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Challenging the dominant logic

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Presentation of an on-going research paper about the dominant logic of industries

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Challenging the dominant logic

  1. 1. Challenging a Dominant Industry Logic: Technological Discontinuities and Disruptive Business Models in the Drug Industry<br />Sabatier V.1, Kennard A.2, Mangematin V.1<br />1 Grenoble Ecole de Management, France<br />2Genostar<br />R&D Management workshop<br />Managing R&D, Technology and Innovation in the Process Industries<br />Grenoble Ecole de Management <br />Center for Innovation, Technology and Entrepreneurship (CITE)<br />5 May 2011<br />
  2. 2. 1. Introduction<br />2. Theoreticalfoundations<br />3. The drugindustry: dominant logic and business model<br />4. Results: Triggers for industry disruption<br />5. Discussion and conclusion<br />
  3. 3. Relevance of the research<br />1. Introduction<br />Thirtyyearsafter the emergence of biotechnology, the overalllogif of the drugindustry has not reallychanged, neither the waycompanies do business, nor the ways in whichdiseases are prevented or cured. <br />A gap in the theory : industry life cycle theoriescannotexplainwhatis happening in the drugindustry. <br />Biotechnology + Bioinformatics + Nanobiotechnology<br /> = several waves of technological discontinuities<br />2. Theoreticalfoundations<br />3. The drugindustry<br />4. Results<br />5. Discussion<br />
  4. 4. Research question<br />When a mature industryisdestabilized by technologicaldiscontinuities, what triggers the disruption of its dominant logic, and how do suchlogics change? <br />1. Introduction<br />2. Theoreticalfoundations<br />The aim of this article is to understand the engines that drive industry logic evolution and to propose a complement to current theories – which consider technological discontinuities as the main trigger for the evolution of the industry logics – with the concept of business model innovation. <br />3. The drugindustry<br />4. Results<br />5. Discussion<br />
  5. 5. 1. Introduction<br />2. Theoreticalfoundations<br />3. The drugindustry: dominant logic and business model<br />4. Results: Triggers for industry disruption<br />5. Discussion and conclusion<br />
  6. 6. The dominant logic of an industry<br />1. Introduction<br />The dominant logic of an industry refers to how firms «conceptualize and make critical resource allocation decisions - be it in technologies, product development, distribution, advertising, or in human resource management» (Prahalad and Bettis 1986). <br />A vision of value creation and value capture shared by the actors of the industry. <br />2. Theoreticalfoundations<br />3. The drugindustry<br />4. Results<br />5. Discussion<br />
  7. 7. Business models<br />From strategy to the business models of the firm (Casadesus-Masanell, 2010)<br />A focus on the value proposition delivered to customers : Business models are the manner by which an enterprise delivers value to customers, entices customers to pay for value, and converts those payments to profits (Teece 2010). <br />The renewal and transformation of business models depends on concrete leadership actions including anticipating the future of the industry (Doz et al., 2010). <br />1. Introduction<br />2. Theoreticalfoundations<br />3. The drugindustry<br />4. Results<br />5. Discussion<br />
  8. 8. Technological and business discontinuities<br />Agarwal and Tripsas (Agarwal et al., 2008) distinguished three stages of evolution – emergence/growth, shake out and maturity – and identified the technological changes that drive firm performance and trigger industry evolution at each stage.<br />Other triggers – beyond technological discontinuities – are needed to drive evolution in the drug industry, and we suggest that it is when discontinuities trigger business model innovations that the industry’s logic evolves.<br />1. Introduction<br />2. Theoreticalfoundations<br />3. The drugindustry<br />4. Results<br />5. Discussion<br />
  9. 9. 1. Introduction<br />2. Theoreticalfoundations<br />3. The drugindustry: dominant logic and business model<br />4. Results: Triggers for industry disruption<br />5. Discussion and conclusion<br />
  10. 10. Methodology<br />1. Introduction<br />The expert study<br />(22 experts)<br />The dominant logic of the drugindustry<br />2. Theoreticalfoundations<br />3. The drugindustry<br />How companiestry to disrupt the dominant logic<br />7 case studies<br />(bioinformaticscompanies)<br />4. Results<br />5. Discussion<br />
  11. 11. Describing the dominant logic of the drugindustry<br />1. Introduction<br />Value propositions: The pharmaceutical industry is based on product discovery, development and commercialization.<br />Networks and alliances: Networks and alliances have become much more extensively used in the drug industry since the emergence of biotechnology companies. Large (hub) firms control these networks. <br />Value chain: The stability of the value chain is strong because of the fragmentation of the innovative work, the power of intellectual property rights, and the regulations exerted by governmental agencies. <br />2. Theoreticalfoundations<br />3. The drugindustry<br />4. Results<br />5. Discussion<br />
  12. 12. Emerging business models as a seed of industrylogicsevolution<br />
  13. 13. 1. Introduction<br />2. Theoreticalfoundations<br />3. The drugindustry: dominant logic and business model<br />4. Results: Triggers for industry disruption<br />5. Discussion and conclusion<br />
  14. 14. Triggers for industry disruption<br />1. Introduction<br />2. Theoreticalfoundations<br />3. The drugindustry<br />4. Results<br />5. Discussion<br />
  15. 15. Triggers for industry disruption<br />1. Introduction<br />2. Theoreticalfoundations<br />3. The drugindustry<br />4. Results<br />5. Discussion<br />
  16. 16. Triggers for industry disruption<br />1. Introduction<br />2. Theoreticalfoundations<br />3. The drugindustry<br />4. Results<br />5. Discussion<br />
  17. 17. 1. Introduction<br />2. Theoreticalfoundations<br />3. The drugindustry: dominant logic and business model<br />4. Results: Triggers for industry disruption<br />5. Discussion and conclusion<br />
  18. 18. Some points of discussion<br />Entering an industrywithtechnologicaldiscontinuities, <br />Control of complementaryassets, <br />Appropriation modes and technologicaldiscontinuities, <br />The power of large diversifying entrants<br />1. Introduction<br />2. Theoreticalfoundations<br />3. The drugindustry<br />Technology is not the only force regulating the industry life cycle;<br />business models innovation can also challenge the dominant logic of an industry. <br />4. Results<br />5. Discussion<br />
  19. 19. Thankyou for your attention<br />Valérie Sabatier, Adrienne Kennard, Vincent Mangematin<br />valerie.sabatier@grenoble-em.com, <br />vincent.mangematin@grenoble-em.com<br />Acknowledgements: <br />We acknowledge the financial support of ANR (ANR-07-NANO-026-01) and of the FP7 European project FRIDA (FP7-SSH-2007-1). The authors would like to thank the participants of the MCOI seminar (www.grenoble-innovation.eu) and Tristan Rousselle for their helpful comments . Usual caveats apply. <br />

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