Saumyaranjan Sahoo (AM2611)
Jinal Patel (AM2211)
Palak Parikh (AM1711)
Types and Pattern of Innovation
HONDA & HYBRID ELECTRIC VEHICLE
• First to introduced hybrid cars in 1997 in Japan-Honda Insight
• Received Award of excellence from environmental groups
• Honda chose not to collaborate and license its technology to
• Awarded most fuel efficient vehicle by Environmental
protection agency in 2002.
• Parallel, Honda is developing Hybrid cars based on Fuel Cells
Increased fuel Efficiency
Reduced Fuel Emission
• First to market and commercialize hybrid cars in 1997 in Japan-
• Toyota chose to collaborate and license its technology to others.
• Sold 107897 units of Toyota ‘Prius’ more compared to 666 units
of Honda ‘Insight’, 16826 units of Honda ‘Accord’ & 25864 units
of Honda ‘civic’ by end of 2005
• Hybrid Electric Vehicles were radical
innovation as well as competence
enhancing innovation for both Toyota &
• Honda’s Fuel cell technology cars would be
a competence destroying innovation in
future as it would make Honda’s 1ST
Generation HEV obsolete
• Fuel cell technology will be architectural
and radical innovation for Honda.
TYPES OF INNOVATION
PRODUCT V/S PROCESS INNOVATION
• Product innovation can be of two
1) Development of New Product
• Innovation in techniques of
producing goods which
reduces Cost, increases rate
of production and reduces
• Several Milk Co-operatives in
India have adopted
automatic milking of cows
which prevent unnecessary
wastage and spillage and
increase rate of milk
collection is an example of
2) Improvement of Existing Product
that enabled its
Customer to deliver
goods more widely
TYPES OF INNOVATION
Radical v/s Incremental innovation
NEW AND DIFFERENT
PRODUCT & PROCESS
MINOR CHANGE IN
EXISTING PRODUCT &
Cortex µP Dual Core A5 µP
Retina Display screen
5 MP camera 8 MP camera
• Innovation made from existing knowledge
TYPES OF INNOVATION
Competence Enhancing v/s Competence Destroying innovation
• Innovation made to make existing
• Innovation of new Walkman series i-pod
headphones has made CD- Walkman
• Innovation of Digital camera
by Kodak have made their reel
camera technology obsolete.
• Changing of Overall Architect
of the product.
TYPES OF INNOVATION
Architectural v/s Component innovation
• Changing of one or more
component of the product.
To make a mouse wireless, we need
to add a power supply section and
transmitter and receiver circuit.
– The pedals were attached directly to the front wheel.
– Solid rubber tires and
– The long spokes of the large front wheel
• Objective was
– Larger the front tire
» Easy to drive
» More distance can travel in low efforts
– Safety issue:
• Has to sit at the top of front wheel
• Fear of damage
– Body parts (Injuries)
• Fear of balance if cycle stops because of hazards on road
The High Wheel Bicycle
S-curves in technology performance and
market diffusion are related
• better performance faster
• greater adoption further
investment in improvements
• With more effort and
learning, the price of the
• With price of the
consumption by ends user
NEW TECHNOLOGY WITH STEEPER S-CURVE NEW TECHNOLOGY WITH HIGHER S-CURVE
• The technological discontinuity may have lower performance than the incumbent technology
and effort invested in the new technology may reap lower returns than effort invested in the
• This causes ﬁrms to be reluctant to switch to investment in the new technology.
• However, if the disruptive technology has a steeper S-curve ( Left Fig.) or an S-curve that
increases to a higher performance limit (Right Fig.), there may come a time when the returns
to effort invested in the new technology are much higher than effort invested in the
• 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 switching 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 incumbent technology, but the rate at which
it does so can vary signiﬁcantly.
• Managers can use data on investment and performance of their
own technologies or data on overall industry investment and
technology performance to map s-curve.
• While mapping the technology’s s-curve is useful for gaining a
deeper understanding of its rate of improvement or limits, its
use as a prescriptive tool is limited.
True limits of technology may be unknown
Shape of s-curve can be influenced by changes in the
market, component technologies, or complementary
Firms that follow s-curve model too closely could end up
switching technologies too soon or too late.
• The benefits a company can achieve by switching to a new technology depends on a number of
– Advantages of the new technology
– New technology’s fit with the company’s current abilities
– New technology’s fit with the firm’s position in complementary resources – lacks them or may make
– Expected rate of diffusion of the new technology
S-Curve as Prescriptive tool
• Firms that follow s-curve model too closely could end up switching technologies too soon or too late.
– Innovators : First 2.5% of individuals to adopt an innovation.
• Adventurous, comfortable with a high degree of complexity and uncertainty
• have access to substantial financial resources
– Early Adopters : 13.5%
• Adopt the innovation
• are excellent "missionaries" for new products or processes.
– Early Majority : 34%.
• Adopt innovations slightly before the average member of a social system.
– Late Majority : 34%
• Adopt innovation with a skeptical air
• They may have scarce resources.
– Laggards: 16%
Diffusion of Innovation & Adopter Categories
• By Launching of Each Product
– Late Adaptors may be shifted to
early adaptor within same brand
– Some may opt for other brands
• Low-end technologies to eventually meet the needs of the mass
– Which are not their need
• If the low-end market is neglected,
– it can become a breeding ground for powerful competitors : Segment Zero
• Exception : Apple
– Not Meant for lower class
due to its feature, incomparable
feature, awesome quality.
Technology Trajectories and “Segment Zero”
• If the low-end market is neglected, it can become a breeding
ground for powerful competitors.
–Intel focused on was low-end personal
• Margins : Unattractive at the beginning
• But, as the technology curve advanced,
– The needs of the mass market : Met at a lower price than the
• Technological change tends to be cyclical:
– New s-curve ushers in an initial period of turbulence,
• More Innovation
• then diminishing returns,
• Displaced by a new technological discontinuity
• Example : Nylon
– 3 Phase:
– Starts with Innovation
– Has exponential growth
of innovation in graph
- Some how dependent on Rayon
– Smooth exponential growth in eventually
– Anderson and Tushman : 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.
–During the era of incremental change,
• Firms cease to invest in learning about alternative designs
–Reason : Incumbent firms may have difficulty recognizing
and reacting to a discontinuous technology.