Executive Briefings

Stubbornly Holding on to Legacy Assets Can Impede Adoption of Promising Technologies

Technologies like 3-D printing, robotics, advanced motion controls and new methods for continuous manufacturing hold great potential for improving how companies design and build products to better serve customers. But if the past is any indicator, many established firms will be slow to adjust because of a formidable obstacle: legacy assets and capabilities that they are reluctant to abandon.

Stubbornly Holding on to Legacy Assets Can Impede Adoption of Promising Technologies

Why are older incumbent firms slow to adopt new technologies even when the economic or strategic benefits are clear?

The literature on this subject is enormous. Much of the early work focused on the adoption rate of new technologies following an S-curve, with some users going early, a lot in the middle, and some following late. These models assume that it takes a while for companies to find out about new technology and, once they do, for their employees to assimilate and use it. Robotics is a good example: It's obvious that it can increase productivity, but it takes some know-how to put robots to work.

Organizations develop processes through repeated problem solving. When a firm gets started, its founders solve problems for customers, and as they grow and establish routines, these ways of working come to embody their organizational capabilities. Managers constantly try to fit new market needs to existing processes and routines. Sometimes they are a fit, but often they are not. They can even require cultural change, which is difficult for established organizations.

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Why are older incumbent firms slow to adopt new technologies even when the economic or strategic benefits are clear?

The literature on this subject is enormous. Much of the early work focused on the adoption rate of new technologies following an S-curve, with some users going early, a lot in the middle, and some following late. These models assume that it takes a while for companies to find out about new technology and, once they do, for their employees to assimilate and use it. Robotics is a good example: It's obvious that it can increase productivity, but it takes some know-how to put robots to work.

Organizations develop processes through repeated problem solving. When a firm gets started, its founders solve problems for customers, and as they grow and establish routines, these ways of working come to embody their organizational capabilities. Managers constantly try to fit new market needs to existing processes and routines. Sometimes they are a fit, but often they are not. They can even require cultural change, which is difficult for established organizations.

Read Full Article

Stubbornly Holding on to Legacy Assets Can Impede Adoption of Promising Technologies