L01 THE NATURE OF DIGITAL TECHNOLOGIES

Question 1

Technology Life Cycle

Answer 1

Dominant Design –>
Era of incremental change –>
Technological Discontinuity –>
Era of Ferment –>

Question 2

Stage Gate Model

Answer 2

(1) Ideas screen
(2) Scoping
(3) Build Business Case
(4) Development
(5) Testing & Validation
(6) Launch

Question 3

Characteristics of Digital Technologies

Answer 3

(1) Homogenization & Decoupling
(2) Connectivity
(3) Re-programmable & Smart
(4) Digital Traces
(5) Modularity

Question 4

Consequences for Products and Services

Answer 4

(1) Low marginal Costs
(2) Convergent user experiences
(3) Interoperability
(4) Network externalities
(5) Servitazation
(6) Emerging products & Functionalities
(7) Wakes of Innovation
(8) Platforms

Question 4

Consequences for Innovation Management

Answer 4

Industrial Dynamics:
(1) Disruption
(2) Convergence of industries
(3) Winner takes all

(4) Platforms & ecosystems
(5) Distributed collaboration
(6) Combinatorial innovation

Innovation Processes:
(7) Agile Development
(8) Continuous innovation
(9) New propositions and business models
(10) cross-functional integration
(11) digital tools & data

Question 5

Homogenization & Decoupling

Answer 5

“Because all digital information assumes the same form, it can, at
least in principle, be processed by the same technologies.

Consequently, digitizing has the potential to remove the tight couplings between information types and their storage, transmission, and processing technologies”
(Tilson et al.2010)

Question 6

CONSEQUENCES OF HOMOGENIZATION & DECOUPLING:

Answer 6

(1) LOW MARGINAL COSTS

Digitized information can be transmitted, stored, and computed
in fast and low cost ways.

Implications for innovation:
disruption, winner-takes-all

(2) CONVERGENT USER EXPERIENCE
Implications for innovation: convergence of industries; combinatorial innovation

Question 7

Connectivity

Answer 7

• Connections with other users
• Connections with other applications
• Connections between firm and customer

Question 8

CONSEQUENCE OF CONNECTIVITY:

Answer 8

(1) NETWORK EXTERNALITIES

(direct) network externalities:
when the value of a good to a user increases with the number of other users (installed base) of the same or similar good.

Implications for innovation: disruption, winner-takes-all, ecosystems

(2) INTEROPERABILITY

Interoperability: the ability of a product or system to work with other products or systems

• Standardized and open interfaces
• Interoperability drives network externalities

Implications for innovation management: platform ecosystems,
combinatorial innovation

Question 9

REPROGRAMMABLE & SMART

Answer 9

Digital products can be edited and
reprogrammed (e.g. software updates)

• By supplier (connectivity!) or autonomously (machine learning!)
• Using sensors, processors, actuators

Question 10

CONSEQUENCE OF REPROGRAMMABILITY:

Answer 10

(1) EMERGING FUNCTIONALITIES
- Product versioning
- Differentiation
- Incompleteness (never finished, malleable)
- Backward & forward compatibility

Implications for innovation:
continuous development, agility, cross-functional integration

(2) SERVITIZATION
- Shift towards “service” (value, experience) that products offer (“job to be done”)
- Shift toward pay for use instead of pay for ownership (“pay per lux”, “power by the hour”, “X as a Service”)
- Hybrids: interdependence: products require service and services require some form of product or artifact (Barrett et al. 2015)
- Hybrids: integrating products and services into complex systems

Question 11

CONSEQUENCE OF DIGITAL TRACES:

Answer 11

(1) WAKES OF INNOVATION