1. Paper to be presented at the DRUID Summer Conference 2007
on
APPROPRIABILITY, PROXIMITY, ROUTINES AND INNOVATION
Copenhagen, CBS, Denmark, June 18 - 20, 2007
CHALLENGING THE S-CURVE: PATTERNS OF TECHNOLOGICAL SUBSTITUTION
Brice Dattee
Tanaka Business School, Imperial College London
b.dattee@imperial.ac.uk
Abstract:
This paper revisits the relevance of the S-curve representation of technological substitution. I argue that the
smooth S-curve does not properly account for the complexity of the phenomenon. First, I observe historical
cases with patterns of substitution more complex than what the classical S-curve suggests. Second, I show that
a broadened theoretical framework at the system level is required to better understand the underlying dynamics
of technological substitutions. Third, I identify bifurcation points between generic substitution trajectories and
show how they can be combined into longitudinal sequences. Finally, the results are discussed and strategic
implications are drawn.
JEL - codes: O33, O32, M00
2. 1
Challenging the S-curve: Patterns of
Technological Substitution
Abstract:
This paper revisits the relevance of the S-curve representation of technological
substitution. I argue that the smooth S-curve does not properly account for the complexity of
the phenomenon. First, I observe historical cases with patterns of substitution more complex
than what the classical S-curve suggests. Second, I show that a broadened theoretical
framework at the system level is required to better understand the underlying dynamics of
technological substitutions. Third, I identify bifurcation points between generic substitution
trajectories and show how they can be combined into longitudinal sequences. Finally, the
results are discussed and strategic implications are drawn.
Keywords: S-curve, technological substitution, trajectories, bifurcation, system dynamics
1. Introduction
The S-curve has been at the core of many concepts in management science for over
50 years. In fact, the logistic shape may be viewed as the quintessence of pattern recognition
in many social sciences. It results from the tension (and shifting dominance over time)
between two forces: a potential for growth and a saturation effect. When it comes to strategic
management, three phenomena are typically represented, discussed, and even modeled,
sometimes forcingly, through a logistic framework: the diffusion of innovations,
technological trajectories, and technological substitutions are all synoptically represented, as
shown in figure 1, by S-shape curves. Respectively, these are graphical representations over
time of the cumulative number of adopters of the innovation reaching market saturation, the
improvements in the performance of a technology reaching an upper limit, and the
3. 2
substitution of a new technology for a former dominant technology. The S-curve’s ubiquity in
the literature may actually be misleading as these three processes tend to be undifferentiated,
and their interrelationships skimmed.
Phenomenon Underlying dynamics Graphical S-curve of the:
Diffusion
An innovation is
adopted through a
social system
Cumulative adopters
(reaching saturation)
Technology
Improvement in the
performance of a
technology
Performance
trajectory
(reaching upper limit)
Substitution
Substitution of one for
the other
Relative market share
(reaching dominance)
Figure 1: The classical S-curves: diffusion, technological trajectories, and substitution
Christensen (1992; 1992) explored the limits of the technology S-curve, i.e. the
performance trajectory, and found it to be a firm specific rather than uniform industry
phenomenon. Similarly, I here set to explore the interrelationships between these three
phenomena and the limits of the substitution S-curve.
While Pistorius and Utterback have discussed other modes of interaction such as
predator-prey or symbiosis (Pistorius and Utterback, 1997), the focus of this paper is on the
substitution dynamics between two or more technologies which interacts on a purely
competitive mode. Along with the classical S-shape base case and other relatively well
understood patterns, I have also identified non-trivial and surprising patterns: the classical
base case (including the concatenation and overlapping generations cases), the long term
feedbacks, the sailing ship effect, the intermediate hybrid, the path finder, and the “double
shift”. I describe each of these generic patterns, show their normalized fractional rate of
substitution as a function of time, and detail a historical example.
I briefly discuss the underlying dynamics of these substitution patterns and present a
broad theoretical framework obtained by aggregating many literature streams on
4. 3
technological change. Finally, by using the concept of substitution trajectories, I identify
bifurcation points between these generic patterns and draw strategic implications.
2. Patterns of technological substitution
Many famous classification of technological innovation have already been developed.
These typologies attempt to reduce the complexity of the phenomenon to a few graspable
dimensions such as the type of innovation (product vs. process), the impact on organizational
competencies (enhancing vs. destroying), the link with market (established vs. new) or the
origin of the change (science based vs. supplier vs. clients, etc.). These typologies have been
fundamental for the management of innovation. However, their main focus is on the
industrial dynamics induced by technological change and especially on the survival of
incumbents versus new entrants. Their conclusions relate to the entry and exit rate, the
competitive advantage based on flexibility and know-how, and the effect of complementary
assets. While it is important for a firm to understand why and how its survival is threatened,
technological substitution is not a unified phenomenon. Thus, it is also important to know
how much time the firm may have before being possibly erased from the industrial landscape.
Tripsas highlighted that “understanding the origins and timing of discontinuous technological
change is extremely important for managers trying to better weather transitions” (Tripsas,
2005).
When it comes to technological change, the classical models of diffusion (Bass, 1969)
and substitution (Fisher and Pry, 1971) have been applied to a number of historical cases. The
normalized fractional rate as a function of time is the classical presentation of technological
substitutions. Despite its impressive statistical robustness, the smooth logistic shape of the
substitution S-curve must be challenged, in a Popperian sense. I thus provide
counterexamples, i.e. exceptions to the logistic generalization of technological substitutions. I
collected secondary historical data for a cases of technological change, many of which were
discussed in the literature. I show that the time-path of these substitutions did not follow the
classical S-curve.
2.1 Base Case
Description:
The “base case” is a binary substitution that occurs when an emerging technology
N+1 substitutes for the current technology N which has reached maturity. This is where the
S-curve is at its best. The classical Fisher-Pry model states that the rate of substitution of the
5. 4
new technology for the current one is proportional to the remaining amount of the old left to
be substituted (Fisher and Pry, 1971). The log of the ratio of the market share of the
succeeding technology to that of the first is a linear function of time. Fisher and Pry studied
the substitution rate for seventeen cases of technological change. They normalized the time
scale by use of the term 2(t-t0)/∆t, where ∆t is the time from 10% to 90% takeover and t0 is
the time of 50% takeover. This collapses all seventeen cases of substitution into the single
curve presented by figure 2.
Figure 2: Normalized substitution pattern of 17 cases (Fisher and Pry, 1971)
Generic pattern:
The generic pattern of a base case is presented by figure 3.
