Technology and Products

                                            “Everything that can be invented
                    ...
Technology revolutions have this
          remarkable ability of being nearly invisible
          but yet so obvious right...
Sustaining Technology
 Gradual Improvements
  – Foster improved product performance
  – Each year new and improved produc...
What is Technology?




Copyright © 2009, Ólafur Andri Ragnarsson
Why study technology?

  Do we know what technology is?
   All technology was once new
History can remind us what technolo...
The word “technology”
 was coined by Jacob Bigelow,
 an engineering professor
 at Cambridge University
 in Boston, in 1829...
Technology


         Process by which an organization
         transforms labor, capital, material, and
         informat...
Product Performance


          The value you get out of a product for
          which you have paid some cost




Copyrig...
Product Performance




Copyright © 2009, Ólafur Andri Ragnarsson
Copyright © 2009, Ólafur Andri Ragnarsson
Copyright © 2009, Ólafur Andri Ragnarsson
Innovation


                         The change in the technology




Copyright © 2009, Ólafur Andri Ragnarsson
Innovation
Copyright © 2009, Ólafur Andri Ragnarsson
How does technology change?




Copyright © 2009, Ólafur Andri Ragnarsson
Technology Factory
 Tomas Edison’s
  Menlo Park
   – World’s first first
     industrial research
     lab
   – 1876-1881...
The Long Nose of Innovation


 Bill Buxton’s
 Long nose of
 Innovation




             Source:
             http://www.bu...
The Long Nose of Technology




Douglas Englebart 1965                               Apple Machintosh 1984


Source: http:...
Any technology that is going to have significant
 impact over the next 10 years is already at least
                  10 y...
Diffusion of Innovation
Innovation grows in three stages

   1. Slow growth – The early phase of exponential
      growth
...
Technology S-Curve
 Based on the notion of Technology Life Cycle
  – Improvements in performance varies throughout the
   ...
Technology S-Curve
 Exponential trends can be composed of a
 sequence of S-curves where each curve is faster




Copyright...
Technology S-Curve




Copyright © 2009, Ólafur Andri Ragnarsson
Technology S-Curve




Copyright © 2009, Ólafur Andri Ragnarsson
Technology S-Curve




Copyright © 2009, Ólafur Andri Ragnarsson
Technology Life Cycle
   Life of technology follows the life cycle
   In the early days
         The innovators and techno...
Technology Adoption Life Cycle
  Adoption of technology follows the life cycle




Copyright © 2009, Ólafur Andri Ragnarss...
What makes a product good so that people will
                  adopt it?




Copyright © 2009, Ólafur Andri Ragnarsson
Copyright © 2009, Ólafur Andri Ragnarsson
VisiCalc

Copyright © 2009, Ólafur Andri Ragnarsson
Edison Phonograph                      Victor Talking Machine’s
                                            Victrola

Copy...
Enrico Caruso
                                            1873-1921
Copyright © 2009, Ólafur Andri Ragnarsson
Edison Phonograph                      Victor Talking Machine’s
                                            Victrola

Copy...
Technological change is relatively easy




Copyright © 2009, Ólafur Andri Ragnarsson
It’s the social, organizational and cultural
                     change that is hard




Copyright © 2009, Ólafur Andri R...
Crossing the Chasm
 The change in customers as technology matures
  Crossing the chasm – or the Tipping point




Copyrigh...
What triggers the tipping point?




Copyright © 2009, Ólafur Andri Ragnarsson
Anderson’s Grand Unified Theory of Technology
                    Trends




Copyright © 2009, Ólafur Andri Ragnarsson
Theory of Predicting the Future
 Anderson’s Grand Unified Theory of Predicting
  the Future
   – All important technologi...
What caused the tipping point for the iPod?




              Apple said it sold a record 22.7 million
              iPods...
Technology Life Cycle
When will the early
majority pragmatics
start buying a product?

