An example of this is Merrill Lynch's effort to take on the challenge of online trading. The broader question for firms like Merrill and others is whether they can survive in the long term without changing their approach to disruptive technologies in a fundamental way.
Incremental
Low Business Model Change/Internal Source of E-Commerce Strategy
Companies in the incremental category are making investments in e-commerce applications that are likely to lead to increased efficiency in an internal activity that does not greatly affect the firms relationships with customers. An example is Microsoft, which has saved more than $100 million using an electronic procurement system called MS Market to purchase office supplies. While the system has not changed Microsoft's competitive position, it has helped improve efficiency.
The dilemma of The Innovator's Dilemma is that a one-size-fits-all prescription for dealing with disruptive technologies is not the right medicine for managers trying to cope with the Internet. The examples of firms like Schwab in online trading and HP in inkjet printers suggest a more enduring way for managers to profit from the transition to e-commerce.
Ultimately, a more balanced and controlled approach to managing this transition is likely to create the most lasting value for customers and shareholders.
Peter Cohan is a management consultant and the author of Net Profit and The Technology Leaders (Jossey-Bass), as well as e-Profit (Anacom), to be published in April.
