MGT 320 Schilling Chp 3 + Discussion

Technology Trajectory

The path a technology takes through its lifetime. This path may refer to its rate of performance improvement, its rate of diffusion, or other change of interest.

Two types of Innovation

product and process innovations

Moore's law

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Limitations of S-curve as a prescriptive tool

1. it is rare that the true limits of a technology are known in advance, and there is often considerable disagreement among firms about what a technology's limits will be. 2. the shape of a technology's s-curve is not set in stone. 3. whether switching to a new technology will benefit a firm depends on a number of factors: (a) the advantages offered by the new technology (b) the new technology's fit with the firm's current abilities (c) the new technology's fit with the firm's position in complementary resources (d) the expected rate of diffusion of the new technology. Thus, a firm that follows an s-curve model too closely could end up switching technologies earlier or later than it should.

discontinuous technology

A technology that fulfills a similar market need by building on an entirely new knowledge base. May not get the opportunity to reach their limits Compact discs made vinyl records a discontinuous technology Initially, the technological discontinuity may have lower performance than the in- cumbent technology New firms entering the industry are likely to choose the disruptive technology, and incumbent firms face the difficult choice of trying to extend the life of their current technology or investing in switch- ing to the new technology. If the disruptive technology has much greater performance potential for a given amount of effort, in the long run it is likely to displace the incum- bent technology, but the rate at which it does so can vary significantly.

If a new technology is a significant improvement over exist- ing solutions, why do some firms shift to it more slowly than others?

Although some of the knowledge necessary to utilize a new technology might be trans- mitted through manuals or other documentation, other aspects of knowledge necessary to fully realize the potential of a technology might be built up only through experience. Some of the knowledge about the technology might be tacit and require transmission from person to person through extensive contact. Many potential adopters of a new technology will not adopt it until such knowledge is available to them, despite their awareness of the technology and its potential advantages Furthermore, many technologies become valuable to a wide range of potential us- ers only after a set of complementary resources are developed for them.

competence-enhancing (-destroying) innovation

An innovation that builds on (renders obsolete) existing knowledge and skills. Whether an innovation is a competence enhancing or competence destroying depends on whose perspective is had. An innovation can be competence enhancing to one firm, while competence destroying for another An innovation is considered to be competence enhancing from the perspective of a particular firm if it builds on the firm's existing knowledge base. An innovation is considered to be competence destroying from the perspective of a particular firm if the technology does not build on the firm's existing competencies or renders them obsolete. NIMH is a competence enhancing destroying: UC

Architectural innovation versus component (or modular) innovation

Component innovation: An innovation to one or more components that do not significantly affect the overall configuration of the system Architectural: An innovation that changes the overall design of a system or the way its components interact with each other. Often have had far-reaching and complex influences on industry competitors and technology users An innovation may entail a change to individual components, to the overall architecture within which those components operate, or both. An innovation that is strictly architectural may reconfigure the way that components link together in the system, without changing the components themselves. For a firm to initiate or adopt a component innovation may require that the firm have knowledge only about that component. However, for a firm to initiate or adopt an architectural innovation typically requires that the firm have architectural knowledge about the way components link and integrate to form the whole system.

S-curves and effort investments

If the effort invested is not constant over time, the resulting s-curve can obscure the true relationship. If effort is relatively constant over time, plotting performance against time will result in the same characteristic curve as plotting performance against effort. However, if the amount of effort invested in a technology decreases or increases over time, the resulting curve could appear to flatten much more quickly, or not flatten at all

Cycles (pg. 55)

Incremental vs. Ferment In Ferment: People are coming up with new ideas

Good quotes

PJ Heller talked about how Ed Catmull's hand was a radical innovation. It was something new that had not been done, a whole new technology. Today I talked about modular vs. architectural and how one change could make a product jump to an architectural if it changes it enough. I then talked about the difference in Product vs. Process and how when your process is your product, what is your process?

Technology S-curves

Rate of a tech's performance improvement + rate of technology adopted in marketplace has S-curve, despite being fundamentally different processes When a technology's performance is plotted against the amount of effort and money invested in the technology, it typically shows slow initial improvement, then accelerated improvement, then diminishing improvement Performance improvement in the early stages of a technology is slow because the fundamentals of the technology are poorly understood. However, as scientists or firms gain a deeper understanding of the technology, improvement begins to accelerate. As the technology begins to reach its inherent limits, the cost of each marginal improvement increases and the s-curve flattens.

Technology cycles

Technological change is 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

S-curves in technology diffusion

Technology diffusion: The spread of a technology through a population. Unlike s-curves in technology performance, s-curves in technology diffusion are obtained by plot- ting the cumulative number of adopters of the technology against time This yields an s-shape curve because adoption is initially slow when an unfamiliar technology is in- troduced to the market; it accelerates as the technology becomes better understood and utilized by the mass market, and eventually the market is saturated so the rate of new adoptions declines. s-curves of diffusion are in part a function of the s-curves in technology improvement: as technologies are better developed, they become more certain and useful to users, facilitating their adoption

Radical versus incremeental innovation

The degree in which innovation departs from existing practice. Radical: An innovation that is very new and different from prior solutions. Newness and differentness, in terms of risk, relative and may change over time Incremental: An innovation that makes a relatively minor change from (or adjustment to) existing practices. Not particularly new or exceptional. An innovation that was once considered radical may eventually be considered incremental as the knowledge base underlying the innovation becomes more common

Creative destruction

The emergence of a new technological discontinuity can overturn the existing competi- tive structure of an industry, creating new leaders and new losers.

Product vs. process innovation

product innovation: goods or services. Process innovations are often oriented toward improving the effectiveness or efficiency of pro- duction by, for example, reducing defect rates or increasing the quantity that may be pro- duced in a given time. (46) Process: innovations in the way an organization conducts its business, such as in the techniques of producing or marketing goods or services (46) First, new processes may enable the production of new products. Second, new products may enable the development of new processes. Finally, a product innovation for one firm may simultaneously be a process innovation for another. For example, when United Parcel Service (UPS) helps a customer develop a more efficient distribution system, the new distribution system is simultaneously a product innovation for UPS and a process innovation for its customer.

Four dimensions to categorize innovations

product vs. process innovation radical versus incremental competence enhancing vvs. competence destroying architectural vs. component