The value of the product
is suffici...
Technology Life Cycle
 Early in the cycle, technology is important
 When technology becomes good enough
  – Value becomes ...
Life Cycle of Technology
 The move from Technology to Commodity




                   The need-satisfaction curve of tech...
The Market of Commodites
 What happens when a market becomes mature?
   – Karaoke Capitalism takes over
 Red oceans
   –...
Creating Blue Oceans
 Strategy for creating new markets
  – Make the competition irrelevant
 Blue oceans denote all the ...
Value Innovation


         Instead of focusing on beating the
         competition, you focus on making the
         comp...
What is the impact of technological change?




Copyright © 2009, Ólafur Andri Ragnarsson
Technology is one of
                            the major factors in
                                  change




Copyrig...
Opportunity                                 Threat



Copyright © 2009, Ólafur Andri Ragnarsson
Example: Digital Photography




Copyright © 2009, Ólafur Andri Ragnarsson
Copyright © 2009, Ólafur Andri Ragnarsson
Copyright © 2009, Ólafur Andri Ragnarsson
Predicting Technology Revolutions
 Predicting is difficult
   – We tend to overestimate the immediate impact of
     tech...
We tend to view technology based on
                 pastusages but not the future
                           potential


...
Any sufficiently advanced technology is indistinguishable
from magic




Copyright © 2009, Ólafur Andri Ragnarsson
Railroads (1815)
       “Rail travel at high speed is not
       possible because the passengers, unable
       to breathe...
Telephone (1876)




    quot;This 'telephone' has too many
    shortcomings to be seriously considered
    as a means of ...
Cars (1885)
“The horse is here to stay, but the
automobile is only a novelty – a fad”
- The president of the Michigan Savi...
Airplanes (1903)
quot;Heavier-than-air flying machines are
impossible.quot;
- Lord Kelvin, president, Royal Society, 1895....
Radio (1905)




   “The wireless music box has no
   imaginable commercial value. Who
   would pay for a message sent to ...
Television (1926)




    “For God’s sake go down to the
    reception and get rid of a lunatic who’s
    down there. He s...
Computers (1943)




   quot;I think there is a world market for
   maybe five computers.“
   - Thomas Watson, chairman of...
Computers (1977)


  quot;There is no reason for any individual
  to have a computer in their home.”
  - Kenneth Olsen, pr...
Internet (1970)



“The Internet is a shallow and
unreliable electronic repository of dirty
pictures, inaccurate rumors, b...
Digital Cameras (1991)

“But is the image quality of digital-
capture high enough for large
reproductions in a magazine li...
How will this innovationchange an
               industry, and what impact does this
                  have on the firms I...
Nordic Marketing Conference of Lottery
Companies, Mývatn, September 1995

Copyright © 2009, Ólafur Andri Ragnarsson
Sustaining Innovations
 Gradual Improvements
   – Foster improved product performance
   – Each year new and improved pro...
Market Leading Companies
 Have a high probability of beating entrant
 attackers when the contest is about sustaining
 inno...
The Digital Revolution

              Transistor, 1947




                                            Integrated circuit,...
Red Ocean Industry
                                    Bloody Competition
                               Well know industr...
Disruptive Technolgoy
 The product performance is good enough to
 fulfill a unfilled need in the market

 Current products...
The Disruptive Innovation Theory
 Existing companies have a high probability of
  beating entrant attackers when the cont...
The Disruptive Innovation Theory
   New organization can use relatively simple,
   convenient, low-cost innovations to cre...
The Disruptive Innovation Theory
Low-end
        Can occur when existing products and services are
        “too good” and ...
The Disruptive Innovation Theory
New-market
        Occur when characteristics of existing products limit
        the numb...
The Disruptive Innovation Theory




                                            Source: Christensen et. al. Seeing what’s...
When
                           Disruptive Technologies
                               Cross the Chasm
                   ...
The Hype Cycle
 A graphic representation of the maturity,
 adoption and business application of specific
 technologies



...
The Internet Bubble

 “The New Economy”
                                                 NASDAQ
                          ...
The Railway Bubble




