How might a firm's management decide whether it should continue to invest in current known technology or in new, but untested, technology? What factors might encourage or discourage such a shift?

What will be an ideal response?

Although technological discontinuity is discussed in the chapter, the answer to this question is not provided. Igor Ansoff recommends that strategic managers deal with the issue of technology substitution by (1) continuously searching for sources from which new technologies are likely, (2) as the technology surfaces, making a timely commitment either to acquire the new technology or to prepare to leave the market, and (3) reallocating resources from improvements in the older process oriented technology to investments in the newer, typically product oriented, technology as the new technology approaches commercial realization. In his book, The Innovator's Dilemma, Christensen explains how difficult it is for a firm to continue to build and market its current products to its current customers using current, well-understood technology when it is trying to create new products for new customers using new, untested technology. The cost and time requirements to stay up to date with new and old technologies can bankrupt a company, especially given that a company's culture, structure, and processes are primarily built around the old known technology.