Strategic Innovation
By breaking the rules of the game and thinking of new ways to compete, a company can strategically redefine its business and catch its bigger competitors off guard. The trick is not to play the game better than the competition but to develop and play an altogether different game.
Topics
In spring 1902, Jim Penney opened his first dry-goods store in Kemmerer, Wyoming, and began his attack on the big retail chains of the time, including Sears and Woolworth, which date back to 1886 and 1879, respectively. By 1940, J.C. Penney had grown to 1,586 stores and annual sales of $302 million.
- In January 1936, Lever Bros., a subsidiary of Unilever, introduced a new food product in the U.S. market, a vegetable shortening called Spry. The new product went up against Procter & Gamble’s established market leader, Crisco, which had been introduced in 1912. Spry’s impact was phenomenal: in a single year, it had reached half the market share of Crisco.
- In the early 1960s, Canon, a camera manufacturer, entered the photocopier market — a field totally dominated by Xerox. By the early 1980s, having seen such formidable competitors as IBM and Kodak attack this same market without much success, Canon emerged as the market leader in unit sales. Today, it is a close second to Xerox.
- In 1972, Texas Instruments, a semiconductor chip supplier, entered the calculator business — a field already occupied by Hewlett-Packard, Casio, Commodore, Sanyo, Toshiba, and Rockwell. Within five years, TI was the market leader.
- In 1976, Apple introduced the Apple II in direct competition to IBM, Wang, and Hewlett-Packard in the professional and small business segment and Atari, Commodore, and Tandy in the home segment. Within five years, Apple had become the market leader.
- In 1982, Gannett Company Inc. introduced a new newspaper into a crowded field of 1,700 dailies. By 1993, USA Today had become a top-selling newspaper with an estimated 5 million daily readers.
- In 1987, Howard Schultz bought Starbucks Coffee from the original owners. In the next five years, he transformed the company from a chain of 11 stores to some 280 stores in 1993. Sales revenues grew from $1.3 million in 1987 to $163.5 million in 1993.
- In the late 1980s, Yamaha tried to revitalize its declining piano business by developing digital technology so customers could either record live performances by the pianists they’d chosen or buy such recordings on diskettes and play the same composition on their pianos. Sales in Japan have been explosive.
References (22)
1. There is only one major exception to this generalization: in cases when the attacker utilizes a dramatic technological innovation to attack the leader, seven of ten market leaders lose out. See: J.M. Utterback, Mastering the Dynamics of Innovation (Boston: Harvard Business School Press, 1994).
2. S. Davies, P. Geroski, M. Lund, and A. Vlassopoulos, “The Dynamics of Market Leadership in U.K. Manufacturing Industry, 1979–1986” (London: London Business School, Centre for Business Strategy, working paper 93, 1991); and P. Geroski and S. Toker, “The Turnover of Market Leaders in U.K. Manufacturing: 1979–1986” (London: London Business School, mimeo, 1993).