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1.0
1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035
m1 m2
Figure 3: Generic pattern of base case substitutions
Historical example:
The transition from the Bessemer process to open-hearth in the steel making industry
is one of the earliest examples of binary substitution which the classical model has been
applied to (Fisher and Pry, 1971; Blackman, 1974). I collected historical data from the
American Iron and Steel Institute annual reports1
to present this classical example. The first
phase of technological change covers from 1880 to 1930. At the end of the 19th
century, the
dominant method of steel-making was the Bessemer process, invented by Sir Henry
Bessemer in the late 1850’s. The rapidly expanding railroad industry provided a stimulus for
1
Sources : The American Iron and Steel Institute ; Annual Statistical Reports : (AISI, 1912), (AISI, 1965),
(AISI, 1979), (AISI, 1985), (AISI, 1993) and (Hendriksen, 1978).
6. 5
heavy demand and the Bessemer converter was the foundation of the industry (Gold, Peirce
et al., 1984). Yet, the process had technical difficulties in part because the reactions involved
in a Bessemer blow were short and very violent. The open-hearth process, first proposed by
C.W. Siemens in 1861, overcame many of these difficulties and began substituting for the
Bessemer equipments.
The open-hearth uses the heat in the waste gases from the furnace itself to preheat air
and gas fuels and thus build up temperature. This enables the process to input scrap and other
cold metal in addition to the hot metal. By 1930 in the United States, the Bessemer process
accounted for only 12 percents of total output and was completely overshadowed by the
open-hearth process. The historical substitution pattern of this binary substitution in the U.S.
industry is shown on figure 4.
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
1878
1888
1898
1908
1918
1928
1938
1948
1958
Bessemer Open Heart
Figure 4: A base case substitution – Open-hearth for Bessemer (1878 – 1958)
2.2 Concatenation
Description:
The base case relates to a binary technological substitution. But in an industry
successive generations of technologies replace each other over time. When considering a
sequence of technologies, the recurrence of the generic substitution pattern (emergence-
growth-dominance) is expected to look like a concatenation of “base cases”.
Generic pattern:
The generic pattern of a concatenation of base cases is presented by figure 5.
7. 6
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0.7
0.8
0.9
1.0
1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035
m1 m2 m3
Figure 5: Generic pattern of a concatenation of base cases
Historical example:
While the dominant steel making method throughout the postwar period was the open
hearth furnace, the mid-1950’s saw the beginning of an entirely new approach, the basic
oxygen process (BOP). It was found that the introduction of oxygen into the furnace would
greatly speed the refining process. The first BOP plant in the United States was built in 1954.
By 1987, the basic oxygen accounted for 95% of the steel output from the chemical
combustion processes. Figure 6 illustrates this concatenation effect.
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
1878
1888
1898
1908
1918
1928
1938
1948
1958
1968
1978
1988
Bessemer Open Heart Basic Oxygen
Figure 6: Concatenated generations - Steelmaking technologies (1878 – 1994)
2.3 Overlapping generations
Description:
The case of concatenated generations implies that each technological generation
actually reaches full dominance before being substituted for by the newer generation.
However, in many cases the timing of the emergence of the new technology creates an
overlapping of “base cases”. In fact, this seems to be the most frequent case in almost all
industries. In the diffusion literature, this is referred to as a ‘multi-level’ substitution. A few
authors have offered analytical models for this type of multi-level substitution (Norton and
Bass, 1987; Mahajan and Muller, 1996; Sohn and Ahn, 2003).
Generic pattern:
8. 7
The generic pattern of overlapping is presented by figure 7.
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0.5
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0.7
0.8
0.9
1.0
1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025
m1 m2 m3
Figure 7: Generic pattern of overlapping substitutions
Historical example:
One such example can be found with IBM mainframes computers. I rely on the data
collected by Phister to describe the overlapping of the successive generations of IBM
mainframes (Phister, 1979). The performance per price ratio of these generations can be
estimated with a generic index of number of operations by seconds per dollar. The first
generation of IBM mainframes started with the 650, first introduced in November 1954. It
yielded an average of 77kops/$. In November 1959, the second generation of IBM mainframe
was introduced with the IBM 7090 which already yielded 1472 kop/$. This second generation
included six systems from the 7090 to the 707x series. In 1962, the 7094 system offered
6898kops/$. But already the 360 generation was introduced. Its performance characteristics
set a new standard that its eleven models kept improving. By 1965, the 360/20 offered some
11232kop/$. Finally, a fourth generation of 370 systems started in February 1971 with the
370/150. It was already performing 28106kop/$.
Historical data from Phister (1979, Table II.1.31.1 - table II.1.31.1a - table II.2.11.1.)
for the substitutions of IBM mainframe systems illustrate, as shown in figure 8, that each of
these overlapping generations had not reached complete dominance when the next generation
started substituting.
Figure 8: Overlapping substitution - IBM Mainframe (1955 – 1974)
9. 8
2.4 Long term feedbacks
Description:
In all the previous cases, it is the emergence of a technology which is better in some
ways that triggers the substitution process. However, there are particular cases where a
substitution can be triggered even in the absence of a newer alternative! Indeed, the socio-
political view suggests that “changes to any of the organizational or scientific or regulatory or
natural components of a technological system could also trigger a substitution [...] Therefore,
existing artefacts can be socially reconstructed as a response to changes in other elements of
the system of which they are part” (Maguire, 2003). I here present the case of a technological
substitution which reverted after negative long term feedbacks became evident.
Generic pattern:
The generic pattern of reverting long term feedbacks is presented by figure 9.
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
m1 m2
Figure 9: Generic pattern of long term feedbacks substitutions
Historical example:
The rise and fall of the organochlorine insecticides and especially DDT2
is a famous
and extensively described example of a reverting substitution due to long term environmental
feedbacks. DDT is an organochlorine that was first synthesized in 1874. Its effectiveness as
an insecticide was only discovered in 1939. The U.S. began producing large quantities of
DDT, especially during World War II to control insect-borne diseases such a typhus and
malaria abroad. Shortly after 1945, DDT started to be used in agriculture. Recommended by
the Department of Agriculture (USDA), its usage became widespread in the U.S. because it
2
Dichlorodiphenyltrichloroethane
10. 9
was “effective, resilient, versatile available at a reasonable price”3
. During 30 years, it
remained the top selling insecticide in the U.S.
However, certain characteristics of DDT which initially contributed to its early
popularity started to become the basis for public concern over environmental effects. The
persistence of DDT which was a solution by 1945 became a problem in the 1960’s!
