Adaptive vs. Qualitive/Discontinuous Innovation

Question 1

Conclusions of Xerography

Answer 1

→ This suggests the need to distinguish research from development:
→ The development phase is usually quite prolonged
→ research is often high uncertainty and risk but a lower cost
→ development - less uncertainty and risk but more expensive.
→ In addition, one should not underestimate the importance of adaptive innovation.
→ For each case of the emergence of new technology (computer, xerography, steam engines, combustion engines) there was many incremental changes preceded and succeeded the breakthrough.
→ Suggests a more complicated model than Schumpeter’s. ( He argues qualitive and dicontinuous change is expensive and risky)
He underestimates the importance of adaptive change

Question 2

Story of Xerox

Answer 2

With a formerly unemployed physicist, Chester Carlson (1938) developed the base for a photocopier
In 1944 he interested Battelle Development Company, a contract research company.
In 1946, Haloid, a manufacturer of photographic equipment, took over responsibility for product development.
A commercially viable copier was developed in 1959
→ At the point of the initial invention there was a substantial risk that the work would lead nowhere. The cost, however, was modest.
→ The development stage (1944-1959) was prolonged and fairly costly, but the risk had diminished. Battelle would not have taken the project on had that not been the case. They knew they had an idea that had potential.
The development costs were sufficiently modest that the final step of producing a commercially viable printer could be taken on by a small company. (Haloid)

Question 3

Learning by doing

Answer 3

Learning by doing: skill in production improves because of experience, causes decline unit labour costs because output rises.
These improvements are a major source of reduced cost/improved productivity for large batch or mass produced items like aircraft or automobiles.

Question 4

Embodied learning by using

Answer 4

Embodied learning by using: After an innovation goes into use, redesign it to improve it
Ex. Aircraft, there is initial caution in design because of the costs of
failure and system complexity
With experience it becomes clear how the product might be redesigned to improve
Ex. Metal fatigue in jets

Question 5

Disembodied learning by using

Answer 5

Disembodied learning by using: There are no design changes, rather, experience leads to modifications to use procedures.
Ex. Saving money by reducing the frequency of maintenance (which significantly reduces cost)
Ex. Trade-off between cutting metal quickly (for efficiency) and damaging it

Question 6

Advantages of being the second mover

Answer 6

Second (or lower order) users profit from the corrections brought to the product design as a result of the experience of first users (embodied learning by using).
The prices paid by second (or lower order) users are likely to be lower than those paid by first users (learning by doing).
Second (or lower order) users are likely to profit from knowledge about how to use new equipment (including maintenance) generated by first users (disembodied learning by
using).

Question 7

Why is adaptive change important?

Answer 7

In a complex system, adaptive change usually means there will be a significant difference between the prototype and the next models
This means buyers will usually delay the purchasing of a new technology as they know it will get better, this slows the rate of diffusion as discovery accelerates
May lead to the purchase of less durable equipment
These factors act as an incentive for diffusers to lower prices to increase sales, or else consumers will always be waiting for the next tech to come out
Diffusion is important because it leads to experience with new technology