 Railway Stock in Britain
    – The value of railway stock grew 4 fold from 1826 to
      1846
   ...
Summary
 Technology is a process
 Technology advances in cycles
 Innovation is about improving the performance
  of tec...
Technology and Products
 About the Presenter

        Ólafur Andri Ragnarsson,
        Chief Software Architect at Betwar...
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Technology And Products

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Technology And Products

  1. 1. Technology and Products “Everything that can be invented has been invented” - Purportedly said by Charles H. Duell, Commissioner, U.S. Office of Patents, 1899 Copyright © 2009, Ólafur Andri Ragnarsson
  2. 2. Technology revolutions have this remarkable ability of being nearly invisible but yet so obvious right in front us. Copyright © 2009, Ólafur Andri Ragnarsson
  3. 3. Sustaining Technology  Gradual Improvements – Foster improved product performance – Each year new and improved products are offered Copyright © 2009, Ólafur Andri Ragnarsson
  4. 4. What is Technology? Copyright © 2009, Ólafur Andri Ragnarsson
  5. 5. Why study technology? Do we know what technology is? All technology was once new History can remind us what technology is Copyright © 2009, Ólafur Andri Ragnarsson
  6. 6. The word “technology” was coined by Jacob Bigelow, an engineering professor at Cambridge University in Boston, in 1829 – Techne is greek for art or skill – logosis greek for word, speech Source: Copyright © 2009, Ólafur Andri Ragnarsson
  7. 7. Technology Process by which an organization transforms labor, capital, material, and information into products and services of greater values Copyright © 2009, Ólafur Andri Ragnarsson
  8. 8. Product Performance The value you get out of a product for which you have paid some cost Copyright © 2009, Ólafur Andri Ragnarsson
  9. 9. Product Performance Copyright © 2009, Ólafur Andri Ragnarsson
  10. 10. Copyright © 2009, Ólafur Andri Ragnarsson
  11. 11. Copyright © 2009, Ólafur Andri Ragnarsson
  12. 12. Innovation The change in the technology Copyright © 2009, Ólafur Andri Ragnarsson
  13. 13. Innovation Copyright © 2009, Ólafur Andri Ragnarsson
  14. 14. How does technology change? Copyright © 2009, Ólafur Andri Ragnarsson
  15. 15. Technology Factory  Tomas Edison’s Menlo Park – World’s first first industrial research lab – 1876-1881 “I have not failed. I've just found 10,000 ways that won't work.” Copyright © 2009, Ólafur Andri Ragnarsson
  16. 16. The Long Nose of Innovation Bill Buxton’s Long nose of Innovation Source: http://www.businessweek.com/innovate/content/jan2008/id2008012_297369.ht m Copyright © 2009, Ólafur Andri Ragnarsson
  17. 17. The Long Nose of Technology Douglas Englebart 1965 Apple Machintosh 1984 Source: http://www.britannica.com/EBchecked/topic/187881/Douglas-Engelbart Copyright © 2009, Ólafur Andri Ragnarsson
  18. 18. Any technology that is going to have significant impact over the next 10 years is already at least 10 years old Source: http://www.businessweek.com/innovate/content/jan2008/id2008012_297369.ht m Copyright © 2009, Ólafur Andri Ragnarsson
  19. 19. Diffusion of Innovation Innovation grows in three stages 1. Slow growth – The early phase of exponential growth 2. Rapid growth – The late explosive phase of exponential growth 3. A leveling off as the particular paradigm matures Copyright © 2009, Ólafur Andri Ragnarsson
  20. 20. Technology S-Curve Based on the notion of Technology Life Cycle – Improvements in performance varies throughout the life of the technology Performance Copyright © 2009, Ólafur Andri Ragnarsson
  21. 21. Technology S-Curve Exponential trends can be composed of a sequence of S-curves where each curve is faster Copyright © 2009, Ólafur Andri Ragnarsson
  22. 22. Technology S-Curve Copyright © 2009, Ólafur Andri Ragnarsson
