Emerging business opportunities at IBM

Question 1 – why large companies find it difficult to create new businesses
Large companies like IBM usually have organisational architecture, routines and culture that have evolved and matured with its successful businesses. But being tailored to mature businesses, they may be a barrier to creating new, different, businesses. Consequently, large corporations may be upstaged by smaller companies armed with new ideas that subsequently become dominant in the market place.
Reasons why large companies find it difficult to create new businesses include: • A focus on currently successful businesses (culture)
As Clayton M. Christensen argues, when a firm’s core businesses are profitable, starting new growth ventures seems unnecessary (Christensen, 1997). Senior managers don’t focus on launching new growth businesses when the core units are strong, so miss potentially lucrative future business opportunities. Eastman Kodak, for example, lost the industry leadership it had held in the photographic media and equipment markets since 1888 because it remained focussed on film and film cameras and failed to offer digital cameras early enough. • A reluctance to take risks (culture)
Related to this focus on current businesses, large, successful companies are sometimes more reluctant to take risks on new growth directions. One example of a risk-taking firm is NTT DoCoMo. Rather than invest in expensive bandwidth to provide greater support to existing customers with existing services as its US competitors were doing, NTT DoCoMo targeted new customers with new features such as ring-tones and games, developing a new revenue stream outside of their core business (Christensen, 1997). But more commonly, large companies will prefer to focus on projects that reinforce and sustain their core business and customers for a more certain return on