Documentos de Académico
Documentos de Profesional
Documentos de Cultura
Melissa Schilling
Chapter 3
TYPES AND PATTERNS OF INNOVATION
HEVs have increased fuel efficiency and decreased emissions HEVs do not have to be plugged into an electrical outlet Honda chose not to collaborate or license its technology to others wanted to maintain its independence.
Toyota, which engaged in both collaboration and licensing, sold almost three times as many HEVs. Honda was also developing fuel-cell vehicles at the same time, though they would take much longer to commercialize.
Types & Patterns of Innovation
incremental innovation? Are they competence enhancing or competence destroying, and from whose perspective? How would you answer these questions for fuel-cell vehicles? 2. What factors do you think will influence the rate at which hybrid electric vehicles are adopted by consumers? 3. What would be the advantages or disadvantages of Honda and Toyota using the same engine standard? 4. Is Hondas strategy of producing a different engine standard than Toyota and not collaborating or licensing to other automakers a good one? What would you recommend? 5. Why do you think Honda simultaneously developed both hybrid vehicles and fuel-cell vehicles?
Types & Patterns of Innovation
In 2001, lost more than $2 billion; ROA went from 8.4% to -8.5% Pace of rollout slowed by lack of affordable 3G handsets and competing 3G network standards Billions of euros spend on upgrading networks and purchasing licenses from government auctions Companies now very deep in debt which caused loss of investor support Users did not value 3G features as much as hoped
5
Overview
Several dimensions are used to categorize innovations.
These dimensions help clarify how different innovations offer different opportunities (and pose different demands) on producers, users, and regulators.
The path a technology follows through time is termed its technology trajectory.
Many consistent patterns have been observed in technology trajectories, helping us understand how technologies improve and are diffused.
Types of Innovation
Product vs Process Innovation
Product innovations are embodied in the outputs of an organization its goods or services.
Ericssons development of 3G wireless networks and network services
Process innovations are innovations in the way an organization conducts its business, such as in techniques of producing or marketing goods or services.
Improving the effectiveness or efficiency of production reducing defect rates, increasing quantity produced in a given time
processes
The development of advanced workstations enabled the implementation of computer-aided-manufacturing processes that increase the speed and efficiency of production
What is a product innovation for one organization might be a process innovation for another
UPS created a new distribution service (product innovation) that enables its customers to distribute their goods more widely or more easily (process innovation)
Types & Patterns of Innovation
Types of Innovation
Radical vs Incremental Innovation
The radicalness of an innovation is the degree to which it is new and different from previously existing products and processes. Radicalness is also defined in terms of risk
3G wireless technology required Investment in new networking equipment and infrastructure Development of new phones greater display and memeory capabilities as well as a stronger battery and/or better power utilization Degree of user acceptance of the technology was unknown
Types & Patterns of Innovation
Types of Innovation
Radical vs Incremental Innovation
Incremental innovations may involve only a minor change from (or adjustment to) existing practices. The radicalness of an innovation is relative; it may change over time or with respect to different observers.
digital photography a more radical innovation for Kodak (chemical photography expertise) than for Sony (electronics expertise).
10
Types of Innovation
Competence-Enhancing vs Competence-Destroying Innovation
Competence-enhancing innovations build on the firms existing knowledge base
Intels Pentium 4 built on the technology for Pentium III.
Whether an innovation is competence enhancing or competence destroying depends on the perspective of a particular firm.
Types & Patterns of Innovation
11
Types of Innovation
Architectural vs Component Innovation
A component innovation (or modular innovation) entails changes to one or more components of a product system without significantly affecting the overall design.
adding gel-filled material to a bicycle seat
An architectural innovation entails changing the overall design of the system or the way components interact.
transition from high-wheel bicycle to safety bicycle.
In the 1800s, the front wheel of a bicycle has a very large circumference in order to provide speed; gears did not exist yet When gears and chains were invented, the bicycle took on a whole new design
12
13
14
Technology S-Curves
Both the rate of a technologys improvement, and its rate of diffusion to the market typically follow an s-shaped curve. Plot technologys performance against the amount of effort and money invested in the technology S-curves in Technological Improvement
Technology improves slowly at first because it is poorly understood. Then accelerates as understanding increases. Then tapers off as approaches limits.
