Featured Research

from universities, journals, and other organizations

Business: Why innovation takes a nosedive

Date:
March 18, 2014
Source:
University of British Columbia - Sauder School of Business
Summary:
Leaders tend to pursue innovations, even as complex as airplanes, based on early adoption by competitors not close scrutiny of the technical merits, new research shows.

A new UBC study reveals that corporate leaders are victims of herd mentality when adopting new innovations, sometimes with deadly consequences.

The paper, by Sauder School of Business Associate Professor Marc-David L. Seidel and INSEAD Professor Henrich R. Greve, shows leaders tend to pursue innovations, even as complex as airplanes, based on early adoption by competitors not close scrutiny of the technical merits.

"Business leaders tend to panic when new innovations are about to hit the market. They scramble to buy an apparent early leader," says Seidel. "Sometimes this results in inferior products, but as we show in our study, in the airline industry there was loss of life."

Among a series of innovations, the authors focused on two almost identical aircraft produced in the 1970s -- the McDonnell Douglas DC-10 and Lockheed L-1011. Dubbed "The Twins," their manufacturers were locked in bitter rivalry.

Component delays slowed the L-1011's entry into the market by a year. Lack of sales characterized it as a failed innovation with only 250 sold compared to 486 DC-10s.

But the DC-10 suffered design flaws that proved deadly, killing over 600 people in a number of crashes. In 1979, it was temporarily grounded by the Federal Aviation Administration but this did not stop its advance.

In the paper, Seidel and Greve warn there is potential for history to repeat itself as Boeing's 787 Dreamliner and its rival the Airbus A350 head to market.

Early groundings and production delays of the Dreamliner resulted in airlines snapping up more of the rival Airbus before it had completed flight testing or carried passengers.

"We can't say the bias to purchase the Airbus will result in negative events," says Seidel. "We won't know if mistakes are being made for some time. But I can say the lesson of history should be guiding current practice."

To arrive at the conclusions of the study, Seidel and Greve analysed the complete manufacturing history of both the DC-10 and L-1011 airplanes, their sales patterns, abandonments and data on airline customers.


Story Source:

The above story is based on materials provided by University of British Columbia - Sauder School of Business. Note: Materials may be edited for content and length.


Journal Reference:

  1. Henrich R. Greve, Marc-David L. Seidel. The thin red line between success and failure: Path dependence in the diffusion of innovative production technologies. Strategic Management Journal, 2014; DOI: 10.1002/smj.2232

Cite This Page:

University of British Columbia - Sauder School of Business. "Business: Why innovation takes a nosedive." ScienceDaily. ScienceDaily, 18 March 2014. <www.sciencedaily.com/releases/2014/03/140318142531.htm>.
University of British Columbia - Sauder School of Business. (2014, March 18). Business: Why innovation takes a nosedive. ScienceDaily. Retrieved July 26, 2014 from www.sciencedaily.com/releases/2014/03/140318142531.htm
University of British Columbia - Sauder School of Business. "Business: Why innovation takes a nosedive." ScienceDaily. www.sciencedaily.com/releases/2014/03/140318142531.htm (accessed July 26, 2014).

Share This




More Matter & Energy News

Saturday, July 26, 2014

Featured Research

from universities, journals, and other organizations


Featured Videos

from AP, Reuters, AFP, and other news services

Europe's Highest Train Turns 80 in French Pyrenees

Europe's Highest Train Turns 80 in French Pyrenees

AFP (July 25, 2014) Europe's highest train, the little train of Artouste in the French Pyrenees, celebrates its 80th birthday. Duration: 01:05 Video provided by AFP
Powered by NewsLook.com
TSA Administrator on Politics and Flight Bans

TSA Administrator on Politics and Flight Bans

AP (July 24, 2014) TSA administrator, John Pistole's took part in the Aspen Security Forum 2014, where he answered questions on lifting of the ban on flights into Israel's Tel Aviv airport and whether politics played a role in lifting the ban. (July 24) Video provided by AP
Powered by NewsLook.com
Creative Makeovers for Ugly Cellphone Towers

Creative Makeovers for Ugly Cellphone Towers

AP (July 24, 2014) Mobile phone companies and communities across the country are going to new lengths to disguise those unsightly cellphone towers. From a church bell tower to a flagpole, even a pencil, some towers are trying to make a point. (July 24) Video provided by AP
Powered by NewsLook.com
Algonquin Power Goes Activist on Its Target Gas Natural

Algonquin Power Goes Activist on Its Target Gas Natural

TheStreet (July 23, 2014) When The Deal's Amanda Levin exclusively reported that Gas Natural had been talking to potential suitors, the Ohio company responded with a flat denial, claiming its board had not talked to anyone about a possible sale. Lo and behold, Canadian utility Algonquin Power and Utilities not only had approached the company, but it did it three times. Its last offer was for $13 per share as Gas Natural's was trading at a 60-day moving average of about $12.50 per share. Now Algonquin, which has a 4.9% stake in Gas Natural, has taken its case to shareholders, calling on them to back its proposals or, possibly, a change in the target's board. Video provided by TheStreet
Powered by NewsLook.com

Search ScienceDaily

Number of stories in archives: 140,361

Find with keyword(s):
Enter a keyword or phrase to search ScienceDaily for related topics and research stories.

Save/Print:
Share:

Breaking News:
from the past week

In Other News

... from NewsDaily.com

Science News

Health News

Environment News

Technology News



Save/Print:
Share:

Free Subscriptions


Get the latest science news with ScienceDaily's free email newsletters, updated daily and weekly. Or view hourly updated newsfeeds in your RSS reader:

Get Social & Mobile


Keep up to date with the latest news from ScienceDaily via social networks and mobile apps:

Have Feedback?


Tell us what you think of ScienceDaily -- we welcome both positive and negative comments. Have any problems using the site? Questions?
Mobile: iPhone Android Web
Follow: Facebook Twitter Google+
Subscribe: RSS Feeds Email Newsletters
Latest Headlines Health & Medicine Mind & Brain Space & Time Matter & Energy Computers & Math Plants & Animals Earth & Climate Fossils & Ruins