Organizational Inertia

TECHNOLOGICAL CHANGE AND ORGANIZATIONAL INERTIA IN THE COMPUTER INDUSTRY

An organization’s ‘Achilles heel’ can often be found in the routines and processes which were the basis of past success. In a fast-moving, technologically complex and innovative industry dominated by small firms with well-developed communication and technology transfer, one firm’s inability to keep pace with innovations in manufacturing processes forced it out of business. Kasper Instruments (KI) produced photolithographic alignment equipment, used to manufacture semi-conductor devices. Their manufacture required the transfer of small, intricate patterns on to the surface of a wafer of semi-conductor material such as silicon. This transfer process, called lithography, required only certain areas of the wafer to be exposed to light, with masks used to provide the appropriate shield. Contact aligners were the first form of mask to be used commercially and, as the name suggest, these may contact with the wafers. KI’s position as industry leader was because of its expertise in the contact alignment technique. However, as technology became more advanced, proximity masks were able to be used which did not come into contact with the wafer, so the risk of damage was reduced. Technology within the industry continued to develop incrementally until a quite different process of electron beam alignment was developed in which a focused beam wrote directly on to the wafer. Yet the industry leader was unable to make their technological transition; in the switch from contact to proximity aligners. KI lost its position of industry leader to Canon and was ultimately forced to leave the industry. The technological change needed for KI to keep pace with Canon and introduce the more efficient proximity alignment technique was, in technological terms, relatively minor; and the top team at KI were keenly aware of the need to change. However, they seemed unable to rise to Canon’s challenge, refusing to accept the obsolescence of their own expert knowledge in the contact technique. Whilst KI continually held on to the past, trying to modify its own production technique to include some elements of Canon’s innovative procedures, with no success, its market share slipped away. When the engineers at KI were given a Canon proximity aligner to take apart with a view to producing their own model, they dismissed it as a mere copy of their own (very different) contact. What seemed to be a small incremental development in technology required KI to totally rethink the way it did business, from its production processes to its sales and marketing strategies. In its failure to translate its technological understanding of the need for change by changing the routinized processes existing in the organization, it was not alone. Throughout the history of technological change within this industry, each innovation has been a harbinger of doom for the market leader. (Prepared by Phyl Johnson, Graduate Business School, University of Strathclyde) 1. Which processes of strategic management might have helped to avoid KI’s problems? 2. Would these processes be suited to organizations facing less innovatory or changing environments?