STRATEGY AND CHANGE
WEEK 1
KNOWLEDGE CLIPS 1
Technology is the sum of techniques, skills, methods, and processes used in the
production of goods or services.
Strategic importance of technology: technology can create value for a company.
First-mover advantage --> companies can enjoy market share and higher
markup. They can enjoy intellectual property protection (patent or copyright)
Technologies change when an emerging high performing technology takes over
an existing technology.
Double S-curve model show the lifecycle of two technologies, in which a new
technology obsoletes the old one.
Era of ferment: uncertain and critical period in which the next generation of
technology occurs.
Science can be cumulative or revolutionary, same as technological knowledge.
> Each S-curve represents the cumulative nature of technology
Technology is developed in firms and based on their capabilities
> Technology gets its value and recognition by society
Technology is developed in firms and based on their capabilities
> Cyclical model, based on punctuated equilibrium model, represents this
aspect of technology.
> In each cycle of technology change the competency of incumbent firms
might be enhanced or destroyed.
Disruptive innovation criteria 1:
- Originates from low-end or new-market footholds
- Entrants may target over-looked low-end segments of the market with a
product considered inferior by the incumbent’s most-demanding
customers
- Entrants may create markets where no market exists and turn non-
consumers into consumers
Disruptive innovation criteria 2:
- Does not catch on with mainstream customers until quality catches up to
their standards
AB line: tries to sustain their technology trajectory. They overshoot; the market
doesn’t require complex products.
CDE: starts from a tiny niche below demanded performance, but later starts
serving the mainstream of the market until it overshoots (E) and a new disruptive
technology enters the market.
,Disruptive innovation criteria 3:
- Involves some kind of business model innovation
- The research landscape we mapped out suggests that disruption is not
about technology alone, but rather the combination of technologies and
business model innovation
Innovator’s dilemma
- Large firms miss the boat because of prior success and their failure to
recognise how the market shifts.
- Failure to adapt to disruptive innovation is not the result of bad
management, but a result of good management.
- Large companies depend on their existing customers and investors for
resources. They get used to their network. They listen to loyal customers
and investors, who are usually not from a niche market targeted by
disruptive technologies.
- They listen closely to these customers and investors and kill ideas for
which there is little need.
LECTURE 1
Evolutionary period = era of ferment
Revolutionary period = era of incremental change
Punctuation 1 = technological discontinuity
Punctuation 2 = emergence of dominant design
Overshooting: “too advanced” technology. Exceeds expectations of a good
product.
Innovator’s dilemma = when firms have an established structure which does not
fit the logic of new technologies.
TUSHMAN AND ANDERSON 1986
RQ: what is the effect of competence-enhancing and competence-destroying
discontinuities on firms and the industry?
Technology are those tools, devices and knowledge that mediate between
inputs and outputs (process technology) and/or that create new products or
services.
> Technology evolves in response to the interplay of history, individuals, and
market demand.
Technological progress happens in an evolutionary system but is punctuated
by discontinuous change.
Dominant design: product-class standard at the end of a period of technological
development. After the dominant design, technological development focuses on
incremental improvements instead of discontinuous renewal. The dominant
design becomes a guidepost for further product or process change.
, Incremental technological progress, unlike the initial breakthrough, occurs
through the interaction of many organizations stimulated by the prospect of
economic returns.
Major technological innovations: technical advances so significant that no
increase in scale, efficiency, or design can make older technologies competitive
with the new technology.
Technological change is a bit-by-bit, cumulative process until it is punctuated
by a major advance.
Product discontinuities: emergence of new 1) product classes (automobiles),
2) product substitution (diesel vs. steam locomotives), 3) fundamental product
improvement (jets vs turbojets)
Process discontinuities: represents a new way of making a given product.
Product stays essentially the same, but process changes. Includes 1) process
substitution (man-made diamonds vs natural diamonds), 2) process innovations
that result in radical improvements in industry-specific dimensions (lubbers’
machinery in glass vs blowing the glass yourself).
Competence-destroying technology: here the mastery of the new technology
fundamentally changes the current required competences within a product class.
This leads to major changes in the distribution of power and control within firms
(organizational structures) and industries (between firms).
Competence-enhancing discontinuities: are order-of-magnitude
improvements in price/performance that build on existing know-how within a
product class. These changes do substitute older technologies, but they do not
substitute the skills required to master the technologies.
Both competence-destroying and competence-enhancing discontinuities
dramatically alter previously attainable price/performance relationships within a
product class. Existing firms should exploit new possibilities opened up by a
discontinuity if it is competence-enhancing.
Both technological discontinuities and dominant designs are only known in
retrospect, technological superiority is no guarantee to success.
Technology processes stages through relatively long periods of incremental,
competence-enhancing change elaborating a particular dominant design. These
periods of increasing consolidation and learning-by-doing may be punctuated by
competence-destroying technological discontinuities or by further competence-
enhancing technological advantage.
Technological discontinuities trigger a period of technological ferment
culminating in a dominant design and, in turn, leading to the next period of
incremental, competence-enhancing, technological change.
H1: technological change within a product class will be characterized by long
periods of incremental change punctuated by discontinuities.
H1a: technological discontinuities are either competence-enhancing (building on
existing skills and know-how) or competence-destroying (require fundamentally
new skills and competences).
