Joseph L. Bower

"When the technology that has the potential for revolutionizing an industry emerges, established companies typically see it as unattractive: it’s not something their mainstream customers want, and its projected profit margins aren’t sufficient to cover big-company cost structure. As a result, the new technology tends to get ignored in favor of what’s currently popular with the best customers. But then another company steps in to bring the innovation to a new market. Once the becomes established there, smaller-scale innovation rapidly raise the technology’s performance on attributes that mainstream customers’ value."

"The definitive examination of strategic investment from the viewpoint of the people who run the company--the CEO and principal officers. Includes four case histories that follow specific investment projects from their inception to their approval by top management."

"The research described in this book is based on a field investigation of resource allocation in a very large firm. It was motivated by my conviction, stated above, that for purposes of management and research, adequate models of the allocation process are not available. I believe that this lack stems from the fact that prescriptive theories of economic choice have not yet been set in the context of the large organization's political process. The research described below is an attempt to take a step in that direction by developing a descriptive conceptual scheme of the resource allocation process. Because "resource allocation" is an all-encompassing phrase, it is not particularly operational as a subject for research."

"How can we use our new understanding to help top management change the process by which resources are invested so that strategic objectives are more effectively achieved? Strangely enough, given the argument above in favor of recognizing complexity, the next paragraphs develop a very simple conceptual scheme for viewing the firm. This is done because the relationships among the essential forces that have been discussed can be most clearly revealed. Furthermore, a more formal discussion facilitates a more precise statement of the research questions. It might be useful to begin a statement of the scheme with an informal description of its structure. Briefly, the scheme describes a firm's position at any point in time as representing a sum or resultant of past decisions and acts which commit the firm's resources. The process of changing that position is deemed to consist of two parts: (1) routine, and (2) critical. Routine change is the continual use of assets and generation of profit which results from the activities of ongoing business. No more will be said about this class of change. The process of critical change is described in the scheme as consisting of two parts: (1) the "business planning process" and (2) the "investment process." The former involves the problem solving which results in the choice of markets and broad product objectives. The latter involves the problem solving which results in the commitment of corporate resources in an attempt to achieve the chosen objectives."

"[Firms rotate managers ] across functional and divisional lines to help build cooperative climate and contribute to the development of generalist viewpoints... [This practice moves] managers at the business level... where new strategic ideas are developed... every two to three years."

"While evidence reveals the relative unimportance of a particular technique of financial analysis and limited usefulness of the [theoretical] financial model, it also indicates that management can control the investment process."

"To make further progress it is necessary to go beyond the financial model."

"The leading attempt at a complete normative theory of planning and resource allocation is provided by the concept of "strategy.""

"One of the most consistent patterns in business is the failure of leading companies to stay at the top of their industries when technologies or markets change. and entered the radial-tire market quite late. Xerox let Canon create the small-copier market. Bucyrus-Erie allowed Caterpillar and Deere to take over the mechanical excavator market. Sears gave way to ."

"Different types of technological innovations affect performance trajectories in different ways. On the one hand, sustaining technologies tend to maintain a rate of improvement; that is, they give customers something more or better in the attributes they already value... On the other hand, disruptive technologies introduce a very different package of attributes from the one mainstream customers historically value, and they often perform far worse along one or two dimensions that are particularly important to those customers."

"Each time a emerged, between one-half and two-thirds of the established manufacturers failed to introduce models employing the new architecture-in stark contrast to their timely launches of critical sustaining technologies."

"One approach to identifying technologies is to examine internal disagreements over the development of new products or technologies. Who supports the project and who doesn't? Marketing and financial managers, because of their managerial and financial incentives, will rarely support a disruptive technology. On the other hand, technical personnel with outstanding track records will often persist in arguing that a new market for the technology will emerge-even in the face of opposition from key customers and marketing and financial staff. Disagreement between the two groups often signals a disruptive technology that top-level managers should explore."

"We contest the conclusions of scholars such as Tushman and Anderson (1986), who have argued that incumbent firms are most threatened by attacking entrants when the innovation in question destroys, or does not build upon, the competence of the firm. We observe that established firms, though often at great cost, have led their industries in developing critical competence-destroying technologies, when the new technology was needed to meet existing customers’ demands."

"Our findings support many of the conclusions of the resource dependence theorists, who contend that a firm's scope for strategic change is strongly bounded by the interests of external entities (customers, in this study) who provide the resources the firm needs to survive."

"Bower and Christensen (1995) coined the term “disruptive technologies” and Christensen (1997) further describes the theory of disruptive innovations."

"Joseph L. Bower... has been a leader in general management at for 51 years. He also served on the faculty of the Harvard Kennedy School during its first decade. He has served in many administrative roles including Senior Associate Dean. An expert on corporate strategy, organization, and leadership, he has devoted much of his teaching and research to challenges confronting corporate leaders in today’s rapidly changing hyper-competitive conditions. Professor Bower has been active in the development of institutions and programs. Between 1968 and 73 he helped establish the in Vienna, Austria. In 1978, he founded the Program for Senior Managers in Government as a joint program of Harvard Business School and the School of Government; and in 1995 he founded the General Manager Program at Harvard Business School. He was deeply involved in the efforts to build the new joint MBA-MPP degree program offered by the Business School and the Kennedy School of Government."