Survival Lessons for a Changing Industry

Robert C. Pini

A new study by Harvard University and Massachusetts Institute of Technology researchers, in Cambridge, Mass., might hold valuable lessons for photonics companies looking to survive the rapid pace of technological change.

The study draws lessons from the disk drive industry and concludes that the first rule of thumb is to adopt the industry's dominant product design. Disk drive manufacturers who followed this rule were more than twice as likely to survive the process of evolution. Being a pioneer or a latecomer to the technology only added to the likelihood of failure.

The validity of this lesson can be seen in the imaging industry. Board makers changed design from an ISA bus to a PCI bus. Firms made the switch to the new dominant technology within weeks. Those that didn't had noncompetitive products. Yet, changing "is very hard for companies that grow large and create a value structure in established markets. The majority deform and re-form in new entities," said Kurt Pelsue, vice president of engineering at GSI Lumonics Inc. in Watertown, Mass.

The second survival tip is to solve new problems rather than trying to break into well-entrenched markets. Entry into new markets allows companies to avoid direct competition with established firms, the study concluded, enabling small firms to progress until they are strong enough to challenge more mature markets.

Success from integration

Micromachining is an example of such an end-run. As the laser industry provides an answer where there is no other solution, it avoids the head-to-head struggle to displace well-established machining processes.

The third tip for photonics companies is to make system-level solutions rather than new components. In the disk drive study, companies that produced innovations in component design were less successful than those that were carving out applications based on clever system architecture. Photonics companies competing in telecommunications are seeing the same trend toward providing integrated systems.