Transcript Innovation
Innovation B290 Cement industry Tushman, M. and P. Anderson, 1986, Administrative Science Quarterly 31 439-465 Computers Tushman, M. and P. Anderson, 1986, Administrative Science Quarterly 31 439-465 Passenger Aircraft Tushman, M. and P. Anderson, 1986, Administrative Science Quarterly 31 439-465 The Technology Cycle Source: Anderson, P. and M. L. Tushman, 1990, Administrative Science Quarterly 35(4) 604-633 Technological change • Discontinuity – Technology breakthroughs • Competence enhancing – Transistors (for computer companies) – Float glass • Competence destroying – – – – Transistors (for valve companies) Plastic Flash memory Xerography Types of Innovation • Incremental vs. Radical • Competence enhancing vs. competence destroying • Component vs. architectural • Sustaining vs. Disruptive Incremental vs. Radical • Incremental – Small changes that improve the performance of a product (or service) • Radical – Dramatic change in performance, an inflection point or discontinuity Component vs. Architectural • Component – Does not alter the basic product architecture • Thermal Conduction Module in 3083 • Multi-core microprocessors (Pentium Core 2) • Architectural – Takes existing components and combines them in novel ways • IBM PC, Apple’s iPhone Competence enhancing/destroying • Competence enhancing – Innovations that build on a company’s current knowledge and resource base • Hybrid disk drives for Seagate • Competence destroying – Innovations that require completely new skills and resources • Digital image capture for Kodak (essentially a chemical company) Sustaining vs. Disruptive • Whether an innovation is sustaining or disruptive: – May have little to do with technology – More often, a function of the interaction of changing markets and organizational imperatives Technological Discontinuity Technological knowledge Technology S curves Time Three different technologies Areal Density Thin film heads Metal in Gap heads More recently: Magnetoresistive Giant Magnetoresistive Tunneling Magnetoresistive Ferrite heads 1950 1970 1990 1995 IBM’s development trajectory • IBM’s R&D scientists reported to management that different technologies (e.g., “Ferrite head”) had performance limits determined by the laws of physics • As each technology ran out of steam the company had to be positioned to implement its successor Fujitsu and IBM (continued) • As IBM approached the predicted technological limit – funding for the next promising technology (e.g., thin-film) was increased – funding for further research into the existing technology (e.g., ferrite heads) was reduced • Thin film head improved increasingly rapidly while progress in ferrite heads slowed… …Fujitsu pushes on with Ferrite Areal Density Thin film heads Metal in Gap heads Ferrite heads More recently: Magnetoresistive Giant Magnetoresistive Tunneling Magnetoresistive Ferrite heads 1950 1970 1990 1995 Technology S-curves • May be a function of a particular technology • Or may simply be a self-fulfilling prophesy Disruptive Innovation • Why do incumbent firms often fail? – Companies listen to their most lucrative customers – Emerging markets are too small (and risky) to pursue – Forecasts of emerging markets are generally wrong – A firm’s existing capabilities shape its approach – Progress may allow technology to ‘leap’ from one market to another The Hard Disk Drive Industry • • • “Of the seventeen firms in the industry in 1976-all except IBM's disk drive operation had failed or had been acquired by 1995” (…and IBM sold it’s operation to Hitachi in 2003) “all of the producers remaining by 1996 had entered the industry after 1976” • (Clayton Christiansen, HBS) • Despite established firms' technological prowess, the firms that led in developing new, disruptive technologies were new entrants, not incumbents. Performance / price Supply exceeds demand Time The Value Network • New products are needed for new markets – Different set of CSFs • Smaller form factor disks • Incumbents consider the technology for this market inferior to that needed for their major customers/markets – New entrants fill the gap – Technology price/performance improves • faster than the small (new) market needs • Enough to surpass incumbent’s technology • New entrants supplant incumbents