Study 4 – Facit and the displacement of mechanical calculators 35 

Facit was a Swedish manufacturer of typewriters, mechanical calculators and office machines. In 1971-1972, the company went from almost 50 years of expansion and continued profitability to being close to bankruptcy. The shift from mechanical to electronic calculators was the main reason why Facit encountered problems. Prior to the transition, the industry was characterized by high entry barriers and extensive vertical integration, both up- stream and downstream. A few large companies which controlled specialized machinery for the manufacturing of components dominated the industry (Majumdar, 1982). These firms also had large sales organizations and maintained close relationships to their industrial customers. The shift to electronics created insurmountable challenges for many of these companies, and Japanese firms like Sharp, Casio, Canon and Busicom entered the scene in the mid-1960s. By the early 1970s, some Western semiconductor firms like Texas Instruments and Rockwell entered the industry, which was now subject to rapid incremental development and a sharp decline in prices.

While some work has been done regarding Facit and the shift to electronics (e.g. Starbuck and Hedberg, 1977; Starbuck et al., 1978), this case has not yet been addressed from a disruptive innovation perspective. Other scholars have focused on such aspects as leadership and organizational impediments (Pettersson, 2003), but the value network dimension of this incumbent failure has not been investigated before. Moreover, the fate of Facit is often mentioned by scholars, but rarely treated in detail.

The fact that the initial diffusion of digital technology happened in very advanced segments such as military or scientific applications (Utterback, 1994), then entered Facit’s segment of office machines, and later on yielded consumer products triggered the author’s interest in the industry and the company. While it was clear that electronic calculators had disruptive properties, the initial investigation made it plain that electronic calculators did not emerge in the way that Christensen’s framework would suggest. Nevertheless, it was evident from an early point that value networks and the environment played an important role in the transition from mechanical to electronic calculators. Additionally, the fact that electronic calculators prospered in Facit’s market segment in the late 1960s and early 1970s made it an interesting case to study within the scope of this dissertation. A historical case like this was also deemed to be suitable since the dynamics of the shift could be followed and analyzed in retrospect. An additional reason for studying these companies was that extensive information could be accessed at the Facit archives in Åtvidaberg, Sweden.

A study of Facit would therefore be suitable for exploring where and how a disruptive innovation actually prospers and what challenges a firm encounters. The books and texts that had been published regarding the company’s fate (Pettersson, 2003; Torekull et al., 1982; von Kantzow, 1991) were read and then an extensive amount of historical documents were reviewed. In total, two weeks were spent going through the Facit archives in Åtvidaberg, Sweden, where the company used to be headquartered. Two weeks were not enough to allow

a complete investigation of the abundant sources available. The author therefore decided to focus on documents which concerned strategic decisions related to the transition from mechanical to electronic calculators. The following documents were reviewed:

• Annual reports from the period 1959-1974 • Minutes from board meetings, 1964-70, 1972 • Minutes from top management meetings, 1961-72

• Forecast of future sales of electronic calculators 1970-72, 1970 • Statistics regarding prices on electronic calculators 1967-1970, 1970 • Data on Facit’s profitability 1960-1970, 1970

• Consulting report on cost savings by H. Bohlin et al., 1962 • Ciceronen, company magazine, 1960-72

• Internal documents related to the collaboration with Sharp

In addition to the archival sources, interviews have been conducted with former directors of the company, e.g. the CEO of Facit from 1957 to 1968, one member of the top management team and one person who worked with the market-related aspects of electronic calculators. In total, six interviews were performed, totaling approximately 20 hours. The interviewees were centered around open-ended questions regarding the emergence of electronic calculators, its impact on the company’s capabilities and the established business model. Moreover, those issues which were identified as particularly interesting from the archival studies were further addressed during the interview sessions. One potential weakness of this study is that some people whom it would have been interesting to interview have passed away. However, the combination of interaction with key individuals and access to rich archival sources has still generated a sufficiently good understanding of this case to address the issue of value networks and disruptive innovation.

The collection and analysis of the data were guided by existing theory on disruptive innovation. After the first week of studies in the archives, it became clearer in what ways the introduction of electronic calculators illustrated several important challenges that existing theory had largely overlooked. This interpretation of the gathered data was presented to other researchers who had been interested in the case.23 A case write-up and a within-case analysis were conducted. These data were in turn compared with the data from the first study regarding Hasselblad and the gathered data about IP video surveillance. The third appended article is based upon this analysis.

       23 _{Mats Magnusson and Jan Jörnmark.}