Toxicologists raised questions about DDT’s chronic toxicity to humans; and increasing
resistance to DDT was documented by economic entomologists. From 1964, many federal
actions were taken and in 1972, U.S. Environmental Protection Agency (EPA) announced the
final cancellation of all remaining crop uses of DDT in the U.S. But the EPA ban was not the
sole or even most important cause for DDT’s disadoption. Indeed, Maguire explains that
insecticide ‘efficacy’ and ‘safety’ had different social meanings over the years, resulting from
changes in the social construction of DDT and other insecticides (Bijker and Law, 1994). The
use of DDT in cotton production went from 23.6 millions pounds in 1964, to 19.2 in 1966, to
13.2 in 1971 and was not used anymore after that.
Figure 10 shows that organochlorines fell steadily from 70 percent of synthetic
organic pesticides use in 1966 to only 6 percent in 19824
. This reverted the substitution
dynamics and the other insecticides grew from 20 percent in 1966 back to almost 70 percent
in 1982.
0
0.1
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0.8
0.9
1
1962
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
Organochlorines Others
Figure 10: Reverting long term feedbacks – Organochlorines usage U.S. crops (1964 – 1982)
3
Excerpt from “DDT, A Review of Scientific and Economic Aspects of the Decision To Ban Its Use as a
Pesticide”, prepared for the Committee on Appropriations of the U.S. House of Representatives by EPA, July
1975, EPA-540/1-75-022
4
United States Department of Agriculture : Agricultural Economic Reports n°622 and 717 (Osteen and
Szmedra., 1989), (Lin, Padgitt, Bull, Delvo, Shank and Taylor, 1995).
11. 10
2.5 Sailing Ship
Description:
Rosenberg highlighted another dynamics whereby a dominant technology which is
threatened by a new technology will often undergo a last gasp of innovation in an attempt to
compete (Rosenberg, 1976). This refinement of the current technology allows it to maintain
its performance advantage over the new technology. However, the usual effect of such
advances is only to postpone the traditional technology’s displacement (Smith, 1992).
Famous examples of defensive surges include the last attempts of the ice harvesting
techniques when mechanical refrigeration emerged (Utterback, 1994), the longer than
expected survival of optical photo-lithography after the entrance of x-ray photo-lithography
(Henderson, 1995), or the “last gasp” by the carburetor technology when Electronic Fuel
Injection was first introduced (Snow, 2003).
The sailing ship effect is indeed a well documented phenomenon but usually
represented only from the perspective of technological trajectories as shown on figure 11.
Therefore, I here present the resulting substitution pattern.
Delay
N+1N
Performance
Delay
N+1N
Performance
Figure 11: Sailing ship effect : a defensive surge of performance
Generic pattern:
The generic pattern of substitution induced by sailing ship is presented by figure 12.
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1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035
m1 m2 expected
DELAY
Figure 12: Generic pattern of a sailing ship substitution
12. 11
Historical example:
A stereotypical and eponymic example of this pattern of defensive surge of
performance is the evolution of the sailing ship into fast Clippers as the steam engine
emerged (Blackman, 1974; Foster, 1986; Utterback, 1994; Snow, 2003). The delay induced
in the substitution is often discussed, but never substantiated. I thus combine Graham’s
qualitative accounts of the defensive surge of sailing ships (Graham, 1956) with quantitative
historical data provided by the U.S. Bureau of Census5
.
At the beginning of the 19th
century, sailing ships were “reminiscent of warships and
required gales of wind to move at a speed no greater than three to four miles per hour”
(Graham, 1956). The use of steam-engine for ocean navigation began in 1819 but the first
boilers were pretty dangerous as they could not withstand pressures higher than three bars;
they often exploded violently! On long routes such as tea trade with China, speed was a vital
consideration and in the face of paddle-wheel and low-pressure boilers, sailing ships had to
hold their supremacy as cargo carriers. They managed to do so at least until 1870.
During the late 1840’s in response to the arrival of steam power, the sailing ships
evolved to emphasize speed as the critical performance criteria of the time. New sailing ships
were introduced with “double the space for cargo in proportion to tonnage, and manned and
navigated by about one-third the number of men” (Graham, 1956). These clipper ships had
completely new and original naval design characteristics, carried large amounts of sail
relative to their displacement and were thus capable of remarkable speed (18mph). This was
the beginning of the clippers era which ran roughly from 1845 to about 1870.
Indeed, in the 1870’s the lead of clipper ships became precarious. Improvements
brought by the compound engine marked a notable advance in marine engineering. Moreover,
the abovementioned open-hearth processes allowed the production of better steel which in
turn enabled boiler plates and tubes to withstand higher pressures. While the early steam
ships burned 30 to 40 tons of coal a day to carry 1400 tons cargo on a long journey, the newer
and faster vessels burned only 14 tons of coal a day to carry 2000 tons cargo. By 1870, these
improvements combined with lower rates for the Suez Canal effectively made tea trade with
China profitable. Soon the traffic was completely stolen from sailing ships. Thereafter, only
sailing ships capable of carrying large freight of cheap bulk commodities – essentially coal –
could be operated profitably (Graham, 1956).
5
U.S. Bureau of the Census. (Carter, Gartner, Haines, Olmstead, Sutch and Wright, 2004).
13. 12
Figure 13 shows the historical data of the substitution of powered boats for sailing
ships from 1797 to 1964. Figure 13 also shows a classical Fisher-Pry logistic curve fitted to
the time period 1797-1845:
t
m
m
′+−=
−
*085.09.4
1
ln (1)
with t’ = 1797. One can easily imagine that by 1845, the binary substitution trajectory could
have been expected to follow a classical logistic shape. By introducing a 31-year delay into
the t’ time reference constant, we can clearly see the delay induced in substitution from 1845
by improved clipper ships until the 1870’s where steam engines became an efficient and
economical solution for marine trade.
0
0.1
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1
1797
1803
1809
1815
1821
1827
1833
1839
1845
1851
1857
1863
1869
1875
1881
1887
1893
1899
1905
1911
1917
1923
1929
1935
1940
1946
1952
1958
1964
Sail Power expected delayed
DELAY
Figure 13: Sailing ship substitution – Sailing ships vs. Power (1797 – 1964)
2.6 Hybrid intermediate
Description:
In many cases, incumbents respond to the substitutive threat of N+1 not just by a
defensive surge of technology N, but by developing an hybrid technology intermediate
N+1/2. An hybrid technology can be defined when some parts of the old technological
paradigm integrate some aspects of the new one. The hybrid is then often presented as a
seemingly radically improved technology. In spite of this, technology N+1 eventually wins
the whole market over. There are numerous examples of artefacts trying to combine “the best
of both” paradigms. In rare cases, the hybrid technology may have a beneficial combination
of traits which, as in evolutionary biology, allows it to succeed in a niche market (marginal
habitat) where the two parent technologies (species) are disadvantaged.