  23. 23. Technology S-Curve Copyright © 2009, Ólafur Andri Ragnarsson
  24. 24. Technology S-Curve Copyright © 2009, Ólafur Andri Ragnarsson
  25. 25. Technology Life Cycle Life of technology follows the life cycle In the early days The innovators and technology enthusiasts drive the market They demand Technology Small percentage of the market In the later days The pragmatists and conservatives dominate; they want solutions and convenience The big market Copyright © 2009, Ólafur Andri Ragnarsson
  26. 26. Technology Adoption Life Cycle Adoption of technology follows the life cycle Copyright © 2009, Ólafur Andri Ragnarsson
  27. 27. What makes a product good so that people will adopt it? Copyright © 2009, Ólafur Andri Ragnarsson
  28. 28. Copyright © 2009, Ólafur Andri Ragnarsson
  29. 29. VisiCalc Copyright © 2009, Ólafur Andri Ragnarsson
  30. 30. Edison Phonograph Victor Talking Machine’s Victrola Copyright © 2009, Ólafur Andri Ragnarsson
  31. 31. Enrico Caruso 1873-1921 Copyright © 2009, Ólafur Andri Ragnarsson
  32. 32. Edison Phonograph Victor Talking Machine’s Victrola Copyright © 2009, Ólafur Andri Ragnarsson
  33. 33. Technological change is relatively easy Copyright © 2009, Ólafur Andri Ragnarsson
  34. 34. It’s the social, organizational and cultural change that is hard Copyright © 2009, Ólafur Andri Ragnarsson
  35. 35. Crossing the Chasm The change in customers as technology matures Crossing the chasm – or the Tipping point Copyright © 2009, Ólafur Andri Ragnarsson Source: Geoffrey A. Moore: Crossing the chasm
  36. 36. What triggers the tipping point? Copyright © 2009, Ólafur Andri Ragnarsson
  37. 37. Anderson’s Grand Unified Theory of Technology Trends Copyright © 2009, Ólafur Andri Ragnarsson
  38. 38. Theory of Predicting the Future  Anderson’s Grand Unified Theory of Predicting the Future – All important technologies go through four states, or at least four stages, in their lives – Each stage can be seen as a collision, with something else. The stages are: 1. Critical Price 2. Critical Mass 3. Displace another technology 4. Become nearly free Copyright © 2009, Ólafur Andri Ragnarsson
  39. 39. What caused the tipping point for the iPod? Apple said it sold a record 22.7 million iPods, which commands a 70% share of the U.S. market for music players. (source: LA times) Copyright © 2009, Ólafur Andri Ragnarsson
  40. 40. Technology Life Cycle When will the early majority pragmatics start buying a product? The value of the product is sufficiently great or good-enough Copyright © 2009, Ólafur Andri Ragnarsson
  41. 41. Technology Life Cycle Early in the cycle, technology is important When technology becomes good enough – Value becomes more important – Technology is no longer the variable that controls purchases – Improvements loose their glamour – Customers are looking for things like value convenience, productivity, ease-of-use, low-cost, reliability – Emotions Copyright © 2009, Ólafur Andri Ragnarsson
  42. 42. Life Cycle of Technology The move from Technology to Commodity The need-satisfaction curve of technology Copyright © 2009, Ólafur Andri Ragnarsson
  43. 43. The Market of Commodites  What happens when a market becomes mature? – Karaoke Capitalism takes over  Red oceans – All the industries in existence today —the known market space – Industry boundaries are defined and accepted, and the competitive rules of the game are known Copyright © 2009, Ólafur Andri Ragnarsson
  44. 44. Creating Blue Oceans  Strategy for creating new markets – Make the competition irrelevant  Blue oceans denote all the industries not in existence today—the unknown market space, untainted by competition Copyright © 2009, Ólafur Andri Ragnarsson
  45. 45. Value Innovation Instead of focusing on beating the competition, you focus on making the competition irrelevant by creating a leap in value for your buyers and your company, thereby opening up new and uncontested market space Copyright © 2009, Ólafur Andri Ragnarsson
