You think your industry is tough? Imagine customer preferences that can shift literally overnight, product lifecycles measured in weeks, and the value of your product plummeting if you miss the latest trend. Welcome to the world of fast fashion.
Donald Sull and Stefano Turconi examine how Zara, a leader in the industry, has pioneered an approach to navigate the volatility of fast fashion, offering lessons for any company facing rapidly changing markets.
Business historians have illuminated how first movers in many emerging industries secure an enduring leadership position, but have devoted less attention to the processes by which industry leaders relinquish their dominance. This paper examines why rubber industry leader Firestone Tire & Rubber failed to respond effectively to new technology and foreign competition. The author argues that Firestone did not respond by doing nothing, but rather accelerated activities that had contributed to its past success. Firestone's response was constrained by managers' existing strategic frames and values, and the company's processes and long-standing relationships with customers and employees.
Strategy scholars argue that industrial clusters foster innovation, citing examples such as Silicon Valley and Hollywood. Leading firms embedded in once-innovative clusters, such as Detroit's automobile manufacturers and Switzerland's watch makers, have failed to adapt to competitive changes and been accused of organizational inertia. This paradox raises two related questions: how do industrial clusters contribute to inertia as well as innovation and how might industrial clusters evolve to promote inertia rather than innovation. This paper presents findings from a historical analysis of the American tire industry concentrated in Akron, Ohio from its inception in 1900 to its demise in the late 1980s. The tire industry was among the most innovative sectors in the U.S. economy between 1900 and 1935, providing dramatic improvements in both product performance and manufacturing process efficiency, and Akron-based firms accounted for most of this innovation. Faced with the introduction of radial tire technology pioneered by French tire maker Michelin, however, the Akron tire companies faltered in the 1970s and 1980s, and in the span of eighteen months, three of the four Akron tire manufacturers ceased to exist as independent corporations. This paper presents a framework grounded in the historical data, that suggests that geographic co-location facilitates knowledge spillovers, but the value of these spillovers decrease as the technology matures. The cost of geographic co-location increases, however, as the cluster's shared cognitive models and organizational routines assume a taken-for-granted quality. The institutionalization of cognitive models and organizational routines leaves the cluster vulnerable to environmental jolts. I gratefully acknowledge the cooperation of the Akron Beacon Journal, the Firestone Tire & Rubber Company, the United Rubber Workers, the Akron Public Library, B. F. Goodrich, and the University of Akron Historical Documents Department for full and open access to their internal files. Research support from the Division of Research at the Harvard Business School is gratefully acknowledged. I also thank Mike Tushman for his helpful comments.
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