Some of the early steam boats were actually hybridized sailing ships with steam
paddlewheels, or vice-versa paddlewheel steam ships with auxiliary sails! The only real
15. 14
new paradigm, i.e. the turbine, to produce rotating shaft power. On the other hand, turbo-jets
use the thrust from exhaust gazes.
Turbo-Propeller Turbo-JetPiston-Propeller Turbo-Propeller Turbo-JetTurbo-Propeller Turbo-JetPiston-Propeller
Figure 15: Piston-Propeller, Turbo-Propeller and Turbo-Jet
Since the early 1950’s the success of an aircraft was viewed as being heavily
dependent on the specifications of power output for its engines “independently of what was
precisely needed to fit the commercial and traffic requirements of the airline customers”
(Davies, 1964). Airline operations had steadily advanced towards commercial viability,
especially thanks the ‘incomparable’ DC-3 which probably introduced the dominant design
of modern aircrafts. In 1953, the de Havilland Comet 1, the first turbojet, started service. It
set the stage for a reappraisal of values in the industry. Despite being a dramatic
technological progress, several factors delayed the substitution of jet engines. They were
much louder and at landing required breaking distance much longer than propeller did by
inverting the angle of their blades. On the other hand, jet engine could not yet change the
direction of their air flow and the landing distances were still very important. Moreover, a
crash of a Comet 1 in April 1954 created a major crisis in the industry and turbo-jet services
were suspended.
The first turbo-prop, the Vickers Viscount, was introduced the same year in 1954 and
piston-propellers started being pushed out of service. Later versions of the Viscount with
longer fuselage were developed and larger turbo-props like the Bristol Britannia were
introduced and operated quite profitably until… in October 1958, the jet services were flown
again on the Boeing 707, the first ‘big jet’ airliner. From 1959, jet airplanes started serving
the important longer routes, whilst the turbo-props were allocated to many of the routes of
secondary importance.
Figure 167
illustrates these three generations of aircraft technologies. Figure 17 shows
the evolution of cruising speed8
(Davies, 1964) and the substitution patterns for these three
technologies (Linstone and Sahal, 1976).
7
From photos 30, 62 and 69 of (Davies, 1964)
16. 15
The ‘Incomparable’ DC-3 Viscount, the First Turbo-Prop Boeing 707, the First ‘Big Jet’The ‘Incomparable’ DC-3 Viscount, the First Turbo-Prop Boeing 707, the First ‘Big Jet’
Figure 16: Three generations of aircrafts – Piston DC-3 / Turboprop Viscount / Turbojet 707
0.000.100.200.300.400.500.600.700.800.901.00
1956
1956
1956
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
Piston
Turbo-Prop
Turbo-Jet
0.000.100.200.300.400.500.600.700.800.901.00
1956
1956
1956
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
Piston
Turbo-Prop
Turbo-Jet
Figure 17: Hybrid intermediate substitution: Piston-prop / Turbo-prop / Turbo-jet (1956 – 1973)
As a second example, figure 18 presents the hybrid intermediate substitution pattern
which occurred in the tire industry when it moved from bias to belted-bias to radial tires
(Sull, 1999, p. 441).
0
0.1
0.2
0.3
0.4
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0.7
0.8
0.9
1
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
Bias Belted Bias Radial
Bias
Belted- Bias
Radial
Figure 18: Hybrid intermediate substitution: Bias – Belted bias – Radial tires (1961–1988)
8
Adapted from figure 86 of Ibid.
17. 16
2.7 Technological bursts
Description:
In most cases, incumbents firms are right to be dismissive because the new
technology just does not make it. In other cases, highly sophisticated products push the
performance limits so far that they are expected to completely revolutionize the industry and
become widely adopted. This complete revolution just does not happen and the overshooting
performance only interests a small niche. This pattern highlights the importance of the
definition of what constitutes the potential market and the difficulty of the classical
representation of substitution to account for market segmentation by technology.
When planned and designed, the Concord Supersonic Transport Aircraft was viewed
as a passenger jet that could fly at twice the speed of sound and whose “commercial logic
seemed ironclad” (Gar, 2005). Indeed, since its debuts, the aviation market had been driven
by what appeared to be the public’s insatiable appetite for faster flights over longer distances
(see figure 17). By the end of 1963, Pan Am, American Airlines, Continental and TWA had
joined British Airways and Air France in taking options to purchase the planes. However,
when Concorde was finally launched in 1976, it entered an aviation market that had changed
drastically since the initial decision back in 1956. Only 16 Concordes were ever sold, all to
British Airways and Air France. After this initial burst, the world market for Concorde was
non existing.
Generic pattern:
The generic pattern of a technological burst is presented by figure 19.
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
0.90
1.00
m1 m2
Figure 19: Generic pattern of a technological burst
Historical example:
In the late 1980’s, Motorola engaged in developing a satellite mobile phone system.
The complete system was initially planned to include seventy-seven but it eventually ended
up with sixty-six active satellites in Low Earth Orbit. A consortium, Iridium LLC was created
18. 17
and promised to allow communication "with anyone, anytime, virtually anywhere in the
world". The Iridium system used Time Division Multiple Access (TDMA). TDMA
equipments can only see one satellite signal at a time. Iridium and other TDMA systems
compensate by using more power. But excess power means larger and heavier handsets.
Moreover, Iridium satellite handsets were Line of Sight (i.e. requiring an unobstructed direct
line between the satellites and the mobile handset) and thus could not be used indoor.
Nevertheless, the system designers were persuaded that it would be a great success in
the market. At the time, all the forecasts had been underestimating the actual growth of the
mobile market. In 1991, there were only 11 millions mobile phones subscribers worldwide.
Cellular service was very limited and there was virtually no international roaming. Motorola
thus interpreted this as an indication that the market would enthusiastically carry their
technology to the top. Motorola had been a technology leader for more than sixty years and
was used to successfully bring radical technologies to the consumers. However, they believed
that mobile phone users would be slow to move to GSM and their faith in the satellite
paradigm was unshakable (Finkelstein and Sanford, 2000). By the late 1990s, relatively good
quality cellular phone service from the GSM technology, which brought international
roaming and equipment compatibility, was much more prevalent than the planning of Iridium
had anticipated.
It took 12 years, $5 billions, and more than 20 millions lines of computer code to
build the system. Iridium communication service was launched on November 1st
, 1998.
