Pattern of Innovation

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The presentation is about Technology Strategy - Pattern of Innovation in Chapter-3, schilling (text Book). Was done by my group mates and reflects some topics with examples.

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Pattern of Innovation

  1. 1. Group 9 Saumyaranjan Sahoo (AM2611) Jinal Patel (AM2211) Palak Parikh (AM1711) Hardik Patoriya(AM2411) Ch-3 (Schilling) Types and Pattern of Innovation
  2. 2. 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 others. • 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 Prius. • 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. • 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.
  3. 3. TYPES OF INNOVATION PRODUCT V/S PROCESS INNOVATION PRODUCT INNOVATION • Product innovation can be of two types: 1) Development of New Product PROCESS INNOVATION • Innovation in techniques of producing goods which reduces Cost, increases rate of production and reduces defect rates. • 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 process innovation. 2) Improvement of Existing Product Created a New distribution system (Product Innovation) that enabled its Customer to deliver goods more widely and efficiently. (Process Innovation)
  4. 4. RADICAL TYPES OF INNOVATION Radical v/s Incremental innovation EXISTING PRODUCT OR PROCESS NEW AND DIFFERENT PRODUCT & PROCESS INCREMENTAL MINOR CHANGE IN EXISTING PRODUCT & PROCESS EXISTING PRODUCT OR PROCESS Cortex µP Dual Core A5 µP Led backlit capacitive screen Retina Display screen 5 MP camera 8 MP camera
  5. 5. Competence Enhancing • Innovation made from existing knowledge base. TYPES OF INNOVATION Competence Enhancing v/s Competence Destroying innovation Competence Destroying • Innovation made to make existing competencies obsolete. 2004-2007 2007-2010 2010-2012 • Innovation of new Walkman series i-pod headphones has made CD- Walkman series obsolete. • Innovation of Digital camera by Kodak have made their reel camera technology obsolete.
  6. 6. Architectural • Changing of Overall Architect of the product. TYPES OF INNOVATION Architectural v/s Component innovation Component • 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.
  7. 7. • Features – 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 – Cycle – Body parts (Injuries) • Fear of balance if cycle stops because of hazards on road The High Wheel Bicycle
  8. 8. Time Cashflows Innovators Early Adopters Early Majority Late Majority Laggards Investment revenue Technology S-Curves S-curves in technology performance and market diffusion are related • better performance faster adoption • greater adoption  further investment in improvements
  9. 9. • With more effort and learning, the price of the consumable decreases. • With price of the consumable decreases, consumption by ends user increases. Technology S-Curves
  10. 10. DISCONTINOUS TECHNOLOGY 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 current technology. • 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 incumbent 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 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.
  11. 11. • 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 technologies.  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 factors – 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 compatible products – 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.
  12. 12. – 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
  13. 13. • By Launching of Each Product – Late Adaptors may be shifted to early adaptor within same brand – Some may opt for other brands also.
  14. 14. • Low-end technologies to eventually meet the needs of the mass market – 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”
  15. 15. Cont… • If the low-end market is neglected, it can become a breeding ground for powerful competitors. –Intel focused on was low-end personal computers • Margins : Unattractive at the beginning • But, as the technology curve advanced, – The needs of the mass market : Met at a lower price than the high-end technology
  16. 16. Technology Cycles • 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
  17. 17. Cont… • Example : Nylon – 3 Phase: • Rayon – Starts with Innovation • Nylon – Has exponential growth of innovation in graph - Some how dependent on Rayon • Polyester – Smooth exponential growth in eventually
  18. 18. – 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. Cont…
  19. 19. –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. Cont…
  20. 20. Technology Hyper cycle : Apple

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