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The Disruption Dilemma$
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Joshua Gans

Print publication date: 2016

Print ISBN-13: 9780262034487

Published to MIT Press Scholarship Online: September 2016

DOI: 10.7551/mitpress/9780262034487.001.0001

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Insuring against Disruption

Insuring against Disruption

(p.97) 7 Insuring against Disruption
The Disruption Dilemma

Joshua Gans

The MIT Press

To insure against supply-side disruption requires a policy of integration. Integration requires having an organizational structure that remembers where its strengths came from so it can adjust itself should those strengths be threatened by a disruptive event. Thus, all of the parts of the organization have to work together and be able to adjust in unison should a disruptive event arise. By contrast, the independence approach is designed to shield the main organization from those adjustments. Integration is what Canon did in photolithographic alignment. It had cross-functional teams that developed multiple generations of the technology simultaneously. But as Rebecca Henderson shows, this cost Canon. While it was more long-lived than its rivals, it was slow to market and never led the market. The way to think about this slowness and lack of leadership is a sacrifice of short-term profits (perhaps sizeable ones) for long-term sustainability – in other words, there is a premium to be paid for insurance against supply-side disruptive events.

Keywords:   Photolithographic alignment, integration

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