Escaping the Collapse Trap: Remaining Capable Without Capabilities
| Date | 01 July 2015 |
| Author | Russell Manfield,Lance Newey |
| DOI | http://doi.org/10.1002/jsc.2016 |
| Published date | 01 July 2015 |
RESEARCH ARTICLE
Strat. Change 24: 373–387 (2015)
Published online in Wiley Online Library
(wileyonlinelibrary.com) DOI: 10.1002/jsc.2016
Copyright © 2015 John Wiley & Sons, Ltd.
Strategic Change: Briengs in Entrepreneurial Finance
Strategic Change
DOI: 10.1002/jsc.2016
Escaping the Collapse Trap: Remaining Capable
Without Capabilities1
Russell Maneld
University of Queensland Business School, Australia
Lance Newey
University of Queensland Business School, Australia
Resilient rms need to maintain function even while under duress, both with
routine actions and when routines collapse.
Old wisdom says that real strength is shown in times of weakness when relied-on
sources of strength are gone. Such wisdom speaks to resilience – remaining capable
even when things seem incapable. Our focal case study of real-time decision
making through cycles of success and failure within ActiveSky over the last 14
years indicates that resilience is critically important for organizations and managers
as well. How can organizations remain capable when their capabilities are gone?
ActiveSky is a technology company founded in 1999, at the height of the
dotcom boom. At founding, it oered a radically new and capable platform for
handheld wireless devices to send and receive interactive content over the air,
enabling services that, at the time, were only dreamed of. When handheld devices
could typically garner processing speeds of no more than 5 MIPS (millions of
instructions per second, compared with 400 MIPS or greater today), the ActiveSky
platform was able to deliver functionality for online forms, audio, and streaming
video. e market interest in this capability was intense and ActiveSky successfully
raised considerable venture capital investment to fund a rapid and ambitious
expansion. In addition to its head oce in Silicon Valley, within a year it had
opened two technology development facilities in Australia, a sales oce and
product-testing facility in Japan, and a sales oce in the UK.
But the growth didn’t last. ActiveSky was hardest hit by the volatility of a
still-forming wireless marketplace, with ckle customer loyalties as new products
hit the market and the consequent unstable and insucient cash ows. e rm
found itself continually redirecting its resources, always catching up to implement
some latest, desired feature set. By 2003 they were well into decline, with a series
1 JEL classication codes: L1, M13, O31.
Capabilities are those bundles of
activities that organizations do
really well and can give them a
competitive edge, but what do
you do when they are shattered
by adverse environmental shocks?
Our longitudinal case study of a
rm that experienced three
episodes of decline and collapse
reveals a particular sequence of
actions that managers need to
learn in order to survive, even
grow, from collapsed capabilities.
We nd that rms that do not
acquire skills are likely to get
stuck in a collapse trap and that
liberation comes from harnessing
the unstable activities used to
purposefully dismantle and rebuild
capabilities under high-risk and
volatile conditions.
Our work seeks to inform
managers in building a more
resilient rm, capable of
managing even when the
organization seems incapable.
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