Post on 11-Jan-2016
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Technology Maturation and SubstitutionAmin Aghajani
Zeinab Rouhollahi
Fall 2011
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Introduction
The most important and difficult task in managing
technology:
The appropriate balance between the application and
extension of conventional technology and the
development and introduction of new technology
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But Why? The Technology Paradox
Most attempts to replace existing technology will
fail.
Technology is like a jigsaw puzzle.
But, history shows that all technologies are fated to
be replaced eventually.
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The Technology Paradox (cont.)
If we understand how and when a technology
becomes vulnerable as well as the issues involved in
technological substitution, we are more likely to
achieve a sound balance of effort.
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Technology Life Cycle
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Technology Life Cycle
When a technology first emerges, there are almost
no constraints on what can be tried.
Effort is focused on improving raw physical
capabilities.
Business is dominated by engineers.
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Technology Life Cycle
As the technology is applied, constraint begin to
emerge:
Advances must be compatible with equipment already
being used
Nature impose limits
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Technology Life Cycle
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Dominant Design
What is a dominant design?
A dominant design is a specific path, along an
industry's design hierarchy, which establishes
dominance among competing design paths
Factors
the emergence of a dominant design is the result of
a fortunate combination of factors:
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Technological
Organizational
Economic
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Facilitating Factors
What makes a design dominant?
1. Possession of collateral assets (market knowledge,
distribution network, reputation, etc.);
2. Industry regulation and government intervention;
3. Strategic maneuvering at the firm level;
4. Existence of bandwagon effects or network
externalities in the industry.
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Dominant Design Along Life Cycle
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Technology Life Cycle
As the gap between natural limit and reliable
practice narrows, more and more attention shifts
from improvement in capabilities to improvement
in processes that lead to lower cost.
Manufacturing effectiveness rises in importance
and visibility.
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Technology Life Cycle
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Technology Life Cycle
As processes become more sophisticated, they
become more expensive and specialized, and the
technology becomes more capital intensive.
The effective management of assets increasingly
determines competitive success.
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Technology Life Cycle
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Dominant design in industries
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Hypothesis
A firm's probability of surviving through time will be
directly affected by a firm's entry timing vis-a-vis' the
evolution of technology in the industry.
The probability of survival will tend to be greater for
firms entering the industry before the emergence of a
dominant design than for firms entering after it.
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Rationale
Dominant design is a catalyst for the accumulation of
collateral assets and creation of barriers to entry:
Dominant designs emerge as a process of experimentation
between the firm and the users of the product.
Entering early allows the firm to 'buy' time in order to
experiment with the market and thus increase its
probability of coming up with a dominant design.
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Typewriter Industry
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An alternative hypothesis
Firms before a dominant design will have lower
chances for Survival because the chance of choosing
the wrong design.
There are some cases which late entrants can also
survive:
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Standards
Financial power
Collateral assets
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Research Conclusion
Entry pre-dominant design is clearly associated with
lower probability of failure.
Entry post-dominant design presents more
ambiguous results: only one industry clearly supports
our prediction that the risk of failure would be higher
for firms entering a greater number of years after the
dominant design.
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But the Paradox Still Remains!
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But the Paradox Still Remains!
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What We Can Say
At a minimum, awareness that a technology is
maturing should alert managers of technology to its
growing vulnerability and lead them to an increased
monitoring of potential threats from new fields that
may supplant conventional technology.
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Technology Substitution