Cumulative sales were expected to reach 1.6 millions subscribers by 2000 and 27 millions by
2007. By 2000, there were a mere 55 thousands subscribers. Given the explosive growth of
the mobile industry, in 2005 the Iridium 150 thousands subscribers base9
only accounts, as
shown in figure 20, for only 0.006 percent of worldwide mobile subscribers.
0.000%
0.001%
0.002%
0.003%
0.004%
0.005%
0.006%
0.007%
0.008%
1998 1999 2000 2001 2002 2003 2004 2005 2006
N.A. Estimated
Figure 20: Technological burst – Iridium Satellite/worldwide mobiles (1998-2006)
9
Iridium Satellite LLC : First Quarter 2006 results and (ITU, 2002)
19. 18
A classical logistic model could properly be fitted to a technological burst. Indeed, it
comes down to the estimation of the potential market. Nevertheless, the burst characteristic is
often salient. This case also demonstrates the difficulty of the strategic planning for long-term
development projects of radical technologies. In highly dynamic environments, things will
have moved on by the time the technology is launched.
2.8 Path finder
Description:
In some cases what initially appeared to be a technological burst eventually reaches
the growth phase. Utterback describes the phase after the introduction of a disruptive
technology as a fluid phase during which many product innovations occur. When the form
factor and the dominant design, etc. are established, then the industry really moves on and the
diffusion rate increases because of reduced uncertainty.
In the case of a path finder, it seems that this fluid phase is abnormally long. Only a
very few players, and for an unusually long time, are making attempts at the technology. But,
then somehow the set of contextual conditions necessary for creating a mass market appears
in the environment. A path finder is thus an initial “burst” stuck in a niche, which eventually
reaches the growth phase – a sleeping beauty that finally wakes up!
Generic pattern:
The generic pattern of a path finder substitution is presented by figure 21.
0.0
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0.2
0.3
0.4
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0.8
0.9
1.0
1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050
m1 m2
Figure 21: Generic pattern of a path finder substitution
Historical example:
The Laserdisc, as an optical video disc, was a path finder for the DVD. I thus
collected10
secondary data on the diffusion of these technologies in the U.S. market. The
10
Consumer Electronics Association, May 2006: www.ce.org and (Taylor, 1998)
20. 19
home video market has experienced changes from the initial Video Cassette Recorder (VCR)
of the 1980’s based on analogue, to the Digital Video Disc (DVD) of the late 1990’s based on
digital optical laser disc. Laserdiscs (LD), introduced in the retail market in 1978, were the
first commercial optical video discs.
On LD, the video was recorded with very good image quality using frequency
modulation of an analogue signal while audio was recorded digitally in separate tracks. Video
resolution was at 425 lines. This should be compared to the 240 lines of magnetic tape
(VHS). Laserdiscs could be encoded with chapters allowing random disc access. This meant
that one could jump to any point on a given side very quickly (a functionality later
highlighted for DVD). LD were 30 cm in diameter and made of two single-sided stamped
aluminum discs sandwiched between two sheets of plastics. Because they had two sides of
thirty minutes each, LD had to be flipped during projection and most movies were recorded
on two discs. This was felt as one of the major drawbacks of this initial optical video system
but many LD-players built after the mid-1980’s could automatically rotate the optical system
to the other side of the disc.
Because of their superior image and sound quality, players and discs titles were kept
at a fairly high price. MCA and Pioneer were the only two prominent industrial players.
However, at the end of the 1990’s, only about 15000 titles were available on the format.
Moreover, VCR were diffusing at the same time and a strong emphasis was placed on
recording capability. For these reasons, LD were not well accepted outside of the video
enthusiasts niche.
Introduced in 1997, DVD format was in effect the digitalization of the optical format
introduced by the Laserdiscs. Digital compression allowed storing a complete movie, audio
and bonuses on one side of a small and practical disc. Taylor considers that the DVD format
was “a modest net advance over LD and a major advance over VHS” (Taylor, 1998).
Moreover, a whole set of conditions was suddenly, in place to allow the creation of the mass
market for optical video discs. This favourable context was constructed along three
dimensions: institutional influence, network externalities, and electronic commoditization.
Indeed, the DVD format was really pushed by an unprecedented cooperation from the
computer industry, music companies, Hollywood studios, and consumer electronic companies
which had formed a consortium, the DVD Forum, and launched an institutional
communication campaign to promote the format. The amazingly rapid commoditization of
the DVD player, the rental infrastructure already in place, and the familiarity that consumers
had developed with home video made adoption easier.
21. 20
By 1998, the U.S. installed base of VCR had reached 80 millions units. Laserdisc
which were introduced in 1978 had, by 1990, only reached an installed base of 2 millions
units. I collected monthly sales of DVD players in the U.S. from 1997 to 2006 from the
Consumer Electronics Association. In May 2006, less than ten years after their introduction,
the installed base of DVD players in the U.S. had reached 106 millions. Given that in 2004,
DVD had a penetration rate of 70% of household11
, I assume that this also illustrates the
substitution of DVD for VCR. Figure 22 illustrate the path finder behaviour of Laserdisc for
the optical disc paradigm of home video. Despite their high quality video experience, LD
stayed an initial burst in a niche. For many years, the optical video system stayed dormant
until the set of conditions made it possible for optical video DVD to explode into a mass
market.
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
0.90
1.00
1978
1979
1980
1981
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2000
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2002
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2005
2006
Magnetic VCR Optical LD +DVD
Figure 22: Path finder: Laserdisc as path finder for DVD in optical video disc (1978-2006)
2.9 Double shift
Description:
In the classical view of successive generations of technology the base case
substitution dynamics occur when the previous technology is already in its mature phase and
is the dominant technology. However, I have also identified a very impressive pattern in
which the second generation substitution dynamics are cut short by a third generation of
technology which ends up dominating the market.
In a double shift, a binary substitution is started by the emergence of a radically new
technology N+1. As it reaches the steep growth phase and appears to be on its way to
completion, the substitution is completely cut short by the emergence of a third technology
N+2.
Tushman and Andersen describe how minicomputers were successively based on
vacuum tubes, transistors and then integrated circuits. The first shift to transistor in 1962
11
Ibid.
22. 21
resulted in minicomputers that were much faster than their vacuum-tube predecessors.
However, this transistor architecture was replaced “within two years” by a second shift to
integrated circuits with an even more astonishing performance improvement (Tushman and
Anderson, 1986). Similarly, Durand and Stymne (1991) describe how public switches in the
telecommunication industry moved away from electromechanical technologies and how
analogue space division “would most probably have become the next dominant technology if
digital Time Division Multiplexing (TDM) had not become the new challenge”.
Generic pattern:
The generic pattern of a double shift substitution is presented by figure 23.