  46. 46. What is the impact of technological change? Copyright © 2009, Ólafur Andri Ragnarsson
  47. 47. Technology is one of the major factors in change Copyright © 2009, Ólafur Andri Ragnarsson
  48. 48. Opportunity Threat Copyright © 2009, Ólafur Andri Ragnarsson
  49. 49. Example: Digital Photography Copyright © 2009, Ólafur Andri Ragnarsson
  50. 50. Copyright © 2009, Ólafur Andri Ragnarsson
  51. 51. Copyright © 2009, Ólafur Andri Ragnarsson
  52. 52. Predicting Technology Revolutions  Predicting is difficult – We tend to overestimate the immediate impact of technology and underestimate the long-term impact – We tend to place emphasis on the technologies themselves, when it is really the social and cultural change that will be the most dramatic Copyright © 2009, Ólafur Andri Ragnarsson Source: Norman, The Invisible Computer
  53. 53. We tend to view technology based on pastusages but not the future potential Copyright © 2009, Ólafur Andri Ragnarsson
  54. 54. Any sufficiently advanced technology is indistinguishable from magic Copyright © 2009, Ólafur Andri Ragnarsson
  55. 55. Railroads (1815) “Rail travel at high speed is not possible because the passengers, unable to breathe, would die of asphyxia” - Dr. Dionysus Lardner, Professor of Natural Philosophy and Astronomy at University College, London Copyright © 2009, Ólafur Andri Ragnarsson
  56. 56. Telephone (1876) quot;This 'telephone' has too many shortcomings to be seriously considered as a means of communication. The device is inherently of no value to us.quot; - Western Union internal memo, 1876. Copyright © 2009, Ólafur Andri Ragnarsson
  57. 57. Cars (1885) “The horse is here to stay, but the automobile is only a novelty – a fad” - The president of the Michigan Savings Bank to advised Henry Ford's lawyer Horace Rackham not to invest in the Ford Motor company saying Copyright © 2009, Ólafur Andri Ragnarsson
  58. 58. Airplanes (1903) quot;Heavier-than-air flying machines are impossible.quot; - Lord Kelvin, president, Royal Society, 1895. Copyright © 2009, Ólafur Andri Ragnarsson
  59. 59. Radio (1905) “The wireless music box has no imaginable commercial value. Who would pay for a message sent to nobody in particular?quot; - David Sarnoff's associates in response to his urgings for investment in the radio in the 1920s Copyright © 2009, Ólafur Andri Ragnarsson
  60. 60. Television (1926) “For God’s sake go down to the reception and get rid of a lunatic who’s down there. He says he’s got a machine for seeing by wireless!” - Editor of the Daily Express in response to a prospective visit by John Logie Baird, 1925 Copyright © 2009, Ólafur Andri Ragnarsson
  61. 61. Computers (1943) quot;I think there is a world market for maybe five computers.“ - Thomas Watson, chairman of IBM, 1943 Copyright © 2009, Ólafur Andri Ragnarsson
  62. 62. Computers (1977) quot;There is no reason for any individual to have a computer in their home.” - Kenneth Olsen, president and founder of Digital Equipment Corp., 1977. Copyright © 2009, Ólafur Andri Ragnarsson
  63. 63. Internet (1970) “The Internet is a shallow and unreliable electronic repository of dirty pictures, inaccurate rumors, bad spelling and worse grammar, inhabited largely by people with no demonstrable social skills.” - Chronicle of Higher Education, 1997 Copyright © 2009, Ólafur Andri Ragnarsson
  64. 64. Digital Cameras (1991) “But is the image quality of digital- capture high enough for large reproductions in a magazine like Arizona Highways that is known for the quality of its photography? Presently, the answer is quot;no.quot;” - by Peter Ensenberger, Arizona Highways Director of Photography, 2007 Copyright © 2009, Ólafur Andri Ragnarsson
