Academic journal article
By Brown, Shona L.; Eisenhardt, Katleen M.
Administrative Science Quarterly , Vol. 42, No. 1
The punctuated equilibrium model of change assumes that long periods of small, incremental change are interrupted by brief periods of discontinuous, radical change (Abernathy and Utterback, 1978; Tushman and Anderson, 1986; Rosenkopf and Tushman, 1995). Fundamental breakthroughs such as DNA cloning, the automobile, jet aircraft, and xerography are examples of radical change. The central argument of the punctuated equilibrium model is that change oscillates between long periods of stability and short bursts of radical change that fundamentally alter an industry (Gersick, 1991). Although incremental change is assumed to occur, radical change is the focus of interest in the punctuated equilibrium model (e.g., Tushman and Anderson, 1986; Romanelli and Tushman, 1994; Utterback, 1994).
While the punctuated equilibrium model is in the foreground of academic interest, it is in the background of the experience of many firms. Many firms compete by changing continuously. For example, Sears' president, Arthur Martinez, recently claimed, "If you look at the best retailers out there, they are constantly reinventing themselves" (Greenwald, 1996: 54). For firms such as Intel, Wal-Mart, 3M, Hewlett-Packard, and Gillette, the ability to change rapidly and continuously, especially by developing new products, is not only a core competence, it is also at the heart of their cultures. For these firms, change is not the rare, episodic phenomenon described by the punctuated equilibrium model but, rather, it is endemic to the way these organizations compete. Moreover, in high-velocity industries with short product cycles and rapidly shifting competitive landscapes, the ability to engage in rapid and relentless continuous change is a crucial capability for survival (Eisenhardt, 1989b; D'Aveni, 1994).
Several authors have begun to explore the implications of continous change, notably in pricing and routes within the airline industry (Miller and Chen, 1994), in charter shifts to capture constantly shifting market opportunities in the electronics industry (Galunic and Eisenhardt, 1996), and in market moves and countermoves (D'Aveni, 1994; Eisenhardt and Tabrizi, 1995). In these industries, the ability to change continuously is a critical factor in the success of firms. In addition, what is also becoming apparent is that this continuous change is often played out through product innovation as firms change and ultimately even transform through continuously altering their products (Burgelman, 1991; Chakravarthy, 1997). A classic case is Hewlett-Packard, which changed from an instruments company to a computer firm through rapid, continuous product innovation, rather than through an abrupt, punctuated change. In firms under-going continuous change, innovation is intimately related to broader organization change. Yet research to date has revealed very little about the underlying structures and processes by which firms actually achieve continuous innovation and, ultimately, change.
The purpose of this paper is to explore how organizations continuously change and thereby to extend thinking beyond the traditional punctuated equilibrium view, in which change is primarily seen as rare, risky, and episodic, to one in which change is frequent, relentless, and even endemic to the firm. In particular, we explore continuous change in the context of multiple-product innovation.
The setting is the high-velocity computer industry. This industry is an attractive one for this study because of its extraordinary rate of change. During the 1993-1995 period of this study, there was a growing convergence with telecommunications and consumer electronics, a rise in multimedia applications, assaults on standards, and the emergence of the Internet, all of which put a premium on the ability to change continuously, especially through multiple-product innovation. Moreover, this pace of change has gone on for many years within the industry, and coping with this change is a key to competitive success (e. …