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Lecture 3

Lecture 3. Innovation Management GM0401 Johan Brink. Today's lecture. Diffusion of innovation Development of technologies Dominant design Technologies as systems. Innovation as a process.

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Lecture 3

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  1. Lecture 3 Innovation Management GM0401 Johan Brink

  2. Today's lecture • Diffusion of innovation • Development of technologies • Dominant design • Technologies as systems

  3. Innovation as a process Perhaps the best definition is that: ”Innovation process is as much a journey as a destination” (Van de Van et al. 1999). It means that: ”the more we know about this journey, the more rewarding it is likely to be”.

  4. Product diffusion Innovation adoption • How does a new product diffuse in society?

  5. Percentage ownership Airplanes Television Radio Telephones Micro- wave Electricity VCR Automobiles PC Cell phones Internet

  6. Rogers empirical • Innovators: 2.5% • Early Adopters: 13.5% • Early majority: 34% • Late majority 34% • Laggards 16% E. Rogers, Diffusion of Innovations (1962)

  7. Rogers model Knowledge Persuation Decision Implementation Confirmation • Previous practice • Felt needs • Innovativness • Social norms • Mandate • Peer review • Relative advantage • Compatibility • Complexity • Triability • Observability • Use • Switch/change • YES • NO

  8. Bass model A theoretical model dN(t)/dt= [p+q*N(t)/m]*[m-N(t)] N(t)=Cumulative units in the market m=total market size (saturation) p= nonimitation (internal) q= imitation (external) That is when N(t)=m the market is saturated

  9. Crossing the chasm& the tipping point

  10. Technology • What is technology?

  11. Radical vs. Incremental • Radical innovations • include breakthroughs that change the nature of products and services • contribute to the technological revolutions • usually requires greater investment in basic research • may follow different diffusion patterns • Incremental innovations • include minor changes to existing products, which cumulatively improve the performance or cost of products and services • Incremental innovation is the most common from and tends to reinforce the position of establish firms, allowing them to exploit what they know to help them do things better (Utterback, 1994).

  12. Technology Performance Time

  13. In 1794 the Earl of Stanhope built a steam-powered vessel named the Kent. 1820 North sea 1830 Mediterranean sea 1840 Atlantic 1850 China Competing technologies Performance Sail Steam Time

  14. Hulls • Steam • Slow (fouling)- 10 knots compared to almost the double for sail • Reliable?

  15. Great age of sail ships 1860-1880 • Sail • Increase cargo capacity (x2) • Advances in oceanographyTrade winds: storms & Currents • Steel wires • Suez channel (1869)

  16. Great age of sail ships 1860-1880

  17. 1880-> Decline?

  18. Future? Performance Nuclear Sail Oil Steam Time

  19. Dominant designs • Early lead • Network effect • Scale • Past investments

  20. VHS Beta-Max

  21. VHS Beta-Max

  22. Niche markets 3 MW, 80M 50-10 kW, 10-20M

  23. Attackers advantage! • 1972->1992 • 100Mb from 5400 to 8 cubic inch • from 5400$/MB to 5 $/MB

  24. Technology as systems

  25. Summary • Diffusion of innovation • Development of technologies • Dominant design • Technologies as systems

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