Ryan Raffaelli, of Harvard Business School, has examined examples of “re-emergent technologies” in detail. The most striking example is the Swiss mechanical-watch industry. In the 1970s it was almost washed away by a tide of cheaper and more accurate digital watches. Today the industry is more successful than ever, providing the country’s largest source of exports after pharmaceuticals and machinery, and the engine of its revival is the old-fashioned wind-up watch.
There are plenty of other examples of re-emergent technologies. Sales of fountain pens collapsed in the 1950s with the arrival of cheap ballpoints; since the mid-1970s they have enjoyed a steady revival. Trams looked destined to become nothing more than tourist attractions in proudly quaint cities such as San Francisco and Paris. But hundreds of cities in the world have either installed new tram systems or have plans to do so. Sales of vinyl LPs in the world have increased from almost nothing in 1993 to more than some millions in 2013. The number of independent bookshops is rising for the first time in decades.
How do businesses go about reviving old technologies in the face of so much innovation? Mr Raffaelli argues that the key to success lies in redefining the product’s value and meaning. Swiss watchmakers redefined their products as status goods rather than a means of telling the time. That they are so much harder to make than digital watches added immeasurably to their desirability. Independent booksellers are redefining themselves as communities where people who care about books meet and socialise. Trams are re-emerging as a green solution to both pollution and urban sprawl: a striking number of the cities that are adopting them are formless sunbelt cities.
This redefinition demands a careful balance between tradition and change. Revival businesses often need to cultivate a close relationship with their craftsmen and customers, who may see themselves as guardians of a great tradition rather than mere employees or consumers. The Swiss watch industry arguably survived only because collectors kept paying record prices for watches at auctions and skilled craftsmen refused to abandon the old ways: when Zenith decided to throw away its mechanical watchmaking moulds at the height of what Swiss refer to as “the quartz crisis”, one old-timer decided to store them in a shed instead, wheeling them out once again when the luxury market took off. Revival businesses need to peddle their back-story remorselessly.
However, while peddling their traditions and reassuring customers and craftsmen that they are holding true to them, revival businesses also need to be willing to change. Nicolas Hayek and Ernst Thomke saved the Swiss watch industry from impending death by applying a succession of electric shocks. In a series of deals they brought together a bunch of ailing businesses into the mighty Swatch Group, whose sales last year reached SFr8.8 billion ($9.5 billion). They fought back against cheap digital watches by first redefining Swiss watches as fashion items, with Swatches, and then redefining them as luxury items, with brands such as Breguet, Blancpain and Omega which sell watches for six-figure sums.
Revival industries need to be willing to take tough decisions: for example, sacrificing market share to new entrants while holding firm on price. They also have to be ready to reorientate themselves to new markets: the Chinese have proved enthusiastic buyers of Western heritage goods.