ArticlePDF Available

Core Capability and Core Rigidities: A Paradox in Managing New Product Development

Authors:
Dorothy A. Leonard at Harvard University
Dorothy A. Leonard
Download full-text PDF
Read full-text
Download citation

Abstract

This paper examines the nature of the core capabilities of a firm, focusing in particular on their interaction with new product and process development projects. Two new concepts about core capabilities are explored here. First, while core capabilities are traditionally treated as clusters of distinct technical systems, skills, and managerial systems, these dimensions of capabilities are deeply rooted in values, which constitute an often overlooked but critical fourth dimension. Second, traditional core capabilities have a down side that inhibits innovation, here called core rigidities. Managers of new product and process development projects thus face a paradox: how to take advantage of core capabilities without being hampered by their dysfunctional flip side. Such projects play an important role in emerging strategies by highlighting the need for change and leading the way. Twenty case studies of new product and process development projects in five firms provide illustrative data.
Content uploaded by Dorothy A. Leonard
Author content
All content in this area was uploaded by Dorothy A. Leonard on Aug 26, 2015
Content may be subject to copyright.
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
CORE CAPABILITIES AND CORE RIGIDITIES: A PARADOX IN MANAGING NEW PRODUCT DEVE...
DOROTHY LEONARD-BARTON
Strategic Management Journal (1986-1998); Summer 1992; 13, SPECIAL ISSUE; ABI/INFORM Global
pg. 111
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
... BMI enables companies to adapt to ongoing changes in their industry by identifying and harnessing underutilized or untapped sources of future value (Amit and Zott, 2012) while also empowering them to shape and manage the evolution of markets , thus demonstrating its capacity for both proactive and reactive responses. The process is often less challenging for younger firms; incumbents are more likely to encounter internal and external resistance and inertia, prompting rigid adherence to existing practices and competencies and inhibiting adaptation to changing circumstances and the seizing of market opportunities (Leonard-Barton, 1992). The imperative for BMI through servitization becomes clear as market shifts-driven by digital innovations, new types of competitors, and regulatory changesthreaten to render traditional business models obsolete (Kindstr€ om and Kowalkowski, 2015). ...
Moving to subscriptions: service growth through business model innovation in consumer and business markets
Article
Full-text available
  • Jun 2024
  • J SERV MANAGE
Purpose Subscription offerings are being hailed as the next service growth engine for companies in both business-to-consumer (B2C) and business-to-business (B2B) markets. The study analyzes how a manufacturing firm can develop and implement a scalable service-based subscription business model for B2C and B2B customers alongside its existing product-centric model. Design/methodology/approach A longitudinal case study is conducted, drawing on 25 in-depth interviews with company executives and dealers in key European markets. Findings The study outlines an iterative process model for subscription business model innovation. It reveals key events and decisions taken in developing, implementing, and scaling the new business model and how internal and external tensions involving intermediaries arose and were mitigated during the four stages of the process. Research limitations/implications The findings highlight the dynamics of business model innovation processes and underscore the importance of organizational learning, collaborative relationships with channel partners, and strategic talent acquisition during business model innovation. Practical implications The findings suggest how product-centric firms can implement new service business models alongside existing product models and what this means for partner and customer journey management. Originality/value While servitization research predominantly concerns B2B manufacturers, B2C research focuses on digital subscription contexts. The study bridges this divide by investigating the move to subscriptions in both markets.
View
... This perspective has caused a significant shift towards a new way of understanding the complex process of innovation. In academia, a new wave of studies has revealed new dimensions including (a) the importance of tacit knowledge (Collins, 1974;Polanyi, 1967), (b) a new generation of dynamic models of innovation (Kline & Rosenberg, 1986;Rothwell, 1992Rothwell, , 1994, (c) the concept of techno-economics networks (Callon, 1991), (d) the conception of core competence (Leonard- Barton, 1992;Prahalad & Hamel, 1990), and especially (e) the role of lead users and customer-centered innovation (von Hippel, 1988;von Hippel, 2005;de Jong & von Hippel, 2009). As a result, new elements have emerged such as (1) the involvement of multiple agents along the innovation process, (2) the access to new knowledge through collaboration, (3) the important role of user experience and (4) the customer as co-creator. ...