WEEK 1
KNOWLEDGE CLIPS 1
Technology is the sum of techniques, skills, methods, and processes used in the
production of goods or services.
Strategic importance of technology: technology can create value for a company.
First-mover advantage --> companies can enjoy market share and higher
markup. They can enjoy intellectual property protection (patent or copyright)
Technologies change when an emerging high performing technology takes over
an existing technology.
Double S-curve model show the lifecycle of two technologies, in which a new
technology obsoletes the old one.
Era of ferment: uncertain and critical period in which the next generation of
technology occurs.
Science can be cumulative or revolutionary, same as technological knowledge.
> Each S-curve represents the cumulative nature of technology
Technology is developed in firms and based on their capabilities
> Technology gets its value and recognition by society
Technology is developed in firms and based on their capabilities
> Cyclical model, based on punctuated equilibrium model, represents this
aspect of technology.
> In each cycle of technology change the competency of incumbent firms
might be enhanced or destroyed.
Disruptive innovation criteria 1:
- Originates from low-end or new-market footholds
- Entrants may target over-looked low-end segments of the market with a
product considered inferior by the incumbent’s most-demanding
customers
- Entrants may create markets where no market exists and turn non-
consumers into consumers
Disruptive innovation criteria 2:
- Does not catch on with mainstream customers until quality catches up to
their standards
AB line: tries to sustain their technology trajectory. They overshoot; the market
doesn’t require complex products.
CDE: starts from a tiny niche below demanded performance, but later starts
serving the mainstream of the market until it overshoots (E) and a new disruptive
technology enters the market.
,Disruptive innovation criteria 3:
- Involves some kind of business model innovation
- The research landscape we mapped out suggests that disruption is not
about technology alone, but rather the combination of technologies and
business model innovation
Innovator’s dilemma
- Large firms miss the boat because of prior success and their failure to
recognise how the market shifts.
- Failure to adapt to disruptive innovation is not the result of bad
management, but a result of good management.
- Large companies depend on their existing customers and investors for
resources. They get used to their network. They listen to loyal customers
and investors, who are usually not from a niche market targeted by
disruptive technologies.
- They listen closely to these customers and investors and kill ideas for
which there is little need.
LECTURE 1
Evolutionary period = era of ferment
Revolutionary period = era of incremental change
Punctuation 1 = technological discontinuity
Punctuation 2 = emergence of dominant design
Overshooting: “too advanced” technology. Exceeds expectations of a good
product.
Innovator’s dilemma = when firms have an established structure which does not
fit the logic of new technologies.
TUSHMAN AND ANDERSON 1986
RQ: what is the effect of competence-enhancing and competence-destroying
discontinuities on firms and the industry?
Technology are those tools, devices and knowledge that mediate between
inputs and outputs (process technology) and/or that create new products or
services.
> Technology evolves in response to the interplay of history, individuals, and
market demand.
Technological progress happens in an evolutionary system but is punctuated
by discontinuous change.
Dominant design: product-class standard at the end of a period of technological
development. After the dominant design, technological development focuses on
incremental improvements instead of discontinuous renewal. The dominant
design becomes a guidepost for further product or process change.
, Incremental technological progress, unlike the initial breakthrough, occurs
through the interaction of many organizations stimulated by the prospect of
economic returns.
Major technological innovations: technical advances so significant that no
increase in scale, efficiency, or design can make older technologies competitive
with the new technology.
Technological change is a bit-by-bit, cumulative process until it is punctuated
by a major advance.
Product discontinuities: emergence of new 1) product classes (automobiles),
2) product substitution (diesel vs. steam locomotives), 3) fundamental product
improvement (jets vs turbojets)
Process discontinuities: represents a new way of making a given product.
Product stays essentially the same, but process changes. Includes 1) process
substitution (man-made diamonds vs natural diamonds), 2) process innovations
that result in radical improvements in industry-specific dimensions (lubbers’
machinery in glass vs blowing the glass yourself).
Competence-destroying technology: here the mastery of the new technology
fundamentally changes the current required competences within a product class.
This leads to major changes in the distribution of power and control within firms
(organizational structures) and industries (between firms).
Competence-enhancing discontinuities: are order-of-magnitude
improvements in price/performance that build on existing know-how within a
product class. These changes do substitute older technologies, but they do not
substitute the skills required to master the technologies.
Both competence-destroying and competence-enhancing discontinuities
dramatically alter previously attainable price/performance relationships within a
product class. Existing firms should exploit new possibilities opened up by a
discontinuity if it is competence-enhancing.
Both technological discontinuities and dominant designs are only known in
retrospect, technological superiority is no guarantee to success.
Technology processes stages through relatively long periods of incremental,
competence-enhancing change elaborating a particular dominant design. These
periods of increasing consolidation and learning-by-doing may be punctuated by
competence-destroying technological discontinuities or by further competence-
enhancing technological advantage.
Technological discontinuities trigger a period of technological ferment
culminating in a dominant design and, in turn, leading to the next period of
incremental, competence-enhancing, technological change.
H1: technological change within a product class will be characterized by long
periods of incremental change punctuated by discontinuities.
H1a: technological discontinuities are either competence-enhancing (building on
existing skills and know-how) or competence-destroying (require fundamentally
new skills and competences).
