIT_CISRwp336_IncumbentsAdvantage.pdf
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314.41 KB
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Author(s)
Iansiti, Marco
McFarlan, F. Warren
Westerman, George
Date Issued
April 1, 2003
Publisher
Cambridge, Mass.: Center for Information Systems Research, Sloan School of Management, Massachusetts Institute of Technology
Citation
Iansiti, Marco, F. Warren McFarlan, and George Westerman. “The Incumbent’s Advantage.” Working paper 336, Center for Information Systems Research, Sloan School of Management, Massachusetts Institute of Technology, 2003. https://dspace.mit.edu/handle/1721.1/175307.
Series/Report no.
MIT Sloan School of Management Working Paper 4315-03
CISR Working Paper 336
Abstract
One of the most important decisions in responding to a technological or strategic innovation is choosing how to organize the new venture. Separating the new venture from the old organization reduces conflict and enables the new venture to generate speed and focus. On the other hand, keeping it integrated allows the venture to leverage valuable resources and skills from the existing organization. In this paper, we examine the advantages and disadvantages of different approaches to organizing the new venture, both early and late in the innovation's life cycle. We find there are three viable approaches to organizing. Of these three, the choice of using separated or integrated approaches to launch the innovation depends on each firm's unique capabilities and competitive situation. However, all three viable approaches are characterized by integration later in the life cycle. This integration is truly the incumbent's advantage: linking the people, processes, infrastructures and resources of the new and old to create powerful competitive synergies. We describe the three viable approaches and illustrate with examples of how firms used each effectively.
Subjects
Organizational Structure and Agility
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