This is a unique application of what has come to be a commonly-held viewpoint — that many of the most successful companies fail to innovate despite knowing that they need to.
We’ll read some literature on the subject that explores the issue from the business (and business scholars’) perspective, and see whether that is, in fact, true, and why (if so). But when companies are very large and influential, they often have other means at their disposal to thwart competition — means that invoke the law: intellectual property acquisition, litigation, and lobbying, just to name a few.
Higher education (and education in general) has been slow to innovate. Be thinking about this other industries that seem resistant to change. Why do you think that is? Are changes less likely – or less needed? Does the structure of the industry inhibit change? Are there aspects of some industries that should resist change? Perhaps in order to preserve things that have a more timeless value?
This article was interesting regarding the demise of companies like Atari, Kodak, Blockbuster. These companies all had sizable market shares in their peaks, but have gone into bankruptcy today because of economic innovations by competing companies such as Sony, Microsoft, Canon, Netflix and Redbox. While hindsight is 20/20 and we could all look back at Blockbuster’s decision to retain storefronts and their existing business model – in the early 2000’s, when streaming and mailed-to-you movies were beginning to be a realistic possibility, Blockbuster had a genuine decision to make: stick with success or innovate? Since Blockbuster was THE place to rent movies for many years during my childhood, it is easy to see why Blockbuster decided to wait and see. Innovation and Research & Development endeavors are not always successful. In a capitalistic economy, successful existing companies are often replaced over time by start-up companies with an innovative idea that has a product or service which is more consumer friendly. The hard part is recognizing how, when and where the existing companies will be replaced…
It is clear that companies like Atari and Blockbuster brought about their own demise by failing to redefine their services in a broader sense and more importantly, by failing to innovate. Although the failure to innovate can clearly affect the future of a company, it also seems to have far-reaching implications for the future of the nation. While it is true that the failure of companies like Blockbuster provide a window of opportunity for new American companies like Red Box to innovate and prosper, according to the attached article, it seems that the United States is failing to take advantage of this opportunity and falling behind in its ability too innovate (http://www.forbes.com/sites/johnlechleiter/2012/07/17/an-internal-failure-to-innovate-is-americas-greatest-global-threat/). With every American company that fails to innovate, the window for opportunity grows larger for entrepreneurs and corporations in other nations like Singapore (which is now ranked ahead of the United States for innovative competiveness) to think outside of the box and innovate. Although the article suggests that things like the corporate tax rate and other policies affect innovation, it seems to me that the larger problem in America is the unwillingness to redefine the services provided and adapt accordingly.
Although the J.D. degree will unlikely die because of a failure to innovate, I predict that some law schools (and higher education programs) will certainly die out if they cannot innovate and adapt to the needs of employers. I recently read the NY Times article about law school applications on the decline. ( http://www.nytimes.com/2013/01/31/education/law-schools-applications-fall-as-costs-rise-and-jobs-are-cut.html?_r=0 ). It should be apparent to potential students, educators, and firms that law schools in general are not meeting a certain demand.
The availability of law jobs has fallen over the years due to the economy, but part of the blame for poor job outlook may fall on the schools as well. Strong evidence indicates that law school tuition is inflated, but curricula that resist change may also be contributing to the falling number of applications. In my experience talking with practicing attorneys, most believe that law school does very little to prepare future lawyers. Attorneys also say that many law schools resist models that focus on clinical and practical skills in favor of the more archaic Socratic-style “book and exam” courses.
While law school ranking plays an important role on future job outlook, I think that we will likely see lower ranked schools die out not only because of inflated tuition costs, but because they cannot innovate to make their students more employable. The market for future law students is the market for future attorney positions. The market for law schools is the market of getting students to attend. If students see that a particular law school is not performing well with respect to job placement, that law school’s market will shrink.