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035
m1 m2 m2* m3
Figure 23: Generic pattern of a double shift substitution
Historical example:
To substantiate this generic pattern of a double paradigmatic shift, I combine the
longitudinal study of the typesetter industry conducted by Mary Tripsas (Tripsas, 1996; 1997;
2005) with other references on the chronology, evolution of techniques and economical
aspects of this industry (Swann, 1969; Hutt, 1973; Solomon, 1986; Wallis, 1988).
“Typesetting is the process of arranging and outputting text and images. Text from a
manuscript is entered into a typesetter machine […] the output of the typesetter, either paper
or film is then used to create a printing plate that is used by a press for high-volume printing”
(Tripsas, 1997 p. 124). Typesetters’ customers include newspapers, commercial printers and
some corporate ‘in-house’ publishers.
Typesetting started manually back with Gutenberg’s invention of the movable type
around 1440. At first, each individual letter was cast into a body of type using a mixture of
lead, tin and antinomy (Solomon, 1986). All the foundry types were stored in large case
drawers and the letters were then composed by hand to form lines of types. The first
commercial typesetting system that automatically distributed letter types for reuse was
23. 22
introduced in 1886 with the Mergenthaler Linotype. An operator typed out individual letters
on a keyboard. With each keystroke, a lever released an individual matrix (mold). After a line
of type was composed and justified, the matrices were moved and the machine tapped a
reservoir of molten lead to cast a slug from the matrix. This formed a “line of type” with
raised letters. All the separate bars were assembled by a compositor to form the complete
printing plate for the press. Each matrix had an individual code key was distributed back into
its proper channel in the magazine. Because of the use of molten lead this generation of
typesetter is referred to as ‘hot metal’. The speed of a typesetting technology can be measured
in characters per second (cps). Until 1930, the speed of hot metal followed a very clear S-
shape trajectory from around 1.5 cps to a limit of 3.5 cps already reached by 1910. When
1946, the first successful analogue phototypesetter was introduced, this induced a very
noticeable sailing ship effect in the performance of the hot metal technology. By 1965 it had
reached a new limit of 8 cps (Tripsas, 2005, p. 35), thus effectively doubling the old
performance limit!
In analogue phototypesetters, the metal matrices were replaced with a photographic
image of the character. Placed in front of a xenon light source, the image of each letter was
flashed and projected onto a step-moving photographic film to form the line. The film was
then developed and projected onto a metal plate chemically treated with light-sensitive
emulsion to create a printing plate for high-volume press. The characters width, size and
position were adjusted optically through a system of lenses. Among others, the introduction
of phototypesetting considerably reduced the composing time and the safety issues associated
with molten lead. By 1975, analogue phototypesetters had reached speeds of 80 cps.
In 1965, the first cathode ray tube (CRT) typesetter was announced. CRT systems
digitalized the previously analogue images of the types. Thus, the characters could be stored
magnetically and instead of a xenon flash, a CRT display was used to write the characters
onto the photographic film. The CRT generation eliminated most of the typesetters’ moving
parts as electronics substituted for electro-mechanical technology (Tripsas, 2005). Speed
from 500 to 2000 cps were commonly available, with particular models reaching more than
3000 cps. However, Tripsas notes that this technology had exceeded the speed requirements
of most users. It was only interesting to print large telephone directories. The real take off
occurred in 1977 with the introduction of Intel 8080 microprocessor that enabled greater
connectivity with large electronic database and better control of the typesetting unit (Wallis,
1988).
24. 23
The third technological shift occurred with the laser technology. In 1976, Monotype
International revealed the Lasercomp. The laser technology writes out text in a raster fashion
by a spinning polygonal mirror across the breadth of a page at thousands of sweeps per inch.
This raster stroke approach was a significant development for the imaging of pages complete
with text and graphics. However, it requires a page description language. The first language,
InterPress, was developed by John Warnock while at Xerox PARC, but Xerox did not
commercialize it. John Warnock and Charles Geschke left Xerox and in 1982 they formed
Adobe Systems. They then developed a simpler and high-level raster image processing
software called PostScript which went on the market in 1984. PostScript specifies the curves
that define the outline of a typeface in terms of straight lines and Bézier curves. By filling the
outline it allows the typefaces to retain smooth contours when rotated or scaled to any size.
PostScript offered flexibility, high-quality, and on-the-fly rasterizing.
The inclusion of the PostScript language in 1985 in the Apple LaserWrite effectively
sparked the desktop publishing revolution! It induced tremendous externalities and sudden
improvement of utility for the laser technology which became the best option for the novel
user needs of setting text and graphics in an integrated manner. From this point, laser
imagesetters started dominating the market.
Since the early 2000’s, yet another technology, computer-to-plate (CTP), has
revolutionized the printing industry because instead of striking a film (which must be
developed and then projected on a plate), the laser beam is used directly on a special printing
plate covered with light-sensitive emulsion (McCourt, 2002; Candille and François, 2004).
Figure 24 illustrates these successive typesetting technologies from 1886 to 2006.
FilmFilm
Pre 1886
Hand-set type cases
1886
Hot-Metal Linotype
1946
Analog Phototypesetter
1965
Cathode Ray Tube
1976
Laser Imagesetter
1984
PostScript Outline Font
2000’s
Computer-To-Plate
FilmFilm
Pre 1886
Hand-set type cases
1886
Hot-Metal Linotype
1946
Analog Phototypesetter
1965
Cathode Ray Tube
1976
Laser Imagesetter
1984
PostScript Outline Font
2000’s
Computer-To-Plate
Figure 24: Successive generations of typesetting technologies (1886-2006)
25. 24
Since the introduction in 1977 of the Intel 8080 microprocessors, the CRT technology
had really took off and by 1985, CRT had reached more than 65% market share. Incumbent
firms were probably confident that their technological choice was strong and that they did not
have anything to fear yet from the 15% share of the emerging laser technology. But the
introduction of PostScript resulted in an explosive substitution and by 1988, laser
imagesetters had themselves reached 65% of market share. In an industry which had so far
experienced long technology cycles, such a double shift in less than three years was
shattering.
Figure 25 gives a longitudinal view of the technological substitutions in the U.S.
typesetter industry (Tripsas, 1997). We can clearly see the double shift whereby the
substitution of the CRT technology for the analog phototypesetters is cut short by the
emergence and rapid diffusion of the Laser technology enabled by PostScript.
Finally, figure 26 offers a synoptic view of all these generic patterns of technological
substitution. It demonstrates that substitution is not a unified phenomenon in the shape of a
smooth S-curve; rather there are various patterns induced by complex underlying dynamics.
