Case Study: Schumpeterian Competition

I. Introduction

Goggle replaced Yahoo, and Yahoo replaced AltaVista and other search engines. These are examples of how fast new players may take over sales in a certain categories on the market. Since 1990s, the market has leaders and innovators that are winner-take-all concentrated, and focused on taking over the market. Competitive advantage is being run for and more companies are investing in IT in order to reach quality and quantity of goods and services. They are replacing their operating models by using Internet and new software’s. Organizations that are making changes in their sectors by including information technology innovations are gaining competitive advantage. This is called Schumpeterian competition. This turn towards innovations

Some choose it for achieving competitive advantage. They try to implement their processes, and achieve it, and some fail in implementation process. On the other hand some do not try at all, because they do not believe in the power of IT. Those that succeed in implementation and become effective begin to spread rapidly. Thus, they become more competitive and the ones with best processes win market sectors. In this case the competitors react more aggressively and they introduce new IT innovations, instead of imitating the first mover. Competitors compete by introducing new innovations and attracting customers so that they begin to switch from one to another. Therefore they are responding to changing environment. Industry rivalry brings intense and dynamic movements in the market. This Schumpeterian environment consists of innovations that multiply fast. Managers need to be turn towards strategic

Companies that use them are U.K. grocery chain Tesco, technology firm Rite Solutions.

• Propagation: top down and bottom up

What did Cisco do? By having about 10,000 Macintosh users that were dissatisfied with the level of support from the central IT group they created a wiki. This wiki shared user ideas, and achieved ideas for innovations to flow through the organization.

It may appear that Cisco and Otis are in the bottom line centralized companies. But, really their local managers and employees have great responsibilities in their IT operating models. After implementing e*Logistics Otis gave, for the first time, supervisors responsibility for observing if the site was ready to install an elevator before shipping was authorized. Previously, after manufacturing the equipment was immediately shipped.

Another example is with clothes retail Zara, where they order clothes using digital tools for weekly timetable. Zara stores managers’ have great responsibility for assessing the taste of customers and then taking orders of which clothes are