Lecture Nine--ICS 131--Fall 2000--23 Oct 00

Deutsch, Claudia H., et al. The Fading Copier King: Xerox has failed to capitalize on it own innovations, NY Times, 19 Oct 00, C1, C20 (R)

Coy, Peter. The Myth of Corporate Reinvention: The key is knowing when to give up--and just spin off the sexier parts of the business, BW, 30 Oct 00, 80-82.(R)

Christensen, Clayton M. The Innovator's Dilemma, _____(O)

Greene, Jay. Microsoft's Big Bet. BW, 30 Oct 00, 152-163(R)




Review of Lecture Eight--E-tailing

Future of e-tailing--combination of bricks and clicks

might be better than pure plays--two examples

Responsibility of web sites to protect consumers from fraud

Responsibility of e-tailers in cases of pricing errors

New ideas- •sell software developed for in-house applications

•figure out how to cope with e-tailing problems, e.g.,

can't try on clothes




Lecture Nine

How do organizations cope with major changes in technology?


•Company has a product

•Knows how to make it, sell it, service it, improve it

•Company is successful

•New technology comes along

•Have to decide how to cope with new technology

Three recent example of problems in coping

Xerox--The copier company wants to shift to



high-end publishing

solutions company--

designs and runs document systems for companies

AT&T--The telephone company

(manufactured, installed, and operated

telephone networks) wants to get into

broadband networks via cable

Kodak--the color film in the yellow box company wants to shift to

digital photo business


While each of these examples has individual characteristics,

they have some things in common with each other and with

other companies in this situation

1. Talented management

2. Access to high quality research

Why are they having problems?

"Cultures prevent them from seizing

opportunities to undermine the status quo"

Can't break away from old technology and

continue to serve core customers and

keep profits high

The technologies are disruptive

not good enough for core customers

nor profitable enough for shareholders

using money, but not generating revenue

competing with needs of installed base

threat to people working on core business

So the new kid on the block comes in and

knocks off the new technology


What should these companies do?

BW's solution

Spin off the new technology.

Let it fend for itself and

not compete with the core business

(What about BW online?)

NY Times' version of Xerox problems

•Didn't take advantage of PARC developments

GUI (apple, m/s), ethernet (3 com), printing software (adobe)

ubiquitous computing

•Made changes to sales force organization

•Didn't keep up with copier technology

The Microsoft Dilemma

How can M/S move from

a PC/Windows based operation

to a net-based service operation?

M/S has done a couple of 'net' things, Explorer, MSN, websites

but the core business is still selling applications and O/S for PC's

But the PC business is falling off,

so what to do

Rejects notion of converting M/S to a network business.

What should M/S do?

The .Net approach

The anti-trust action complicates things


Successful coping stories



Quiz 1 Scores


Week 5 Schedule

Optional readings:

Landler, Mark. A Filipino linked to 'love bug' talks about his license to hack, NY Times, 21 Oct 00, B1, B2

Piller, Charles. The place that tech forgot,

LA Times, 19 Oct 00, A1, A34, A35

Boxall, Bettina. Bay area cities try to stem dot-com tide,

LA Times, 19 Oct 00, A3, A32