Chapter 3 - Types and Pattern of Innovation
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The document discusses technology trajectories, detailing how technological innovations follow patterns of performance improvement and market adoption, often represented by s-curves. It categorizes types of innovation into dimensions such as radical versus incremental and product versus process innovation, emphasizing the differing impacts they have on industries. Additionally, it highlights the cyclical nature of technological change, where new discontinuities can disrupt existing market structures, supporting Schumpeter's idea of creative destruction as a driver of progress.
Chapter 3 - Types and Pattern of Innovation
- 1. TYPES AND PATTERN OF INNOVATION WahyuYudistira
- 2. The path a technology follows through time is termed its technology trajectory. Technology trajectories are most often used to represent the technology’s rate of performance improvement or its rate of adoption in the marketplace. Though many factors can influence these technology trajectories (as discussed in both this chapter and the following chapters), some patterns have been consistently identified in technology trajectories across many industry contexts and over many periods. Understanding these patterns of technological innovation provides a useful foundation that we will build upon in the later chapters on formulating technology strategy
- 3. TYPES OF INNOVATION Technological innovations are often described using dimensions such as “radical” versus “incremental.” Different types of innovation require different kinds of underlying knowledge and have different impacts on the industry’s competitors and customers. Four of the dimensions most commonly used to categorize innovations are described here: product versus process innovation, radical versus incremental, competence enhancing versus competence destroying, and architectural versus component
- 4. TECHNOLOGY S-CURVES Both the rate of a technology’s performance improvement and the rate at which the technology is adopted in the marketplace repeatedly have been shown to conform to an s-shape curve. Though s-curves in technology performance and s- curves in technology diffusion are related (improvements in performance may foster faster adoption, and greater adoption may motivate further investment in improving performance), they are fundamentally different processes. S-curves in technology improvement are described first, followed by s-curves in technology diffusion. This section also explains that despite the allure of using s-curves to predict when new phases of a technology’s life cycle will begin, doing so can be misleading.
- 5. S-CURVES INTECHNOLOGICAL IMPROVEMENT Many technologies exhibit an s-curve in their performance improvement over their lifetimes. 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. Great effort may be spent exploring different paths of improvement or different drivers of the technology’s improvement. If the technology is very different from previous technologies, there may be no evaluation routines that enable researchers to assess its progress or its potential. Furthermore, until the technology has established a degree of legitimacy, it may be difficult to attract other researchers to participate in its development. However, as scientists or firms gain a deeper understanding of the technology, improvement begins to accelerate
- 7. S-CURVES INTECHNOLOGY DIFFUSION S-curves are also often used to describe the diffusion of a technology. Unlike s-curves in technology performance, s-curves in technology diffusion are obtained by plotting 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 introduced 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. For instance, when electronic calculators were introduced to the market, they were first adopted by the relatively small pool of scientists and engineers. This group had previously used slide rules. Then the calculator began to penetrate the larger markets of accountants and commercial users, followed by the still larger market that included students and the general public. After these markets had become saturated, fewer opportunities remained for new adoptions.
- 8. Technology S-Curves - Introduction of DiscontinuousTechnology
- 9. Average Sales Prices of Consumer Electronics Penetration of Consumer Electronics Source: Consumer Electronics Association Source: Consumer Electronics Association
- 10. TECHNOLOGYCYCLES The s-curve model above suggests that 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. The emergence of a new technological discontinuity can overturn the existing competitive structure of an industry, creating new leaders and new losers. Schumpeter called this process creative destruction, and argued that it was the key driver of progress in a capitalist society
- 11. THE END