Topic: Business Strategy, Marketing
Publication: Harvard Business Review (MAR 2010)
Article: Bold retreat: A new strategy for old technologies
Authors: R. Adner, D. C. Snow
Reviewed By: Liz Brashier
So your company specializes in – and relies on – a technology that is now being threatened by a new technology. Do you respond by trying to change your existing technology, or do you fight the new technology by improving what you have? Or, do you explore a third, and often ignored, option: making what Adner and Snow (2010) call a bold retreat into a niche market?
In “Bold Retreat,” Adner and Snow (2010) highlight several examples of companies that have successfully chosen a bold retreat over other options, and offer a guide for making the decision to retreat. When considering a bold retreat, there are two possible directions to take: retrenchment to a niche of the traditional market or relocation to a new market. Retrenchment is a valuable option when there are elements of the old technology that the new does not address, there is a customer base that would respond positively to a focus on those elements, and there is little existing competition in the niche market. Relocation is a good decision when the old technology could be used to solve either a new problem for existing customers or an old problem for new customers.
The authors suggest restructuring the organization’s focus and talent base, while also taking into account the possibility of mixing old and new technologies. Also, don’t forget that while it may be a challenge to “sell” the idea of a retreat to your internal shareholders, it could be the best choice for the organization. Lastly, a retreat must be bold – don’t waste time weighing options when a strategic retreat is the best one.