Types & Patterns of Innovation
15
Technology S-Curves
S-curves in technology performance and market diffusion are related
better performance faster adoption greater adoption further investment in improvements
But they are fundamentally different processes If the effort invested is not constant over time, the resulting s-curve can obscure the true relationship
16
Technology S-Curves
In 1985, Gordon Moore, cofounder of Intel, noted that the density of transistors on integrated circuits had doubled every year since the IC was invented The rate has since slowed to doubling every 18 months but the rate of acceleration is still very steep
17
18
However, Intels R&D dollars per year has also been increasing rapidly
The big gains in transistor density have come at a big cost in terms of effort invested
19
Technology S-Curves
Technologies do not always get to reach their limits May be displaced by new, discontinuous technology.
A discontinuous technology fulfills a similar market need by means of an entirely new knowledge base.
E.g., switch from carbon copying to photocopying, or vinyl records to compact discs
Technological discontinuity may initially have lower performance than incumbent technology.
E.g., first automobiles were much slower than horse-drawn carriages.
Firms may be reluctant to adopt new technology because performance improvement is initially slow and costly, and they may have significant investment in incumbent technology
20
Discontinuous Technology
If the returns to effort invested in new technology are much higher than effort invested in the incumbent technology, in the long-run it is more likely to displace the incumbent technology
Disruptive technology has a steeper s-curve Disruptive technology has an s-curve that increases to a higher performance limit
P e r f o r m a n c e
Incumbent technology
New technology
P e r f o r m a n c e
Incumbent technology
New technology
Effort
Types & Patterns of Innovation
Effort
21
Technology S-Curves
S-Curves in Technology Diffusion (spread of technology through a population)
Adoption is initially slow because the technology is unfamiliar. It accelerates as technology becomes better understood. Eventually market is saturated and rate of new adoptions declines. Technology diffusion tends to take far longer than information diffusion.
Technology may require acquiring complex knowledge or experience. Technology may require complementary resources to make it valuable (e.g., electric lights didnt become practical until development of bulbs and vacuum pumps, cameras not valuable without film).
Types & Patterns of Innovation
22
Technology S-Curves
S-curves of diffusion are in part a function of scurves in technology improvement Learning curve leads to price drops, which accelerate diffusion
23
24
Firms that follow s-curve model too closely could end up switching technologies too soon or too late.
25
26
27
28
29
Technology Cycles
Technological change tends to be cyclical:
Each new s-curve ushers in an initial period of turbulence, followed by rapid improvement, then diminishing returns, and ultimately is displaced by a new technological discontinuity. Utterback and Abernathy characterized the technology cycle into two phases:
The fluid phase (when there is considerable uncertainty about the technology and its market; firms experiment with different product designs in this phase) After a dominant design emerges (bringing a stable architecture to the technology), the specific phase begins (when firms focus on incremental improvements to the design and manufacturing efficiency).
Types & Patterns of Innovation
30
Technology Cycles
Anderson and Tushman also found that technological change proceeded cyclically.
Each discontinuity inaugurates a period of turbulence and uncertainty (era of ferment) until a dominant design is selected, ushering in an era of incremental change.
31
Technology Cycles
Anderson and Tushman found that:
A dominant design always rose to command the majority of market share unless the next discontinuity arrived too early. The dominant design was never in the same form as the original discontinuity, but was also not on the leading edge of technology. It bundled the features that would meet the needs of the majority of the market.
During the era of incremental change, firms often cease to invest in learning about alternative designs and instead focus on developing competencies related to the dominant design. This explains in part why incumbent firms may have difficulty recognizing and reacting to a discontinuous technology.
Types & Patterns of Innovation
32
Discussion Questions
1. What are some of the reasons that established firms might resist the adoption of a new technology? 2. Are well-established firms or new entrants more likely to a) develop and/or b) adopt new technologies? What are some reasons for your choice? 3. Think of an example of an innovation you have studied at work or school. How would you characterize it on the dimensions described at the beginning of the chapter? 4. What are some of the reasons that both technology improvement and technology diffusion exhibit sshaped curves?
Types & Patterns of Innovation
33