From Typewriters to Technology: Olivetti's Strategic Innovation

A company's ability to adapt and innovate in the face of rapid and disruptive technological changes is critical for success. The story of Olivetti, with its dramatic shift from the mechanical technology of its typewriters to electronic technology, provides an excellent case study on overcoming inertia and harnessing disruptive innovation by promoting organizational ambidexterity.

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The Legacy of Olivetti: A Journey of Innovation and Challenges

Founded in 1908 in Ivrea, Italy, Olivetti began as a manufacturer of typewriters and evolved to become competitive in the electronic products market as well. In the mid-20th century, the company faced the necessity of transitioning from mechanical products to information technology solutions, a change driven by the emerging digital revolution of that time.

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Embedded Competencies

At Olivetti, competencies in mechanical technology became deeply embedded over decades, acquiring legitimacy, power, and significant resources. These established competencies shaped the culture and operations of the company, becoming part of its identity and success. Paradoxically, while these same competencies promoted inertia, they also offered the infrastructure necessary for change, as they could provide the knowledge base and resources that, if reoriented, could drive innovation (Danneels, Verona & Provera, 2018).

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Organizational Inertia: Separating to Integrate

Olivetti faced the challenge of integrating new electronic technologies into a mechanically dominated environment. The solution came through organizational ambidexterity by segregating the new technology, creating dedicated spaces that allowed innovation to flourish without the constraints of existing operations. The company strategically used cooptation to align the new electronic technology with the established mechanical competencies. By doing so, Olivetti not only leveraged the legitimacy and support for the new technology but also facilitated a smoother transition by presenting it as a natural extension of its capabilities.

An important element in overcoming this inertia was reallocating resources to support the new technologies. This strategic diversion of investments allowed Olivetti to develop the competencies necessary to compete in the new technological environment.

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Strategic Vision

Clayton Christensen’s (2016) “Jobs to be Done” theory offers an innovative perspective on products and services, emphasizing that consumers “hire” solutions to perform specific tasks in their lives. This approach focuses less on the products and more on the outcomes that consumers aim to achieve by purchasing them. In the case of Olivetti, this theory provides a lens that helps us understand how the company adapted its product offerings in response to technological changes and market needs. Historically known for its typewriters and other mechanical devices, Olivetti faced challenges with the rise of the electronic era. In response, the company not only updated its technologies; it fundamentally rethought the role of its products. Instead of viewing its devices merely as office tools, Olivetti began to see them as integrated solutions for the daily communication and information management tasks of customers. This realignment enabled Olivetti to meet the new market demands more effectively, transforming its products to serve as more efficient facilitators of the “jobs” that customers needed to complete.

Another very interesting theory, “Marketing Myopia”, introduced by Theodore Levitt in 1960, already warned about the risk of companies overly focusing on their current products and losing sight of the future needs of customers. Levitt, an influential Harvard professor, argued that successful companies look beyond the technical features of their products to understand how they meet the deeper desires and tasks of consumers. Originally focused on manufacturing typewriters and calculators, Olivetti faced the imperative need to reinvent itself to avoid obsolescence, expanding its vision beyond the machines it manufactured, positioning itself as a provider of broader technological solutions.

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Conclusion

Olivetti’s journey through a landscape of transformation is a powerful reminder that technological transition is intricately complex and requires not only the adoption of innovations but also strategic management of internal forces that can both catalyze and hinder change. Despite the highs and lows, Olivetti leaves a legacy of innovation with important lessons on managing technological changes and business adaptation.

We can conclude, therefore, that technological transition is a complex process that involves implementing disruptive innovations within an organization, often challenged by inertia and facilitated through the adoption of cooptation and organizational ambidexterity, allowing the company to balance the exploration of new technologies with the efficient maintenance of existing competencies.

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Thiago Madruga ??

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References

Christensen, C., Hall, T., Dillon, K., & Duncan, D. S. (2016). Know your customers’ “jobs to be done”. Harvard Business Review, 94(9), 54-62.

Danneels, E., Verona, G., & Provera, B. (2018). Overcoming the inertia of organizational competence: Olivetti’s transition from mechanical to electronic technology. Industrial and Corporate Change, 27(3), 595-618.

Levitt, T. (1960). Marketing myopia. Harvard Business Review, 38, 45-56.