0.0
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0.2
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1949
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2001
2002
2003
2004
2005
2006
Hot Metal Analog Photosetter Digital CRT Laser Imagesetter Computer To Plate
Figure 25: Double shift: Typesetters Hot Metal – Analog Photo – CRT – Laser – CTP (1949-2006)
3. Underlying dynamics
As shown by an immense body of literature, many technological substitutions occur
on a basic binary mode. Nevertheless, the above examples illustrate that substitution is
neither a unified logistic phenomenon nor a passive process. As Christensen puts it, many
authors “simply report observations of S-curve phenomena”, but “a few examine the
processes […] in considerable depth” (Christensen, 1992). While being a very well plough
academic ground, technological change has, according to Sahal, “turned out to be one of the
26. 25
most vexing of all problems in the social sciences […] in particular, there remain all too
many missing links in our knowledge of the subject” (Sahal, 1981). More than a quarter of a
century later, I believe her comment still holds.
These generic patterns of substitution result from broad and complex underlying
dynamics. The technological burst and path finder patterns include a combination of long
term systemic interactions and social dynamics that greatly influence the creation of a mass
market. The long term feedback illustrate how broad system changes can trigger a
substitution. The defensive surge of the threatened technology, as with the sailing ship, and
the intermediate hybrid technology can both induce a delay in the substitution trajectory.
As shown in figure 1, the innovation and technology management literature
classically represents technology trajectories with a new technology taking over when the
existing technology has reached its technological limits (Linstone and Sahal, 1976; Sahal,
1981; Christensen, 2003; Durand, Granstrand et al., 2004 p. 108). The double shift, as an
extreme case of overlapping, challenges this view of the disruption timing. The technology
burst also illustrates the difficulty of strategic planning for long-term high technology
projects that are embedded in highly dynamic contexts. Indeed, when Concorde was finally
launched in 1976, it entered an aviation market that had changed drastically since the initial
decision back in 1956. Similarly, by the time the Iridium satellite system was launched in
1998, GSM had really changed the dynamics and growth of the mobile telecommunication
industry since the initial decision in the late 1980’s.
First or second-order technological externalities, i.e. changes induced by links with
other technologies, greatly influence the substitution trajectory. Externalities have been
discussed in the literature to occur in two forms. On one hand, network externalities increase
the expected utility as the number of adopters increase. The underlying dynamics are
economics. On the other hand, bandwagon effects result from strong social dynamics which
generate a boom and burst behaviour. I argue that there is a third type of externalities, which I
call technological externalities. By creating links between industries or practices, some
innovations act as catalysts, and sometimes even triggers, to explosive technological change.
28. 27
The case of the sailing ship shows that the substitution of steam boats for sailing ships
resumed thanks to improvements in steelmaking brought by open-hearth furnaces in the late
1870’s. Their diffusion of allowed the production of better steel, which in turn enabled boiler
plates and boiler tubes to withstand higher pressures; through a second-order feedback more
efficient steam boats could then be operated profitably (see figure 4 and figure 13). The
introduction of Intel 8080 microprocessors into the design of the digital CRT typesetter offers
another example. It enabled greater connectivity with large electronic databases and greater
control of the typesetting unit (Wallis, 1988); hence creating a step discontinuity in the utility
of this generation of technology. Finally, the PostScript is certainly a radical example of such
catalyst innovations. It created externalities with the growing installed base of desktop
computers which led to the desktop publishing revolution and a double shift in the typesetter
industry. Macromedia Flash and the USB port can also be thoughts of as catalysts
innovations that led to explosive change in the multimedia and consumer electronics.
These generic patterns show that we need to broaden the scope of our analysis in
order to better understand the underlying dynamics of technological substitution. A system
approach to technological change should account for classical industrial dynamics
(Utterback, 1994), but also regulatory changes, spillovers from science and academia
(Henderson and Cockburn, 1996; Murmann, 2003), the availability of financing and
technological development and externalities. A broader model should also recognize the
critical role of social factors (Dattee and Weil, 2005). Without detailing its structure, figure
27 shows an aggregated theoretical framework (Dattee, 2006) which offers a synoptic view of
the major concepts of technological change and the research traditions that have discussed
them.
Social
Dynamics
Market Diffusion
Technological
Evolution
Industrial
Dynamics
Science &
Acdemia
Heterogeneity
Socio-Political Co-Evolution
Socio-Technical Co-Evolution
Lobbying
Opportunity
Driver of Growth
Knowledge Spillover
Perceived Risks & Opportunities
Technology Development
Offering
Ethical Issues
Regulation &
Policies
Financial
Sector
Taxes and Innovation Programs
Political Environment
Investment
Technological Paradigm
Research Programs
Discursive Actions
Figure 27: A broad theoretical framework of technological change.
29. 28
4. Bifurcation analysis
The substitution time-paths, patterns, or trajectories are influenced by the dynamics
taking place in the broad technical system described in figure 27. In this section, I identify
bifurcation points between these trajectories and how the generic patterns can be combined
into sequence to replicate the longitudinal view of technological substitution in an industry.
Based on the life cycle theory, an emerging technology generation must go through a
growth phase before reaching dominance. Figure 28 shows the three phases over time of the
classical logistic pattern of technological substitution. Every technological change starts with
a spark that ignites the substitution dynamics. Then, for a base case, the new technology
smoothly enters a growth phase which Moore refers to as “crossing the chasm” (Moore,
2002) before reaching market dominance.
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
Spark
Growth
Dominance
Figure 28: Three time phases of a base case substitution
Using a simulation model developed with the system dynamics methodology (Dattee,
2006), it is then possible to plot substitution trajectories under various scenarios. A base case
scenario can be altered by changing the dynamics at the system level, as described in figure
27 – e.g. changing the timing of emergence of the new technology, or accounting for specific
social dynamics, etc. This is illustrated by figure 29 which shows that there exist important
bifurcation12
points in the substitution trajectory13
of a technology N+1. Indeed, while the
12
Pasquet in his study of technological transition defines points of technological bifurcation by analogy with
the physicochemical theory of dissipative structure (Pasquet, 2002). Around bifurcation points, macroscopic
qualitative changes in the structure can be produced by the amplification of an infinitesimal internal fluctuation
or by a small external perturbation, while the system is in an instable state. Nevertheless, Pasquet refers to
bifurcations between two technological paradigms, i.e. moving from N to N+1. In my work, the bifurcations
points are between types of substitution trajectories already started (after the paradigmatic bifurcation point in
Pasquet’s meaning).
13
For clarity, the complementary fractions for technology N were omitted; i.e. fn+fn+1=1
30. 29
substitution is taking place along a given trajectory, changes at the system level may create a
bifurcation towards another substitution trajectory.
