Accelerating Adaptive Processes: Product Innovation in the Global Computer Industry

By Eisenhardt, Kathleen .. ..; Tabrizi, Behna N. | Administrative Science Quarterly, March 1995 | Go to article overview

Accelerating Adaptive Processes: Product Innovation in the Global Computer Industry


Eisenhardt, Kathleen .. .., Tabrizi, Behna N., Administrative Science Quarterly


Adaptation is a process of fundamental interest to organizational scholars. Historically, a debate has been shaped by two extreme perspectives. One is that organizations are inertial and so are unable to change significantly. The other is that organizations are malleable and can realign with evolving conditions. More recently, this debate has shifted from whether adaptation happens to how and when it occurs (Gersick, 1994). Punctuated equilibrium, which centers on large, infrequent, structural changes to achieve adaptation, has emerged as the dominant model of such processes (Miller and Freisen, 1984; Romanelli and Tushman. 1994). Yet, as others (Miller and Chen. 1994; Brown and Eisenhardt, 1995b) have observed, adaptation can also occur through small, frequent shifts in how firms compete in the marketplace.

Product innovation is a primary way in which this alternative form of adaptation can happen. For many organizations, creating new products is a central path by which they adapt and sometimes even transform themselves in changing environments (Womack, Jones, and Roos, 1990; Dougherty, 1992; Brown and Eisenhardt, 1995a). Hewlett-Packard transformed from an instruments company to a computer-based one through new product development. Similarly, Intel changed from a memory company to a microprocessor firm through product development (Burgelman, 1991). Thus, in the face of intense international competition, rapid technology evolution, and customers' maturing expectations, product innovation is a primary way in which firms actually adapt.

In recent years, fast adaptation has become a pivotal, strategic competence for many organizations (e.g., Eisenhardt, 1989; Stalk and Hour, 1990). Not surprisingly then, this same theme of fast pace has become critical in product innovation. The evidence for the importance of rapid product development to success is compelling. Vesey (1991) reported on a study of high-technology products, showing that products that were six months late in entering the market, but were within budget, earned 33 percent less over a five-year period than they would have if on time. Entering the market on time. even 50 percent over budget, reduced a firm's profitability by only 4 percent for that product. Moreover, fast product development is usually more productive and lower cost, because lengthy time in product development tends to waste resources on peripheral activities, changes, and mistakes (Stalk and Hout, 1990; Clark and Fujimoto, 1991). Thus, although there may be pitfalls to rapid product development (von Braun, 1990), it is often essential for the successful adaptation and, ultimately, for the survival of firms.

But how do firms develop products quickly? Several previous research streams provide some insights. One stream synthesizes the experiences of the authors, often people with decades of experience in product development (e.g., Gold, 1987; Rosenau, 1988; Stalk and Hout, 1990; Cordero, 1991; Vesey, 1991). Although they typically have little systematic data or theoretical foundation, they do tend to have captivating anecdotes and many ideas for managerial practice. Drawing on his extensive industrial experience, Rosenau (1988), for example, enumerated about 10 factors that are organized around the key idea of shortening the time of steps in the development process. Similarly, Cordero (1991) drew on his industry experience to emphasize the use of computer-aided design (CAD) as well as careful planning and targeted rewards to accelerate product development.

A second stream emphasizes impressionistic data gathered from managers engaged in product development (e.g., Gupta and Wilemon, 1990; Mabert, Muth, and Schmenner, 1992; McDonough, 1993). Typically, the methodology involves using surveys to gather the broad, general attitudes and opinions of single informants within a firm about fast product development. Gupta and Wilemon (1990) surveyed 80 managers on the factors that they believed would speed up and slow down product development. …

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