Conjecture

The two phases of an industry demand incompatible organisations, which is why the same firm rarely wins both. In turmoil, with no single industry-wide dominant design, success in the market turns on the synthesis of unfamiliar technologies in creative new designs, so a firm must actively develop both knowledge of alternative components and knowledge of how they can be integrated. Advantage comes from intelligent global search, the active search for new solutions within a constantly changing context, and it is best done by small teams of highly creative experts. In stability, competition turns on component quality, so firms hire large numbers of detail-oriented engineers, split into functional teams each owning a component, communicate less across functions and carry their architecture in their procedures rather than explicitly. Advantage comes from efficient and exhaustive local search within a defined product structure. Personnel, team size, communication strategy and standard operating procedure all reflect the regime a firm grew up in, and large incumbents carry the most inertia and the most reluctance to believe the ground is moving.

Institutional design