View
Investigating the Roles of Neuroscience and Knowledge Management in Higher Education
Chapter
  • Jan 2017
This chapter explains the current trends in higher education, the overview of neuroscience, the multifaceted applications of neuroscience, the overview of knowledge management (KM), the perspectives of KM, the significance of neuroscience in higher education, and the significance of KM in higher education. Neuroscience is a multidisciplinary science that is concerned with the study of the structure and function of the nervous system. KM is the practice of organizing, storing, and sharing vital information, so that individuals can benefit from its use. The achievement of neuroscience and KM is required in higher education institutions (HEIs) in order to serve school administrators and students, increase educational performance, sustain competitiveness, and fulfill expected accomplishment in higher education. The chapter argues that encouraging neuroscience and KM has the potential to improve educational performance and reach educational goals in higher education.
View
CEO overseas experience, dynamic capabilities and corporate digital transformation: An imprinting theory perspective
Article
Full-text available
  • Jun 2024
The drivers of corporate digital transformation have been the focus of industry and academic attention. To deeply explore the driving factors and influencing mechanisms of corporate digital transformation (CDT), this paper takes Chinese listed manufacturing companies from 2007–2021 as the research object, based on imprinting theory, adopts the Driscoll-Kraay standard error method, examines the impact of CEO overseas experience on CDT, analyzes the moderating mechanisms of market competition and organizational resources, as well as the mediating effect of dynamic capabilities. The study shows that CEO overseas experience significantly promotes CDT, while market competition intensity and organizational slack resources strengthen the above relationship. Dynamic capabilities play a mediating role in the relationship between CEO overseas experience and CDT. The above findings still hold after considering robustness tests and endogeneity treatments. Further research finds that the overseas working experience of a CEO outweighs the learning experience when it comes to CDT; a CEO with overseas experience has a more significant influence on CDT in the company with a low growth rate; when the CEO is also the chair of the board in the executive team of a company, the overseas experience matters more to CDT; the overseas experience of CEOs with deep academic backgrounds has a more significant impact on CDT. This paper states the driving mechanism of corporate digital transformation from the imprinting theory perspective, and the findings are proven to be substantial and offer practical value for the in-depth development of corporate digital transformation.
View
View
Decision tree for adaptation after radical changes: linking dynamic capabilities, ambidexterity, and strategic alliances
Article
Full-text available
  • May 2024
  • J Manag Govern
We developed a decision tree that integrates relevant organizational adaptation theories to respond to radical changes. The understanding of organizational adaptation often requires a combination of multiple theoretical lenses, especially considering today’s radical changes in technologies, markets, and regulations. However, the research streams on adaptation and change are often disconnected and we lack a unifying adaptation framework that might reveal the synergistic contribution of each theoretical perspective to the problem. To fill this important lacuna, we integrate four relevant scholarly perspectives on the topic: dynamic capabilities, ambidexterity, vertical alliances, and horizontal strategic alliances. Our main contribution is an integrative decision tree that unveils when and why each perspective is most appropriate to respond to radical changes. Our research also unpacks dynamic capabilities theory by suggesting when ambidexterity, vertical, and horizontal alliances are appropriate to integrate the upper-level theory of dynamic capabilities, and how they can overcome some of its limitations. The paper also clarifies that, in order to adapt ambidextrously after radical changes destroying core and/or complementary assets, companies need specific alliance strategies.
