A new look at older technologies

Conventional wisdom has it that new and better technologies replace old ones — and that companies whose markets are being transformed by disruptive new technologies thus need to figure out how to switch to the dominant new technology. And, of course, that’s often the case.  But, in a thought-provoking paper, two researchers argue that an alternative approach — one that involves rethinking opportunities for the old technology — can sometimes make sense. 

Ron Adner of Dartmouth’s Tuck School of Business and Daniel Snow of the Harvard Business School note in their paper “Old” Technology Responses to “New” Technology Threats, that the idea of new technologies always replacing old is incomplete; for example, pagers and fountain pens still persist long after the development of, respectively, cell phones and ball point pens.  What’s more, the authors point out, the option of a new technology can reveal niche markets where characteristics of the old technology still have value.

To be sure, the authors don’t argue that sticking with an older technology should be the response of most businesses to a new technology — just that, for some companies in some circumstances, it can be a rational response that is often overlooked.  They include an interesting case study of a company in the semiconductor lithography equipment industry that, because its resources were constrained by a restructuring, decided not to compete in the next generation of technology in its market. Instead, the company evaluated other options for its older technology — and found new markets for it in areas such as hard disk drive manufacturing and microprocessor packaging.