Responding to business model innovation: organizational unlearning and firm failure

Yuliya Snihur

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Organizational Learning and Leadership Innovation and Knowledge Management Management and Organizational Studies

Abstract

Purpose This paper aims to examine Borders response to business model innovation (BMI) by Amazon in the bookselling industry. The case illuminates potential causes for protracted periods of organizational unlearning, explaining why organizational unlearning, although beneficial in many documented cases, can also be insufficient to prevent failure. Design/methodology/approach Archival data are used to study Borders’s historical evolution from 1995 to its 2011 bankruptcy. Theoretical inferences are drawn from this case to shed light on the process of organizational unlearning. Findings Borders failed because its top managers were unable to adjust its traditionalist superstore identity to respond in an adequate manner to the changes in their environment. Instead, the company went through protracted phases of weathering the storm, denial and unlearning, resulting in bankruptcy. This extreme case of failure explains why sometimes, organizational unlearning might be insufficient, resulting in organizational demise rather than renewal. Research limitations/implications A longitudinal study of an extreme case allows the author to build links between the research on organizational unlearning and the scholarship on organizational identity. Practical implications Organizations may survive longer if their top managers engage in the process of organizational identity change in response to BMI in their industry. The article proposes a few actions that organizations might usefully take to react to BMI before it is too late. Social implications Better understanding of failure may enable preventive behavior. Originality/value This article explains how organizational identity prevents learning the right things and augments the dangers organizations face during unlearning.

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References

1991Exploration and Exploitation in Organizational Learning 2009Business Models, Business Strategy and Innovation 1999Strategies for Theorizing from Process Data 2001Value creation in E‐business 2007Persuasion With Case Studies 1991Sensemaking and sensegiving in strategic change initiation 2009Business Model Design: An Activity System Perspective 2010From Strategy to Business Models and onto Tactics

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