René Thom developed the catastrophe theory in order to understand sudden
phenomena. In a system, these abrupt changes occur at points of tension between two
variables. At a particular moment, there is a conflict between two attractors and the system is
constrained to suddenly decide for one of them. The catastrophe theory emphasizes
phenomenological discontinuities but also relate them to an underlying slow evolution
(Thom, 1984).
Figure 29: Bifurcation graph of technological substitution trajectories
The initial spark is common to every cases of technological change because it is the
initial disruption that ignites the substitution dynamics. However, a first bifurcation point is
evident after this initial takeoff. In the classical S-curve view, the substitution continues on
the left of this point as it is assumed that the technology smoothly enters the growth phase.
The system is on a base case trajectory (1). If this substitution reach completion, the next
spark (N+2) will generate a concatenated pattern. Nevertheless, in many cases, the next spark
will create an overlapping pattern (2). These are the classical views of technological change
between successive generations of technology. However, as I have discussed earlier when the
generation N+1 is on its way to complete substitution, there is another potential bifurcation
point because the system could suddenly bifurcate towards a double shift (3). The catastrophe
theory states that at bifurcation points there is a tension between two attractors, a slower
underlying dynamics and a quicker one (Thom, 1984). Figure 29 shows that a double shift
can be considered as a particular case of overlapping, but the catastrophe theory also
31. 30
highlights that the sudden bifurcation that can be triggered by a specific N+2 spark (e.g.
PostScript).
These trajectories (1,2, and 3) are from an initial bifurcation towards mass market.
But often the proponents of the previous technology react and respond either with a defensive
surge or a hybrid intermediate. In both case the resulting pattern for N+1 is a delayed
substitution; the substitution bifurcate towards the right. As in the case of steam boats or CRT
typesetters, technological externalities can create a new point of bifurcation whereby the
substitution dynamics eventually resume. The technology N+1 is back on track and enter the
growth phase (4). The rest of the substitution trajectory will be determined by the emergence
of N+2 (i.e. concatenation, overlapping, etc.). As an example, figure 29 actually indicates an
overlapping case occurring after the system had followed a sailing ship pattern (5).
At the initial bifurcation point, generation N+1 can actually become stuck in the burst
scenario. This can happen because of the defensive surge of technology N was sufficient –
but this seems to be a rare case – or broader dynamics (cf. Concord or Iridium). The new
generation N+1 only appeals to a small elite. From this point, the perspective of entering the
phase of rapid growth (i.e. crossing the chasm) is greatly compromised and the system will
most probably follow the very strong attractor of a burst pattern (6).
However, the path finder pattern shows us that in some cases a “last chance”
bifurcation is possible because the broader system change and the growth phase is finally
reached (7). Nevertheless, either creating this point through institutional entrepreneurship or
guessing the right timing to enter will be extremely difficult. It will demand a deep
understanding of the emergence of bifurcation point. Munir and Philips show how Kodak
fought for many decades using discursive strategies to make its roll-film – an initial burst –
bifurcate towards a mass-market success (Munir and Phillips, 2005). However, figure 29 has
us wondering how long can a “sleeping beauty” technology wait before it becomes a
mummy?
This bifurcation analysis shows that strategic actions may be undertaken by change
agents to influence the dynamics of substitution, increase the strength of an attractor and thus
favor the occurrence of a preferred pattern. As an example, if a company is stuck in a burst it
probably has four alternatives:
1. First, wait for the right system conditions to happen,
2. Second, undertake strategic actions to influence the discursive dynamics and change
the evaluation criteria of adopters in order to create those right conditions,
3. Third, create an alternative use for the technology,
32. 31
4. Fourth, withdraw from the business and admit failure.
The institutional entrepreneurship of Kodak offers great lessons in changing the dynamics of
a burst and make the system bifurcate towards a path finder trajectory. As many authors
emphasize, the dynamics of substitution can be socially constructed through discursive
actions that influence the decision criteria and market preferences (Van de Ven and Das,
2000; Maguire, 2003; Schilling, 2003; Munir and Phillips, 2005).
Sometimes the entire technical system has so much inertia that it’s just too big to
influence its trajectory. Nevertheless, Yoffie and Cusumano (1999) explain that like in judo
whose strategy is based on rapid movement, flexibility, and leverage, there are strategic
actions that one can take to turn these larger dynamics to one’s advantage. Indeed, the
essence of strategy is timing. Hence, identifying the emergence of a double shift might for
example offer the opportunity to leapfrog the sandwiched generation without wasting time.
This would also allow profiting from the momentum of change already initiated. By
definition, a double shift occurs during the growth phase of the technology N+1 when major
investments have just been made to increase volume, etc. Therefore, these commitments and
limited financial capacity will make it extremely difficult for those engaged in the
sandwiched generation N+1 to follow and switch to N+2.
Finally, this approach shows that the generic patterns of substitution that I have
described can actually be combined to replicate more precisely the longitudinal view of
technological change in an industry. For example, instead of a concatenation of base case S-
shape substitution the typesetter industry, as discussed in section 2, went through a sailing
ship from hot metal which delayed analogue, the CRT were stuck in a niche market until the
introduction of the Intel 8080, but when the substitution resumed like for a path finder it was
suddenly curt short by a double shift from a combination of laser and PostScript!
5. Conclusion
In this paper I started by challenging, in a Popperian sense, the smooth logistic shape
of the substitution S-curve. I provided counterexamples, i.e. exceptions to the logistic
generalization of technological substitutions by collecting secondary historical data for a
series of examples used in the literature on technological change. I showed that the time-path
of these substitutions did not follow the classical uniform S-curve but that rather more
complex substitution trajectories. These were summarized in figure 26. This variety of
patterns requires us to broaden the scope of our analyses and account for the dynamics
33. 32
occurring at the system level; I proposed an aggregated theoretical framework of
technological change. Using the catastrophe theory, I then conducted a bifurcation analysis.
This resulted in figure 29 which presents the bifurcation points between the generic patterns
of substitution.
Contrary to the classical view of a concatenation of smooth logistic base cases where
each successive generation reaches dominance, these generic patterns of substitution can
actually be combined to replicate more precisely the longitudinal view of technological
change in an industry. The combination of these analyses shows that a better understanding
of the underlying dynamics of substitution could help identify the conditions of emergence of
particular patterns. Hence, a company could for example undertake strategic actions to
influence the bifurcation towards preferred patterns (e.g. engage in institutional
entrepreneurship to change a technological burst into a path finder), or try to identify a double
shift and to leapfrog the crushed generation.
34. 33
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