Inchan Kim is an author on "Two Entrepreneurial Firms, a Digital Disruption, and Different Responses: The Role of Organizational Mission and Experiential Computing Digital Options," published in Information & Management.
For most, the launch of the Apple Watch in 2015 was just the next advancement in smart technologies. But, for the two leading fitness technology entrepreneurs at the time—Fitbit and Jawbone—the Apple Watch was the ultimate industry disrupter.
Fitbit survived the disruption and continued to compete, but Jawbone eventually filed for bankruptcy. Why did these two companies have very different fates?
UNH Paul College Assistant Professor of Decision Sciences Inchan Kim and Nicholas Roberts, an associate professor at Oregon State University, investigated the contrasting fates of the companies and found that agility in responding to disruptions hinges on two critical factors: a company’s organizational mission and digital options strategy.
“This study shows that being focused, as opposed to being flexible, actually helps digital entrepreneurs when big tech firms make a disruptive move to encroach on their established markets,” Kim says.
The Research and Findings
The researchers conducted an in-depth comparison of the two entrepreneurial companies using archival data, interviews, press releases, and blog posts. They found:
- Fitbit remained focused on improving health and fitness, and its digital strategy reflected that by continually enhancing its fitness-related capabilities, such as step counting, sleep tracking, and heart rate monitoring. This narrow focus allowed Fitbit to preserve resources, build competence, create a clear niche, and cautiously expand by acquiring startups like Pebble and Vector Watch.
- Jawbone focused on a broader mission of improving "mobile lifestyle" and "helping people live better," which led them to pursue diverse digital options beyond fitness tracking, including wearability features, Internet of Things (IoT) integration, and payment capabilities. Ultimately, this led to resource depletion, and the company struggled with product quality and failed to solidify its core competencies.
“From the very beginning, entrepreneurial firms should have a clear, specific mission, which typically equips them with a narrow focus on the products they create and pursue,” Kim says. “Over time, they will be able to build competence in producing quality products, solidify a niche, and maintain a healthy level of resources. This combination of niche, competence, and resource is critical in being able to respond to a disruption brought by big, powerful firms.”
The Big Takeaway
Entrepreneurs shouldn’t take on more than they can handle.
This is a case where Fitbit excelled because it combined a specific mission with selective digital options, while Jawbone paired an abstract mission with diverse digital options that stretched it too thin and undermined its ability to respond to new competition.
Kim says a lot can be learned from comparing the two businesses.
“Competition is vital in building and maintaining a healthy economy, and entrepreneurship precisely brings that,” Kim says. “However, small, young firms, or simply ‘entrepreneurial firms,’ often confront a harsh reality where big, powerful firms are increasingly looking to conquer their hard-earned markets. We need much more studies to help these ‘little’ firms, which can build and maintain a healthy level of competition in our economy.”
