26th International Association for Management of Technology Conference - IAMOT 2017

Technological evolution brings big change in business and in many cases, just few companies can survive such situation. Digitalization drove out photographic film from the market and most of film makers including Eastman Kodak failed to change its business portfolio and survive. One of the exceptions is Fuji Film. There are many comparing analysis of management aspect of Kodak and Fuji after crisis. Previous studies have shown that after a long period of film business success, Kodak`s core competencies became core rigidities and making change was difficult. Also, it is shown that organization`s culture change was very difficult, especially in Kodak`s bureaucratic organization staffed by risk-averse managers . Malfunction of Kodak`s top management is also pointed out. Meanwhile, it is discussed that Fuji achieved proper business change under the strong leadership of CEO Komori, and succeeded business diversification in a short time. New business fields of Fuji include pharmaceuticals, cosmetics, diagnostic digital imaging, LCD film and so on. Technological diversification should be ahead of business diversification, especially in case of the business with high technology. However, technological diversification takes long time, so it is difficult to take an opportunity of business diversification in a timely manner. This is critical issue to survive the era of technological drastic change. Purpose of this study is to analyze how a firm responds to a big change, and clarify the conditions that make a firm possible to create diversified business in appropriate time period. We focused in the process of technological diversification that is needed to create diversified new business. We analyzed patent data of Fuji and Kodak to visualize the range of technology by a time series. International patent classification (IPC) code was used to distinguish field of technology. Number of variety of IPC subclass code and its Herfindahl-Hirschman Index (HHI) of each year were calculated. Interviews to senior managers of Fuji Film and other companies were done. It became clear that Fuji was extending its technology field between 1994 and 2000. The number of IPC code variety was increasing and HHI was decreasing in the period significantly. Market decline of photographic color film started 2000 and Fuji`s mid-term strategic plan “Vision 75”started in 2004. This means that Fuji Film had started its technology diversification in advance of business big change. On the other hand, Kodak did not show such clear strategic activity in this period. Kodak`s IPC code HHI started to decrease only after 2000. This new findings may help to understand why Fuji could survive big change caused by digitalization and Kodak could not. Technology diversification takes long time and business organization should prepare long time before business change is expected, so precise and visionary technology management is needed to make it possible. We named this kind of maneuver as a “Preadaptation Strategy”of technology management in the era of big change. Preadaption is a term of evolutionary biology and describes a situation where a living creature uses a preexisting anatomical structure inherited from an ancestor for a potentially unrelated purpose and function. By extension, preadaptation strategy of technology management means a process that company diversifies its technology in preparation for big business change in advance. As technological singularity is approaching, this concept may provide important suggestions to the management of technology in high-tech industry.