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TEDx Talks
Published: 2017-09-06
Source: https://www.youtube.com/watch?v=jz99kqjhZfI
and arrive at the story the little guy who threw some clever strategy managed to take down the big guy we love telling that story through the ages and in business women telling that story a lot lately we see no industrial giants of our last generation tech firms fall before start ups and upstarts in the cellular industry which I study a lot we've seen Motorola Nokia rim
Broadway they've all gone from completely dominant to big player in a handful of years it's pretty striking so it's not surprising were fascinated by the theory of disruptive innovation it tries to tell us some of Ryan and why these firms are vulnerable these dominant players might be vulnerable and in my own research on their wireless service industry I found some suggestive evidence of this power of
start ups this effectiveness of start ups when we compare how firms ensuring the wireless service industry grow we compare startups two entrance established players coming in from outside we see the startups grow faster initially but over time their growth falls off they enter as triumphant debates in terms of growth but little by little they fall back until actually growing more slowly than these established players and
we need to change comes to the industry they fall even further behind so these established players they actually seem to have some adaptive advantages we might be interested in that's why I want to talk about a piece of research that we think may shed some light on what sorts of advantages he's established players out the defense about where there is a band is coming from just
think of the startups when they first come into Cerebus cellular industry what advantages did they have that make them these past glories Robert starting from scratch they can put the pieces of their business together so that we operations the marketing the placing all the elements of the business model really work together effectively at this moment of entry their masters of strategic integration but over time changes
happen the industry there acquired those parts to be put together in a new fashion and it appears that the established players the giant telcos the cable television companies they're actually noticing and reacting to these changes they're managing to adopt now this is mostly speculation speculation that we're trying to interpret what we find in the growth data here she did it surgeon immigration is often difficult to
see in practice it's not about the measure and even if we think we observe that somewhere there is %HESITATION even harder to say with confidence that the performance of some firm is actually the results of this integration because these companies are run by smart people they're doing the best they have with the elements of the company and they're anticipating what might happen in this industry so
in terms of research immigration is a pretty tough nut to crack yeah around the time there's finishing this other study on this other industry I was moving to McCartney joining the department of management technology and one boss right into my office well it was a PhD student according well trained in methods interested in strategy and organization and deeply passionate about cars and motor sports yeah well
this one is a huge Formula One fan knows the sport inside and out and is a fascinating sport I'm not an expert but I've learned something about it let the cars are miracles of modern engineering they will do things that those of us in our everyday because I can't quite imagine the kind of performance that teams out of them and they do it with up to
ten thousand precision parts carefully integrated the teams are marvels of organization they run huge budgets they have as many as a thousand workers in their system and they manage brought supply chains as I recall puts it who is a former leader of Williams racing no relation aren't we inside of Iran requires mastery not just a metal technical disciplines but also the economics and the politics that
are essential to the competitive position of each team so multi dimensional sport a lot going on in these dimensions lined up with you know are very important in business and yeah boss is aware of where the official observers of this industry and sets of fans track every aspect of the sport so we can see not just how the teams in their drivers are performing and races
we can observe changes to the car to different components of the system and when the reported to have problems that's in engines difficulties with aerodynamics problems with with breaks so you want to use this to study look some of these teams are actually better at the strategic integration than others their staff yeah changes to the call of the engineering of the collar and whether that results
in better performance fewer problems in the car and then faster racing but at this broad level of the data that you don't find much in the way of stable powders now there's another aspect of the sport I need to tell you about it and that's the rules the governing body of Formula One sets wide ranging rules they cover and restrict aspects of the car operations of
the team and from season to season they frequently change these rules they may change them to improve the parity between tunes they sometimes change them further financial benefit of the spell and sometimes for other reasons what we discovered is that sometimes these rule changes require a team to change the supplier for individual component and this looks like a classic integration challenge who seems more to ride
to work with the new parts build a new relationship with the supplier and well designing and improving and racing their car so we want to see %HESITATION we want to see what happens with this integration challenge we choose a real change from two thousand seven for the first time the sport announces a single tyre supplier for the entire sport before that some teams and work with
Bridgestone others with Michelin as a researcher this looks a lot like a naturally occurring experiments we have a control group jeans it didn't work with Bridgestone the past after the rule change can continue to work with bridge down yeah treatments etcetera teams who are subject to this new integration challenge those inability with Michelin now they have to work with without bridge down and we can compare
the performance of these two different groups and see how they react with the system of the car and how that impacts their performance so what do we see in the data well not surprisingly the teams that are forced to change supplier they see their performance fall it will look more deeply at what we can observe the car they have more problems with their car no problems
with the tires shutter but also with other components of the car so this change entire supplier is cascading through the system it's creating changes and potential problems with other components and not tunes are reacting to those problems the say that we're strategy researchers this is just lower interest in that are same tunes actually better at adapting to this change than others they want to find that
there are some differences across the successful adapters and yellows then they make more changes to the car they have fewer problems and will perform better in the races but to understand what kind of changes are really making a difference any detail about one other concept from the study and that is an engineering dependence matrix with a mouthful what it means it basically is it's a map
of how the different elements of a system relate to one another which ones are tied more closely and which were more distant imagine you go because of the components of a car assemble islands your engine your chassis the steering and some of those islands are closer together and they have a bridge between them when others are further apart and there's no bridge the dependence matrix is
basically a map of those bridges so you take this to the data and that %HESITATION so one vote from the one car yeah talks to end that serve as a number of retired from the run engineers some industry experts and and this is what makes level of what we get back took just a simple component the second call from there that's a spark plug lose one
connection from that to the rest of the car it's linked to the engine but the more typical component will be connected to at some other systems in the car then we found we bring this to the data but not and changes are having the same effect this matrix allows us to separate changes in systems that are very far not closely connected to tires them those are
much more closely linked and what we find is only changes to tie a reluctant related components that are affecting the performance of the team not used other systems and it's not having the same effect in the treatment group it's only movies these teams that were forced into this change they're seeing a difference and they are finding the more changes they make to other components connected to
tie us with fewer problems they're having with their car and the faster they are in races so it really looks like when this tire change happens some teams are proceeding how it flows through the system they're noticing the potential problems that it introduces into the system and the only acting there solving those problems more quickly than their competitors cat so these are the strategic integrators of
Formula One and in terms of up race day performance it's decisive no we will defend our space in this is going to study with the other aspects of integration and adaptation we find for instance that miss ability to integrate opposed almonds at the edge of the organization we recruit changes by suppliers to components that suppliers changed over that suppliers control doesn't have the same effect on
performance we went through with their disability arises it's not teams with more human capital is not teams with the leaders had more experience in the industry it's the more mature tunes pursuing work together longer we're figuring out this adaptation but I have time to delve into those other other results more out more today we want to be with it's just this notion of strategic integration it
really doesn't some teams symbolization some companies have a better idea of how the parts of their business go together and when some change requires that they adopt that they'll figure it out work quickly Kelly was back to the cellular study I mentioned the beginning this looks like concrete evidence that we saw in the original study that some improvement these established players are now able to understand
how changes affect the system and take the system apart and put it back together to adopt and be more successful yeah this mod yawn he's graduated from the the because the PAC program with flying colors excellent in his father's heart well into our study so he now is a manager in North America for a Ferrari one of the giants of by a familiar name and and
