L4

Question 1

Industry Life Cycle

Answer 1

1. Development - High differentiation, innovation is key
2. Growth - High growth, low entry barriers, scaling is key
3. Shake out - Growth slows down, some exits, managerial and financial strength key
4. Maturity - Low growth, standard products, entry barriers, market share + cost key
5. Decline - Many exits, consolidation, price competition, cost is key

Question 2

Why do Dominant Designs Emerge?

Answer 2

1 Package of features that find favor of markets
2 Dominant producer with much power behind
3 Powerful customer/user may mandate standard
4 Industry committee may establish durable standard
5 Group of firms forms an alliance (ex. Philips and Sony for CD)
6 Government regulations

Question 3

TECHNOLOGY LIFE CYCLE

Answer 3

Technological Discontinuity
* Breakthrough innovation
* Revolutionary technology
* Radical performance improvement

Era of ferment
* Variation
* Technical uncertainty
* Undefined user preferences

Dominant design
* Industry standard emerges
* Well established preferences
* Economies scale and scope

Era of Incremental Change
* Retention
* Elaboration of dominant design
* Continuous, incremental innovation
* Evolutionary technology

Question 4

The S-curve

Answer 4

• The performance improvement in a given technology is first relatively low during the early development stages.
• As the technology is better understood, the rate of progress increases until the stage of maturity, at which point the technology approach its limits and the performance impact of additional effort is subject to decreasing returns.

Question 5

Adner & Kapoor

Name two distinct effects on the realized performance of a technology:

Answer 5

Not the performance of the focal technology on its own but rather a function of its interaction with the other elements of the system

1. Emergence challenge:
   Realized performance of a technology can be hindered by technical bottlenecks within the system. “a given invention, however promising, often cannot fulfill anything like its potential unless other inventions are made relaxing or by-passing constraints which would otherwise hamper its diffusion and expansion.”
2. Extension opportunity:
   Underlying a technology’s advance are not only producers of the focal technology, but also component and complement providers from a range of interdependent industries.

For the old technology: improvements elsewhere in the system may enhance the realized performance for the old technology system – the ecosystem extension opportunity.

Question 6

How firms’ choices and investments shaped the path of technology transitions.

Modes of firm-level actions that shape pattern of substitution:

Answer 6

1. Pace of innovation slowed due to “last gasp” efforts by some firms to maximize the value that they could capture from the old technology while other firms aggressively pursued the new technology.
2. In other instances, R&D efforts in the new technology created a “spillback” effect and helped firms to also improve the performance of the old technology.
3. they have found evidence of heterogeneous actors across the ecosystem engaging in a collective “last resort” effort to extend the old technology when met with significant emergence challenges in the new technology.

Question 7

ecosystem emergence challenge =

Answer 7

ecosystem emergence challenge =

Realized performance of a technology can be hindered by technical bottlenecks within the system. “a given invention, however promising, often cannot fulfill anything like its potential unless other inventions are made relaxing or by-passing constraints which would otherwise hamper its diffusion and expansion.”

Question 8

ecosystem extension opportunity =

Answer 8

ecosystem extension opportunity =

Underlying a technology’s advance are not only producers of the focal technology, but also component and complement providers from a range of interdependent industries.

for the old technology, we must expand our consideration to include the extent to which improvements elsewhere in the system enhance the realized performance attainable with the old technology system – the ecosystem extension opportunity.

Question 9

Dominant design

Answer 9

After dominant design emerges, there is a neglected period in technological lifecycles

Time period associated with the emergence of a dominant design
* the overall rate of product innovation does not decrease immediately following the dominant design - it appears to increase throughout the era of incremental change rather than stablize or diminish

• firms do not immediately shift their innovative attention away from ‘core’ components where they focused on before the dominant design (however the proportion of innovation comprised by core components does decrease)
• concentration of innovating firms increases immediately following the emergence of a dominant design, but decreases in the era of incremental change