View
View
Örgütlerde Bilgi Paylaşımı Üzerine Kavramsal Bir İnceleme
Article
  • Apr 2024
Bilgi, örgütler için oynadığı kritik rol nedeniyle yöneticilerin odağındaki yerini almıştır. Bilginin, paylaşılarak çoğaltılabilir ve tekrar kullanılabilir olması nedeniyle kesintisiz bir rekabet avantajı sağladığı bilinmektedir. Bilgi paylaşımı, çalışanların örgüt genelinde deneyimlerini, becerilerini ve bilgilerini paylaştıkları sosyal bir etkileşim olarak kabul edilmektedir. Paylaşılan bilgi, yaratıcılık ve öğrenmenin gelişmesi yoluyla inovasyonda ve birey ve örgütün performansında artış sağlar. Ayrıca açık ve örtük bilgi paylaşımı ile çalışanların neyin nasıl yapılacağına dair yetkinliklerinin artmasıyla iş süreçlerinin verimliliğinde artışlar görülür. Bilginin paylaşılarak örgütler için değerli hale gelmesi için etkin bilgi yönetimi önem taşır. Buradan hareketle, çalışanların ve yöneticilerin sahip olduğu bilginin gücünden yararlanmasına olanak tanıyacak yolları aydınlatmak ve bilgi paylaşımının örgütler için önemini vurgulamak amacıyla bu çalışma yapılmıştır. Bu doğrultuda çalışmada öncelikle bilgi ve bilgi yönetimi konularına değinilmiş ardından bilgi paylaşımı kavramı tanıtılmıştır. Bilgi paylaşımını kolaylaştıran faktörler ve bilgi paylaşımını ölçmek için kullanılan ölçekler tartışılmış, bilgi paylaşımını engelleyen faktörler ile bilgi paylaşımının sonuçları ele alınmıştır.
View
Growing Technological Relatedness to the ICT Industry and Its Impacts
Article
  • May 2024
In today’s rapidly evolving technological landscape, industries across various sectors are increasingly leveraging information and communication technologies (ICT) to drive innovation and gain a competitive edge. Our study reveals that, as industries become more closely connected to the ICT sector, they experience a significant shift in their innovation processes and outcomes. By analyzing 1.3 million U.S. patents granted between 1981 and 2010, we demonstrate that industries with stronger ties to the ICT sector (i.e., higher “ICT-closeness”) exhibit a greater proportion of ICT technologies in their patent portfolios and enhanced complementarity between ICT and non-ICT patents. Furthermore, ICT-Closeness results in greater innovation efficiency (the number of patents per R&D capital), recombinant creation (the creation of new technological combinations), recombinant reuse (the refinement and reuse of known technological combinations), and the creation of new business models. These findings have important implications for practitioners. Specifically, our research highlights the importance of strategically integrating ICT into their technological innovations. Managers should actively seek opportunities to collaborate with and learn from the ICT sector to enhance their innovative capabilities, create new products, services, and business methods, and ultimately gain a competitive advantage. However, they must also be prepared for the heightened competition that comes with increased ICT-closeness, as it can lead to winner-take-all dynamics and market turbulence.
View
R&D investment and innovation performance under vertical partner concentration
Article
  • May 2024
Vertical exchange partners, both customers and suppliers, are key sources of knowledge about new components, technologies, and markets, exerting a critical influence on firms’ innovation performance. While firms’ reliance on a few suppliers and/or a few customers has become a regularly occurring phenomenon, there is only an insufficient understanding of the effect of vertical partner concentration on the returns to firms’ R&D investments. Building on transaction cost and evolutionary economics theories, we conjec-ture that vertical partner concentration negatively moderates the relationship between R&D investments and innovation perfor-mance. Our analysis is built on a dataset of 768 R&D-active French manufacturing firms derived from two independent and temporally separated surveys, enabling the use of lagged values of the key independent variables. The results reveal that customer concentra-tion, whether accompanied or not by supplier concentration, weak-ens the positive relationship between R&D investment and innovation performance, but this is not observed in dynamic indus-try settings.
View