Abstract
This chapter presents an archetype of confrontations that highlights the distinctive perspective of an outsider. In this archetype insider refers to an established leading firm in a specific market, while outsiders are startups or historical nonparticipants in the insider’s market. The chapter interprets events as a conflict between the outsider’s novel point of view and the insider’s established point of view. To support this interpretation, the chapter examines numerous illustrations involving prominent firms, such as Microsoft, IBM, Britannica, Intel, Apple, Dell, and others, and events related to the determination of technological leadership in a market. The chapter stresses the factors that ease entry, such as perceptions of sclerotic behavior from an insider, and the origins of the outsider that lead to surprises. The chapter also examines the factors that lead insiders to imitate outsiders by quickly changing their plans (or not) and by quickly altering their investment priorities (or not). The discussion stresses the mechanisms that slow down response and potentially reduce the seeming advantages of incumbency.
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Notes
- 1.
Perhaps the most quoted summary of the Schumpeterian argument about creative destruction is this: “Capitalism, then, is by nature a form or method of economic change and not only never is but never can be stationary... The fundamental impulse that sets and keeps the capitalist engine in motion comes from the new consumers’ goods, the new methods of production or transportation, the new markets, the new forms of industrial organization that capitalist enterprise creates... This process of Creative Destruction is the essential fact about capitalism.”
- 2.
This language uses Kaplan’s (2008) characterization of arguments among executives inside a firm as “framing contests,” where executives debate ways to perceive uncertain events. Kaplan (2008) does not focus on the implications for industry evolution or competitive interaction. Rather, she goes on to show how such framing contests not only shape decisions ahead of uncertain outcomes but also shape understanding of them after the fact. This links the framing contest to organizational status and power and strategic priorities. Note that, similar to the above remark about spin-offs, Kaplan’s characterization is a model of “disagreements among insiders,” where sometimes a spin-off arises and often times it does not.
- 3.
In this sense, the archetype also offers additional examples to the related literature about “technological competition”—i.e., society’s contest and choice between two distinct technical approaches to providing a seemingly similar functional need. This theme arises in the history of computing, such as studies of competition between different computing platforms—such as mainframes and client/server (Bresnahan and Greenstein 1999).
- 4.
A specific area in this literature focuses on the role of firm identity in shaping innovation (Callen and Tripsas 2016). In this approach, an “identity” becomes associated with it a set of norms that represent shared beliefs about legitimate behavior for an organization with that identity. Investments that contradict this identity do not receive as much attention initially, and then, once they receive attention, organizations find it more difficult to adjust their processes (Tripsas 2009).
- 5.
- 6.
There is some question whether the era of the commercial Internet—from which many of these examples are drawn—was any different in the experience of failure. One group of researchers has argued that it displayed a higher rate of private success and well-known big failures (Chap. 12, Greenstein 2015), and the emphasis of venture capital on massive profitability, which few also achieve, distorts the historical picture of the broad trends. See Goldfarb et al. (2007) and Kirsch and Goldfarb (2008).
- 7.
See Chap. 8, Greenstein (2015).
- 8.
The origins and operations of open governance have a long history. See Greenstein (2015), Chapters 2, 3, and 7.
- 9.
The descriptions below are necessarily cursory summaries. See the references for further details.
- 10.
This is a summary of a much longer and more detailed study. See Greenstein (2016).
- 11.
This was mostly a marketing ploy to make Encarta look current. Britannica sold a yearly “update” to its encyclopedia to address the demand for current events, and most buyers never looked at it.
- 12.
This example is described in more detail in Chap. 13 of Greenstein (2015).
- 13.
Quoted from Stephans-Davidowitz (2017).
- 14.
The basis for this anecdote comes from Chap. 6 of Greenstein (2015).
- 15.
This argument is made in more detail in Greenstein (2015).
- 16.
This summarizes the much longer analysis of Bresnahan, Greenstein, and Henderson (2012).
- 17.
The Internet Tidal Wave is exhibit 20 for the federal antitrust case.
- 18.
Chap. 10, Greenstein (2015)
- 19.
Chap. 14, Greenstein (2015)
- 20.
See Greenstein and Norris (2017).
- 21.
Little evidence at the time suggested that streaming movies was leading customers to “cut the cord,” so this is not relevant to the trade-off. In addition, Hulu, a streaming service, was a marginal effort for the carriers involved.
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Greenstein, S. (2019). An Archetype for Outsiders in Technology Commercialization. In: Aspray, W. (eds) Historical Studies in Computing, Information, and Society. History of Computing. Springer, Cham. https://doi.org/10.1007/978-3-030-18955-6_7
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