Tripsas & Gavetti, 2000 –
Capabilities, Cognition and Inertia: Evidence from Digital Imaging
Abstract
Known: established firms often have difficulty / show inertia when it comes to adapting to radical
technological change
Unknown: how managerial cognition affects the adaptive intelligence of organizations
Findings: The Polaroid story shows the importance of managerial cognitive representations in
directing search processes in a new learning environment, the evolutionary trajectory of organizational
capabilities and beliefs, and ultimately processes of organizational adaptation
Introduction
Existing findings:
Technol. Change has proven particularly deadly for established firms
When a new technology is „competence destroying“ in that it requires mastery of an entirely
new scientific discipline, established firms are more likely to fail
Managers are boundedly rational, thus they rely on simplified representations oft he world in
order to process information
Cognitive representations are based on historical experience as opposed to current knowledge
of the environment. For instance, as senior managers work together over time, they often
develop a set of beliefs („dominant logics“) for the firm, based on their shared history
Given the influence of the historical environment on the development of beliefs, in rapidly
changing environments top managers often struggle to adapt their mental models, resulting in
poor org. performance
Finding of this paper:
The paper finds that by restricting and directing search activities related to technological development,
managerial cognition influences the development of new capability.
E.g. the senior management at Polaroid believed in pursuing large-scale „impossible“ tech
advances – thus the firm made significant investments in developing technical capability
related to digital imaging
E.g. top management believed in a razor/blade business model – this delayed the
commercialization of a stand-alone digital camera product
Methods & Data
Inductive, exploratory historical case study of Polaroid
Long-term historical perspective to gain insight into the evolutionary nature of capabilities and
cognition
Combination of public data, company archives and interview data was used
, Story of Polaroid
Polaroid’s foundations: 1937-1980
Founded 1937 by Edwin Land who invented light-polarizing filters
1948 – Polaroid introduced first instant camera
In the following years, focus on improving the picture quality for the instant camera
1948-1978: expectional firm performance
o average compounded annual sales growth of 23%
o profit growth of 17%
o share price growth of 17%
Firm Capabilities in 1980:
knowledge of the relevant technology for instant photography – over 500 patents held by Land
himself
strong understanding of silver halide chemistry
strong foundation in optics and electronics
In-house manufacturing since end of 1960s
o A camera manufacturing plant was built – resulting in a high capability in camera
precision assembly
o A color negative plant was built – resulting in a high capability in film coating
Managerial Beliefs in 1980:
Land = strong character, autocratic manner, strong control, absolute commitment to science and
instant photography
Resulting beliefs at Polaroid:
Technology-driven, not market-driven
Long-term success & large scale research projects
o „impossible“ achievements made possible / major inventions
o E.g. the SX-70 instant camera in 1972
Belief that customers value instant print (->video camcorders were not considered
competition)
Belief that customers value high photographic quality
Strong belief in razor/blade business model
o Was adopted in 1965 – camera prices were dropped, film prices were increased
o Resulting belief: Polaroid could not make money on hardware, only software
Digital imaging search: 1981-90
Mid 1980s: New CEO, Bill McCune (employee since 1939)
Serious investment in digital imaging technologies incl. formation of electronic imaging group
in 1981 as well as a microelectronics lab
Goal of the electronic imaging group: develop an instant digital camera/printer product (PIF /
Printer in the Field) – patent was achieved in 1990
Second major area of digital imaging investment: medical system HELIOS
o HELIOS used a high-energy lasert o eypose a dry film material. Targeted at
radiologists
Capabilities, Cognition and Inertia: Evidence from Digital Imaging
Abstract
Known: established firms often have difficulty / show inertia when it comes to adapting to radical
technological change
Unknown: how managerial cognition affects the adaptive intelligence of organizations
Findings: The Polaroid story shows the importance of managerial cognitive representations in
directing search processes in a new learning environment, the evolutionary trajectory of organizational
capabilities and beliefs, and ultimately processes of organizational adaptation
Introduction
Existing findings:
Technol. Change has proven particularly deadly for established firms
When a new technology is „competence destroying“ in that it requires mastery of an entirely
new scientific discipline, established firms are more likely to fail
Managers are boundedly rational, thus they rely on simplified representations oft he world in
order to process information
Cognitive representations are based on historical experience as opposed to current knowledge
of the environment. For instance, as senior managers work together over time, they often
develop a set of beliefs („dominant logics“) for the firm, based on their shared history
Given the influence of the historical environment on the development of beliefs, in rapidly
changing environments top managers often struggle to adapt their mental models, resulting in
poor org. performance
Finding of this paper:
The paper finds that by restricting and directing search activities related to technological development,
managerial cognition influences the development of new capability.
E.g. the senior management at Polaroid believed in pursuing large-scale „impossible“ tech
advances – thus the firm made significant investments in developing technical capability
related to digital imaging
E.g. top management believed in a razor/blade business model – this delayed the
commercialization of a stand-alone digital camera product
Methods & Data
Inductive, exploratory historical case study of Polaroid
Long-term historical perspective to gain insight into the evolutionary nature of capabilities and
cognition
Combination of public data, company archives and interview data was used
, Story of Polaroid
Polaroid’s foundations: 1937-1980
Founded 1937 by Edwin Land who invented light-polarizing filters
1948 – Polaroid introduced first instant camera
In the following years, focus on improving the picture quality for the instant camera
1948-1978: expectional firm performance
o average compounded annual sales growth of 23%
o profit growth of 17%
o share price growth of 17%
Firm Capabilities in 1980:
knowledge of the relevant technology for instant photography – over 500 patents held by Land
himself
strong understanding of silver halide chemistry
strong foundation in optics and electronics
In-house manufacturing since end of 1960s
o A camera manufacturing plant was built – resulting in a high capability in camera
precision assembly
o A color negative plant was built – resulting in a high capability in film coating
Managerial Beliefs in 1980:
Land = strong character, autocratic manner, strong control, absolute commitment to science and
instant photography
Resulting beliefs at Polaroid:
Technology-driven, not market-driven
Long-term success & large scale research projects
o „impossible“ achievements made possible / major inventions
o E.g. the SX-70 instant camera in 1972
Belief that customers value instant print (->video camcorders were not considered
competition)
Belief that customers value high photographic quality
Strong belief in razor/blade business model
o Was adopted in 1965 – camera prices were dropped, film prices were increased
o Resulting belief: Polaroid could not make money on hardware, only software
Digital imaging search: 1981-90
Mid 1980s: New CEO, Bill McCune (employee since 1939)
Serious investment in digital imaging technologies incl. formation of electronic imaging group
in 1981 as well as a microelectronics lab
Goal of the electronic imaging group: develop an instant digital camera/printer product (PIF /
Printer in the Field) – patent was achieved in 1990
Second major area of digital imaging investment: medical system HELIOS
o HELIOS used a high-energy lasert o eypose a dry film material. Targeted at
radiologists
