Today the long rumored announcement came: LG is launching
a mobile phone with a curved screen, shortly after Samsung made the same
announcement. The phones are not imitations of each other. The Samsung phone
has curved sides, which changes the grip and visibility. The LG phone is curved
lengthwise so that it can be held more snugly against the head. I admit some puzzlement
at the need for these designs, but OK. Seen as innovations, it is
pretty impressive that the screens can be curved. This is done as an OLED, or organic light-emitting diode, which is a new, difficult, and
expensive technology.
Are these introductions right after each other just evidence
that firms in the same industry will act as rivals and pursue the same
technologies? Maybe, but the story has more details. LG and Samsung are
Korean companies, are well aware of the screen technology each of
them is developing, and most likely they get some information from the same
sources. Such a high technology is not developed solely inside one firm, even a
giant firm like Samsung; alliances are used to develop it. Indeed, Samsung is
one of the key examples of a good user of alliances in the book that I, Tim Rowley, and Andrew Shipilov wrote and will publish soon. When firms are developing new
products, a network of alliances gives a firm an advantage, but so does
the proximity to other innovators. This is the kind of benefit that has made Silicon Valley
so powerful, as firms there learn through alliances and through being near each
other.
But now there is also research on how firms can be
far away from other firms and still do well. The answer is again related to
information flows through networks. Russel Funk has an article coming out in Academy of Management Journal that looks at innovations by nanotech firms. He
finds that firms that are near other innovators have an advantage if they have
a well-integrated network internally so they can integrate information they get
from the outside. This is well known, and we write about it in our book. But he
also finds a different form of advantage. Firms that are away from other
innovators have an advantage if they have a loose network internally, so that innovators
inside the firms can be more independent from each other. So, learning from the
outside and developing in the inside calls for the exact opposite internal
structure.
This new research is interesting, and gives some
hope to firms that are away from other innovators. Such firms often have
disadvantages in innovation races, and need every trick they can get. For
Samsung, it is less interesting because they already have the advantages of
proximity to others and a large network – and internally they are tightly
integrated.
Sangani, B. 2013. LG curved G
Flex smartphone 'to rival Samsung Galaxy Round'. The Telegraph, 28.10.2013.
