Managing the Threat of Disruption Due to Technological Innovation

Karl Ulrich, Operations, Information and Decisions, The Wharton School

Abstract: This proposal is to fund a first study as part of a longer-term initiative to better understand the threat of disruption from technological innovation. Disruption as a term has come to be used so frequently that it has lost specific meaning. In the larger project, I aim to bring precision to the term and focus on two specific questions. First, when a new technology is introduced to an industry, what are the conditions under which a previously successful incumbent is likely to falter as a result of technological change? Second, what managerial actions are in shareholders’ interests for such an incumbent facing technological change? A key element of my approach is that it considers the effectiveness of managerial policies prospectively across the entire set of threats that may emerge over time — not just the few that did in hindsight result in true disruption. A goal is to develop a prescriptive decision framework for managers. I now seek to bring empirical evidence to bear on the sources of threats and the viability of various actions.