Thursday, July 28, 2016

Radical Flank Marketing: How Engineers Adapted to Lost Power

Many firms that emerge or grow as a result of radical technological progress owe a lot – maybe everything – to their technical occupations, and in return give them both formal power and informal status and gratitude. Often the same firms find that these engineers have lost importance because the technology is now developed, and the next step forward is to find ways of entering new markets or strengthening current market positions. Engineers don’t know how to do that; the marketing department does. So can firms really shift authority away from the source of their success to the new path to success? Often the answer is no, as seen in firms applying technological innovations that ignored marketing challenges – such as Sony’s continued development of disk-based music players after flash media enabled firms to make compact players like the iPod.

But there are also successful cases, and a forthcoming article in Administrative Science Quarterly by Emily Truelove and Katherine Kellogg explains one mechanism. They followed a car-sharing company that made a strategic shift to marketing following a period of strong engineering success based on radical innovations. This was a classic case of a firm with engineers as a powerful occupation with a track record of success and professional norms that are completely different from the new leaders in marketing. They had all opportunities to resist, which they did – until they suddenly started making compromises. What happened?

The firm had engineers that were either radical or moderate in their views on the role (and power) that engineering should have and the type of engineering that was needed. They also had radical and moderate marketing professionals. The battle between engineering and marketing alerted engineers to the difference between marketing people, and the radicals were seen as such a great threat that the moderate engineers started collaborating with the moderate marketers. So, the firm was reconfigured from an engineering versus marketing battle to a moderate-moderate collaboration with radicals on both sides out of the loop, in both power and product/market development.

This is a very nice illustration of how power struggles in organizations can get resolved. It also is a point that harks back to classical organizational theory. Back in the days of Cyert and March, the Behavioral Theory of the Firm introduced the concept of a dominant coalition, and suggested that managers could be very astute in forming coalitions. Indeed they can – as Truelove and Kellogg pointed out, the dominant coalition can shift from a department to a cross-department collaboration.