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Long Range Planning

39/1 February 2006

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Charles Baden-Fuller Editorial

Conquering the Unintended

We all know about the dangers of the unintended consequence. How can we avoid the downsides, and how should we exploit the upsides? In this issue we have four articles that approach this topic from very different angles. They include looking at the dangers of being cautious in product line extensions, the perils of planned change, how to get an exploratory alliance to build a lasting competitive advantage and how to avoid the worst consequences of patent expiry.

The opening piece by Filippo Carlo Wezel and Arjen van Witteloostuijn look at the unintended consequences of trying to change in the face of market pressures. Using the history of the UK Motor Cycle industry, the authors begin by showing that firms with narrow product portfolios should beware of change. Failure comes rather often to those who change too much, or too fast. Maybe this seems intuitive, but their research then shows some more unexpected results. While firms with wider product portfolios can take bigger steps without the risk of failure, it seems that if they are too timid, they run the risk of failure too! For these large product portfolio firms, doing too little, or doing nothing at all, may have the unintended consequence of failure.

Julia Balogun looks at change programmes, and shows how well-laid plans come adrift because of misunderstandings among middle managers. She points out why failures in change can come about not because managers are resistant to change, but because they misinterpret what is the change agenda. As a result, the original good intentions of a change process may produce unintended and often adverse consequences. She explains how top managers can shape the mindsets of middle managers to reduce these risks.

Ian Hipkin and Pete Naudé trace some very positive unintended consequences. They examine how alliances built strength from a position of weakness. Their case is drawn from the industrial lubricants sector where a pilot lubrication-service project with a partner developed over the years to a full-scale collaborative high-technology arrangement with new systems and new approaches to products and markets. The authors show how flexibility in governance structures and alliance leadership were the key factors in creating and exploiting changing opportunities, and why unintended consequences were in this case turned to great advantage.

Finally, John (Jack) Pearce examines how companies can maintain the momentum of success after patent expiry. He explores three key strategies: launching generic products, layering innovations and creating line extensions. Using examples, he shows how these strategies can be used to shield the firm from some otherwise inevitable consequences of new competition.

 

Filippo Carlo Wezel and Arjen van Witteloostuijn From Scooters to Choppers: Product Portfolio Change and Organizational Failure. Evidence from the UK Motorcycle Industry 1895 to 1993 f.c.wezel@uvt

How often are researchers able to review the entire history of an industry? This article looks at the ups and (mostly) downs of virtually a century of motor-bike production in Britain, examining that most unarguable of success measures e complete organisation failure. What the authors look at specifically is the consequences for firms of increasing their portfolio width, to address the question of ‘how much change is too much?’Examining the pros and cons of flexibility and inertia arguments, and detailing the threats represented by the scooter revolution and the entry of Japanese bikes into the UK market, they conclude that, while any portfolio expansion entails risk, the level of risk depends on the width of the existing portfolio. For narrow-niche manufacturers, radical expansion could be fatal, as when dabbling in the small-bike market nearly put paid to Harley-Davidson. But where firms with broad portfolios can leverage their developed capabilities, portfolio expansion appears to be a safer option than no change, and radical expansions associated with lower risk than more timid ones. Thus the authors’ study of past failures yields some positive guidance for future success: if your portfolio is narrow, advance carefully e but if is broad, it may pay you to be bold!

 

Julia Balogun Managing Change: Steering a Course between Intended Strategies and Unanticipated Outcomes j.balogun@city.ac.uk


Even the best-laid plans can result in surprising, and not always positive, outcomes. For organisations seeking to implement a programme of change, this is worrying, especially when some researchers put the rate of failure of organisational change programmes to deliver against their intended aims at up to 70 per cent. Until now, the literature that addressed this issue has concentrated on prescriptive approaches aimed at improving the success rates of change programmes. This paper takes a different approach. Its starting point is the fact that change initiatives emanate from the top of an organisation, and it is on the way down through the middle management, or the ‘‘change recipients’’, that the original intention can become confused and derailed. This does not necessarily mean that change recipients are resistant; rather it means that their interpretation of the plans does not match that of the change designers. In this paper therefore a sensemaking framework is developed to demonstrate how both intended and unintended change outcomes can result from the way change recipients make sense of senior management change initiatives. This framework highlights the significant impact of change recipients on actual outcomes, even in top-down programmes of change, and suggests we need to reconsider both what we mean by ‘‘managing’’ change, and the way senior managers lead change. The author looks at a case study of a privatised utility undergoing strategic change from a middle manager perspective to illustrate how the framework can account for the phenomenon of unintended outcomes. This shows how the outcomes develop and therefore offers implications for the way we think about change. It suggests that change recipients need to be viewed as active creators of change and the translators of plans rather than passive reactors. This in turn requires senior managers to be more active in engaging with these individuals to gain understanding and alignment of their objectives.

 

Ian Hipkin and Pete Naudé Developing Effective Alliance Partnerships: Lessons from a Case Study I.B.Hipkin@exeter.ac.uk

The industrial lubrication sector is full of competition e so how can one firm create a competitive advantage for itself? This article describes how a pilot lubrication service to two South African mines developed over three years into a full-scale collaborative hightechnology alliance between providers and end-users, covering lubrication scheduling, machine condition monitoring and spares management. The authors define the management of strategic objectives, technological expertise and governance structures - and their interaction - as their three themes, arguing that the last can be the most significant. The case study story shows how governance structures evolved from limited initial objectives as expert partners followed their noses so that learning, innovation and opportunistic experimentation created information from data, and knowledge from information. Leadership of the alliance ebbed and flowed between partners, as first technological expertise and later knowledge management became the chief focus of alliance momentum. Governance
structure, at first too tight, and then too loose, stabilised as the knowledge-based service was eventually defined.

 

John A. Pearce II How Companies Can Preserve Market Dominance After Patents Expire John.Pearce@Villanova.edu

Patents provide market protection for companies that invent any process or product and therefore they influence financial success. In industries with high levels of innovation, this influence reaches a critical level as the deadline for the end of patent protection looms because company profit streams can run dry as quickly as they began when the patented products were first introduced. Rival companies will be keen to jump on the success of a product with their own, often cheaper, versions as soon as the patent on the original expires. This article is designed for executives who want to forestall the impact of such competition and to extend the profitability of the product or process, thereby increasing the rewards for innovation.
The author offers three options that executives can consider in their search for strategies that prepare them for operating without patent protection. These strategies have been successfully implemented by patent-sensitive companies and are therefore promising candidates for adaptation. The strategies are: pre-emptively launching a generic product; layering innovations; and creating line extensions. To illustrate the value and broad potential of these strategies, each option is presented with examples of its successful implementation in the pharmaceutical, semiconductor and software industries.
To understand why the strategies have proven successful, and to prescribe the context in which the strategies have optimal potential, the nature of patent protection is discussed. Special emphasis is placed on competition from generics in the pharmaceutical industry and threats from imitators in the semiconductor and software industries. The article concludes with a discussion of the importance of midrange strategies, such as pre-expiration options, in clarifying the company’s competitive stance.

 

 

This issue is available in full on-line at www.sciencedirect.com

 
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