The_Innovators_Dilemma__Clayton

11. Makers of early hybrid ocean transports, which were steam-powered but still outfitted with sails,
used the same rationale for their design as did the Bucyrus Erie engineers: Steam power still was not
reliable enough for the transoceanic market, so steam power plants had to be backed up by
conventional technology. The advent of steam-powered ships and their substitution for wind-powered
ships in the transoceanic business is itself a classic study of disruptive technology. When Robert Fulton
sailed the first steamship up the Hudson River in 1819, it underperformed transoceanic sailing ships on
nearly every dimension of performance: It cost more per mile to operate; it was slower; and it was
prone to frequent breakdowns. Hence, it could not be used in the transoceanic value network and could
only be applied in a different value network, inland waterways, in which product performance was
measured very differently. In rivers and lakes, the ability to move against the wind or in the absence of
a wind was the attribute most highly valued by ship captains, and along that dimension, steam
outperformed sail. Some scholars (see, for example, Richard Foster, in Innovation: The Attacker’s
Advantage [New York: Summit Books, 1986]) have marveled at how myopic were the makers of
sailing ships, who stayed with their aging technology until the bitter end, in the early 1900s, completely
ignoring steam power. Indeed, not a single maker of sailing ships survived the industry’s transition to
steam power. The value network framework offers a perspective on this problem that these scholars
seem to have ignored, however. It was not a problem of knowing about steam power or of having
access to technology. The problem was that the customers of the sailing ship manufacturers, who were
transoceanic shippers, could not use steam-powered ships until the turn of the century. To cultivate a
position in steamship building, the makers of sailing ships would have had to engineer a major strategic
reorientation into the inland waterway market, because that was the only value network where steampowered
vessels were valued throughout most of the 1800s. Hence, it was these firms’ reluctance or
inability to change strategy, rather than their inability to change technology, that lay at the root of their
failure in the face of steam-powered vessels.
12. An exception to this is an unusual product introduced by Koehring in 1957: the Skooper combined
cables and hydraulics to dig earth away from a facing wall; it did not dig down into the earth.
13. Bucyrus Erie does not fit easily into either of these groups. It introduced a large hydraulic excavator
in the 1950s, but subsequently withdrew it from the market. In the late 1960s, it acquired the
“Dynahoe” line of hydraulic loader-backhoes from Hy-Dynamic Corporation and sold them as utility
machines to its general excavation customers, but, again, dropped this product line as well.
14. Caterpillar was a very late (but successful) entrant into the hydraulic excavation equipment
industry, introducing its first model in 1972. Excavators were an extension of its line of dozers,
scrapers, and graders. Caterpillar never participated in the excavation machine market when cable
actuation was the dominant design.
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