This concept is not new. The technology industry sees massive changes in technology and each new wave of technology brings new organizations to dominance and destroys previously successful firms.
An article in the Aug 4, 2010 issue of HBS Working Knowledge, “The Effect of Market Leadership in Business Process Innovation: The Case(s) of E-Business Adoption” by Kristina McElheran, the Lumry Family Assistant Professor of Business Administration in the Technology and Operations Management unit at Harvard Business School, researched the adoption of e-business practices in 1999 to analyze the adoption of incremental vs. radical e-business practices by competitive position of companies. The research added details to our understanding of this behavior.
Her research found that the larger the organization, the more likely it was to adopt incremental changes in business processes such as e-procurement for MRO.
“Strong evidence of increasing dominance is found in the case of e-buying: an increase in the plant’s share of the product market by one standard deviation is associated with an 18-27% increase in the likelihood of internet-based indirect purchasing.”
On the other hand, the larger the organization, the less likely it was to adopt e-selling which was a more complex and radical move in 1999, the year studied.
“This is clearly not the case for e-selling, for which a standard deviation in plant market share is associated with a 16-24% decrease in the probability of adoption.” Her research spanned multiple industries showing that it was not just technology companies that engaged in e-business.
I saw similar trends in research projects. For example, IBM adopted e-procurement of MRO items early; then continued to invest in the e-procurement to reap significantly more benefits from automating product materials. The automation allowed analysis of the material purchased resulting in lower prices from consolidation of purchases across multiple supplier levels and standardization of purchases.
However, one note from her research: in 1999, only 21% of firms adopted e-procurement and 15% e-selling, which shows how uncertain the value of e-business was at that time. In hindsight, the companies that did adopt relatively early gained a significant competitive advantage.