  65. 65. How will this innovationchange an industry, and what impact does this have on the firms I care about? Copyright © 2009, Ólafur Andri Ragnarsson
  66. 66. Nordic Marketing Conference of Lottery Companies, Mývatn, September 1995 Copyright © 2009, Ólafur Andri Ragnarsson
  67. 67. Sustaining Innovations  Gradual Improvements – Foster improved product performance – Each year new and improved products are offered Copyright © 2009, Ólafur Andri Ragnarsson
  68. 68. Market Leading Companies Have a high probability of beating entrant attackers when the contest is about sustaining innovations – Incremental or radical improvements to already existing products – Airplanes that fly further, computers that process faster, and televisions with clearer images Copyright © 2009, Ólafur Andri Ragnarsson
  69. 69. The Digital Revolution Transistor, 1947 Integrated circuit,1959 Intel 4004, 1971 Copyright © 2009, Ólafur Andri Ragnarsson
  70. 70. Red Ocean Industry Bloody Competition Well know industry boundaries Rules are established Sustained Innovation Disruption Blue Ocean New Value Innovation Technology Align innovation with utility, price, and cost poisition Copyright © 2009, Ólafur Andri Ragnarsson
  71. 71. Disruptive Technolgoy The product performance is good enough to fulfill a unfilled need in the market Current products can’t compete Copyright © 2009, Ólafur Andri Ragnarsson
  72. 72. The Disruptive Innovation Theory  Existing companies have a high probability of beating entrant attackers when the contest is about sustaining innovations Copyright © 2009, Ólafur Andri Ragnarsson Source: (Christensen, 2000)
  73. 73. The Disruptive Innovation Theory New organization can use relatively simple, convenient, low-cost innovations to create growth and triumph over powerful incumbents Copyright © 2009, Ólafur Andri Ragnarsson Source: (Christensen, 2000)
  74. 74. The Disruptive Innovation Theory Low-end Can occur when existing products and services are “too good” and hence overpriced relative to the value existing customer can use – Value Innovation Copyright © 2009, Ólafur Andri Ragnarsson Source: (Christensen, 2000)
  75. 75. The Disruptive Innovation Theory New-market Occur when characteristics of existing products limit the number of potential consumers or force consumption to take place in inconvenient, centralized settings Copyright © 2009, Ólafur Andri Ragnarsson Source: (Christensen, 2000)
  76. 76. The Disruptive Innovation Theory Source: Christensen et. al. Seeing what’s next Copyright © 2009, Ólafur Andri Ragnarsson
  77. 77. When Disruptive Technologies Cross the Chasm “’This time it’s different’ are the four most expensive words in the investing language ” - Sir John Templeton Copyright © 2009, Ólafur Andri Ragnarsson
  78. 78. The Hype Cycle A graphic representation of the maturity, adoption and business application of specific technologies Copyright © 2009, Ólafur Andri Ragnarsson
  79. 79. The Internet Bubble “The New Economy” NASDAQ January 2000 Copyright © 2009, Ólafur Andri Ragnarsson
  80. 80. The Railway Bubble  Railway Stock in Britain – The value of railway stock grew 4 fold from 1826 to 1846 – Many companies, heavy overinvestment – The Bubble burst 1846 Copyright © 2009, Ólafur Andri Ragnarsson
  81. 81. Summary  Technology is a process  Technology advances in cycles  Innovation is about improving the performance of technology  It is sometimes difficult to convince others of new technology  People base their view on past uses not future potential Copyright © 2009, Ólafur Andri Ragnarsson
  82. 82. Technology and Products  About the Presenter Ólafur Andri Ragnarsson, Chief Software Architect at Betware and Adjunct a the University of Reykjavík  On-line profile: http://olafurandri.com http://twitter.com/olandri http://delicious.com/olandri andri@ru.is Copyright © 2009, Ólafur Andri Ragnarsson

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