Discontinuous technologies (often the result of ‘disruptive innovation’) emerge at the periphery of organizational vision, requiring fundamental changes in business structures in order to be adopted successfully. So it is not surprising that they present particularly demanding challenges for executives. This Idea explains why organizational identity has an important role to play in dealing with this type of technological change.
Discontinuous technologies refers to when new products are created that end up transforming existing markets, such as cloud computing, digital photography, 3D printing, online news, etc. Not surprisingly, they often pose a critical challenge for executives, and how they deal with such major paradigm shifts has formed the basis of a number of recent articles. In a 2013 working paper, researchers from the University of St. Gallen and IMD suggest that an organization’s identity (i.e. the perception of ‘who we are as an organization’) plays a crucial role in how it adapts to discontinuous technologies.
Nadine Kammerlander, Andreas Konig and Albrecht Enders set out to examine two questions: first, which identity dimensions or attributes are prominent in organizations in the context of discontinuous change? Secondly, how do the various dimensions of identity contribute to different organizational responses to such innovations?
Through their studies, Kammerlander, Konig and Enders narrow down to two dimensions of organizational identity that surface as particularly salient in the context of discontinuous change: ‘focus’ and ‘locus’. They found that these are strongly influential on strategic behaviour.
Focus of identity captures the degree to which the members of an organization consistently define their competitive arena, inclusively or exclusively; some of these organizations use an inclusive terminology when describing what is central to their organizations, whereas others define this more narrowly. The exclusive organizations tend to stick to their established business model and are less likely to commercialize new innovations than ‘inclusive’ organizations.
Locus of identity refers to the extent to which an organization’s cognitive and motivational centre is the organizational self or the environment. Kammerlander, Konig and Enders found this to be most strongly related to the speed of the response to discontinuous innovation and technology adoption. In fact, the more environment-centric an organization’s locus of identity is, the earlier it is likely to respond actively to discontinuous technologies.
The combination of ‘inclusive focus’ and ‘internal locus’ seems to entail the most novel and high-quality innovations, highlights Kammerlander; hence, one might say that this is the best one.
Methodology: Using a sample of 14 of the top 100 businesses in the German publishing industry, the researchers collected data through: interviews with members of the firms and industry experts; archival documents including business publications and internal documents, all ranging from the mid-1990s to 2011; supplementary data such as follow-up conversations and surveys.
Discussing this research, Kammerlander acknowledges that changing an organization’s identity is challenging and can take a lot of time; however, this is sometimes necessary in which case she recommends the following:
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