1 / 16

Management of Technology (OM476)

Management of Technology (OM476). Design Dominance and Timing of Entry February 8, 2006 S. Fisher. Agenda. How does existence of a dominant design affect innovation? Who benefits from dominant designs? What is the optimal timing of entry into a market? The role of first movers.

adie
Télécharger la présentation

Management of Technology (OM476)

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Management of Technology (OM476) Design Dominance and Timing of Entry February 8, 2006 S. Fisher

  2. Agenda • How does existence of a dominant design affect innovation? • Who benefits from dominant designs? • What is the optimal timing of entry into a market? • The role of first movers

  3. Review: Technology Cycles • Selection of a dominant design results in a period of incremental change, until the next technological discontinuity.

  4. Group Exercise • Think of a technology for which there is a dominant design • Something other than Microsoft, please • What is the impact of this dominant design for: • The dominant provider • Providers of complementary goods • Consumers • The industry as a whole

  5. Battle for Dominant Design: VHS vs. Beta • 1974 – Sony meets with JVC and Matsushita to discuss plans and design standards for home video • 1975 – Sony releases Betamax • 1976 – JVC rejects Sony’s ideas, releases VHS (using some of Sony’s technology) • Division into 2 camps • Betamax: Sony Toshiba, Sanyo Electric, NEC, Aiwa, and Pioneer • VHS: Matsushita, Hitachi, Mitsubishi Electric, Sharp, and Akai Electric • VHS ultimately became the dominant standard – simpler, longer recording times, better marketing

  6. Key question… • How does this innovation add value? What is the utility to the buyer? Dimensions include: • Productivity • Simplicity • Convenience • Risk • Fun and Image • Environmental friendliness • Remember Performance Indicator!

  7. Network Externalities • Also known as positive consumption externalities • The benefit (or value) of using a technology increases as the number of people using it (installed base) increases • Examples? • Are there instances when the opposite effect occurs?

  8. RFID (radio frequency identification) • Technology used to track materials and products through the supply chain • Essentially, more sophisticated version of the bar code • Active vs. passive tags

  9. RFID, continued • Wal-Mart, US Department of Defense are requiring suppliers to use RFID • Pros and cons of dominant design in this situation? • Tags • Readers • Software

  10. Compatibility and RFID • Alien’s ALR-9800 reader, designed primarily for EPC Class I Gen 2 compatibility, has cleared a major obstacle -- its compliance with Microsoft’s RFID technology. • August 20, 2005 from http://www.rfidgazette.org/2005/08/microsoft_and_a.html • “Our latest solution suite combines modular flexibility and user-specified capabilities with ease of integration with IBM, SAP WM and other technologies,” • May 4, 2005 from http://www.catalystinternational.com/content/About_Us/pressreleases/latest/CatalystComplete%209.2%20Release.pdf

  11. Components of Value • Technological utility • Installed base • Complements availability Greater value --- higher probability of adoption and design dominance

  12. Timing of Entry • Categories similar to Rogers’ categories for diffusion • First movers • Early followers • Late entrants • First mover advantages? Disadvantages?

  13. Early follower advantages • Learn from what the first movers have done • Adopt new and more efficient processes • Often have higher ROI in the long term, even without a significant sales advantage Source: Boulding and Christen (2001 October). First-mover disadvantage. Harvard Business Review.

  14. Factors Driving Optimal Timing of Entry • Certainty of customer preferences • Degree of innovation (level of improvement) • Enabling technologies and complementary goods • Threat of competitive entry • Ability to withstand early losses • Reputational value • Switching costs

  15. When to enter first • Likely advantage depends on rates of technological change and market growth Short-Lived Durable Calm Waters -Both slow Unlikely Very likely • Market Leads • Market rapid • Tech slow Very likely Likely Technology Leads -Market slow -Tech rapid Very Unlikely Unlikely Rough Waters -Both rapid Likely Very unlikely Source: Suarez, F. and Lanzolla, G. (April 2005). The half-truth of first-mover advantage. Harvard Business Review.

  16. Next class • Monday – no class (Feb. break) • Wednesday, Feb 15 – Prepare Apple Computer case (2002 and 2005) • Team 3 presenting • Team 7 asking questions (and exec summary) • All other teams preparing exec. summary

More Related