A competitive strategy tale for the Thanksgiving Holiday
Today EkaLore is going back in time… to an Alien Invader that literally zapped the marketplace.
Litton Industries was founded in 1953. Litton Industries became a major defense contractor in electronics, ship building, instruments, and other components for the defense industry.
Litton Industries became an Alien Invader using:
1) Adequate investment capital generated from the enterprise
2) Technology knowledge and expertise from parallel defense markets
3) Government contracts extended by acquisitions to gain market know-how
Litton, In 1963, got a pioneering contract with an airline. In cooperation with the Federal Aviation Administration, it produced an 86-pound microwave oven for use in an airliner. Litton Industries purchased Atherton Company (Chicago) in 1965. Atherton, with major manufacturing in the suburbs of the Twin Cities (Minnesota), made appliances and had consumer manufacturing expertise.
Raytheon patented microwave ovens in 1956 after an accidental discovery of popped corn from microwave emissions from a magnetron. In the 1950s Raytheon brought an industrial and commercial line of microwave ovens to the market under the name of Radar Range. Raytheon was not a consumer products company and licensed the technology to Tappan Stove Company. Thus, for about the first 20 years microwave cooking was a small side-show in the commercial marketplace.
Litton Industries turned the microwave oven from a niche market to a major consumer appliance that almost all US homes and businesses now have. It stepped out of the defense and commercial world into consumer marketplace as an Alien Invader:
1) Litton used investment capital to explore and then attack a large existing market. Litton was a ‘conglomerate company’ in a style now out-of-fashion business model. Profits from defense and unrelated commercial divisions were used to expand the enterprise and enter a totally alien market: consumer cooking appliances. The investment in a new product attacked the most expensive and profitable products of established consumer kitchen appliances companies.
2) Litton had a solid grasp of the technologies used in microwave ovens and focused on two commercialization competencies: mass manufacturing and appliance design. The mass manufacturing used expertise and know-how from producing high-tech defense elements combined with the mass manufacturing techniques for consumer appliances. The appliance design was established to be ‘manufacturable’ and took the form of a low rectangular shape that we still commonly see. The weight dropped steadily from the 750 pound 5½ foot tall original costing $5,000 (1947 dollars, now closer to $52,000) Raytheon Radar Range to an appliance Litton designed to fit on an American kitchen counter. Litton achieved a “sellable” product by combined technological knowledge, design imagination, and core manufacturing competency.
3) Litton acquired the marketing know-how from outside the firm to build a consumer business that had never seen Litton as a competitor – a true Alien Invader. Raytheon also wanted into this market and bought Amana Appliances (Amana, IA) to compete in the market that Litton was pioneering. Within a few years Litton had attacked and conquered a market where they targeted and manufactured microwave ovens cheaper than the color TVs then coming to market.
The results of the Alien Invasion 50 plus years later is an appliance where even small children can safely zap popcorn. The competitors in the early microwave oven market were successful in attacking the market for ovens and stoves. From a commercial curiosity to something used by young college students learning to cook for themselves, this Alien Invasion has completely changed home cooking, commercial food preparation, and commercial food products.
If you’re interested in staging an Alien Invasion into another marketplace or are concerned about someone doing that to your market, we’d love to hear about it. www.ekalore.com/contact
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