Entrenched Player's Dilemma
- Entrenched Player's Dilemma
The Entrenched Player's Dilemma is the choice faced by existing businesses in a changing marketplace. In order to embrace new ideas fully, they must abandon their current revenue streams. Thus, a dilemma between what works today and what will work tomorrow. Naturally, this is difficult for publicly traded companies or successful businesses.
Problems with Change
The Entrenched Player's Dilemma is featured in Wikinomics, as the authors attempted to find out why corporations resisted crowd sourcing and mass collaboration.
"The problem with mature companies is that the very commercial success of their products increases their dependency on them. Making radical changes in the product's capabilities, underlying architecture or associated business models could cannibalize sales or lead to costly realignments of strategy and business infrastructure. It's as though popular and widely adopted products become ossified, hardened by the inherent incentives to build on their own success. The result is that entrenched industry players are generally not motivated to develop or deploy disruptive technologies." [Tapscott, Don "Wikinomics" (New York 2006) 174.]
In "Television Disrupted", famed composer and author, Shelly Palmer writes that:
...enhancements that create the best user experiences are extremely disruptive to the financial model of network television. So, the idea of enhancing a show on a linear network or truly making it interactive is a better theory than reality. This is not going to change - ever." [Palmer, Shelly "Television Disrupted: The Transition from Network to Networked TV" (Oxford 2006) 35.]
Since moving towards an interactive model of television would impact the ratings of traditional television, channels are stuck. [Palmer, Shelly "Television Disrupted: The Transition from Network to Networked TV" (Oxford 2006) 35.] The incentives to improve are countered with a short-term worsening.
Examples
* In The Farnsworth Invention a character describing RCA's reluctance to explore new business models says "Once you’re good at connecting consumers with advertisers, it’s hard to be good at anything else.”
* The railroad industry was reluctant to invest in airplane transportation because it would have hindered their ability to lay more track and create new routes.
ee also
*Law of disruption
*Prisoner's Dilemma
References
Wikimedia Foundation.
2010.
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