As we have become more dependent on technology in our every day lives, the notion “innovate or die” has never been more true. Not only does every industry depend on innovations in technology to make their businesses more efficient, but individual consumers are also waiting for the newer/better/faster product to hit the market. People line up down the street for a new iPhone that really only has (relatively) minor improvements to the previous version. These minor, annual innovations has been the cornerstone for Apple’s business model ever since they revealed the first iPod. The introduction of “smartphones” changed the way we do business/communicate with each other, with Blackberry being among the first and best to do it. The term Crackberry was often used when the phone was first released because of the addictive-like use of the phones. Blackberry started this smartphone trend, but where did they go? Nowadays Blackberry’s are seen as relics. Out of date. As phones like the iPhone, Android, and now Galaxy gained traction in the smartphone market, Blackberrys seemed to fade into darkness. Blackberry’s were popular because they let you use email, internet, and phone all in one device, but then they failed to innovate. Texting, gaming, pictures/videos, social media and touch screens became the new development, and Blackberry didn’t keep up. Blackberry continued to hold themselves out as the phone of the businessman, whereas iPhones were for the younger generation with different interests. But over time the businessman realized he could get all of the same things from the iPhone, but with more. I loved my Blackberry. I even fought the pressure to get an iPhone. When I finally caved and got my first iPhone, I realized that I was the one missing out. Now, I’m likely to stick with the iPhone. This is despite the release of Blackberry’s newest phone (Z10) which is meant to compete more closely with the iPhone. This article: http://www.foxnews.com/tech/2013/01/28/can-new-phones-save-blackberry-brand/ points out the problems that the Blackberry brand (and their parent company Research in Motion) have had trying to keep up. The fact is, Blackberry failed to innovate in a timely manner, expecting their branding to sustain them, rather than adapting to the changes in technology. Is it too late? Only time will tell.
What I find most interesting about this article is the ignorance of Blockbuster, Atari, and Kodak. Innovate or die is not a new concept. I compare this to survival of the fittest. The test of time will always win. For example, the first calculator was the size of a small house. Similarly, the first form of typing letters was the type writer. Like Blockbuster and Atari, these innovations have gone by the wayside. In hindsight, it’s easy to criticize these companies for not being able to innovate in a competitive market. However, maybe these companies only had one amazing idea. Maybe these companies didn’t have the best staff available to make the necessary changes. I criticize these companies for not investing more time and money to trying to innovate the next best thing. Sitting by and watching your competitors overtake your market share is obviously not the best strategy. We can criticize or applaud the theory of “innovate or die,” but it will inevitably continue to happen as time moves forward. It is difficult enough to come up with one revolutionary idea. To come up with many more under pressure is entirely more difficult. Companies that try will fail. Companies that don’t try will fail. The trying effort is what counts. It’s better to go down with a fight.
Re: Why some industries are resistant to change.
In the short WSJ interview posted below, Priceline founder Jay Walker posits that the critical factor in determining the rate of innovation in a particular industry is whether the industry serves customers. Walker explains that “customers drive innovation because competition drives innovation.” In addition, Walker touches on the importance of failure to innovation: “You can’t have success if you’re not having failure… If you’re not striking out, you’re not hitting home runs.” It therefore seems that industries with the least amount of competition and risk-taking will be the most resistant to innovation.
Couldn’t figure out how to make an original post – so I thought this would be the best home for this article. I noticed this article while on LinkedIn this afternoon and I thought it was an interesting read that goes along with our class’ “entrepreneurial innovation” theme. The author, Jeff DeGraff, is a professor at the University of Michigan and is apparantly referred to as “the dean of innovation” because of his influence on the field. In this article, entitled “On the Hypocrisy of Innovation”, Jeff writes on how innovation and start-ups were rejected in MBA schools for decades only to become recently embraced. But even today, there is a bit of an “old-school” vs. “new school” battle in regards to how much MBA students should learn about entrepreneurism and alternative business models when giant corporations seem to be as profitable as ever. The article’s most interesting section is a brief explanation as to what innovation really is: “Remember it all starts with a lie”, “Befriend the new”, “Find your own undiscovered country”, and “Stop thinking about your own hypocrisy.” I would recommmend this article if you want to take a critical look at how “innovation” is viewed by our nation’s leading business school educators and some of the hypocrisy that coincides with their teachings.