Lecture 6 Theory Toolbox Flashcards
Definition Technology
- Technology is the application of scientific knowledge to the practical aims of human life
- Any useful skill or mechanism that was developed or invented
- Any method used to transform an input to an economic system into an output (economic perspective)
Definition Technology Management
- Technology management is a set of management disciplines that allows organizations to manage their
technological fundamentals to create customer advantage.
Definition Innovation Diffusion
Diffusion of innovations is a theory that seeks to explain how, why, and at what rate new ideas and
technology spread.
First S curve
Innovators
Early Adopters
Early Majority
Late Majority
Laggards
Technology Adaption Life Cycle
Innovators: 2.5%, Risk takers
Early Adopters: 13.5%, Selective about new tech, considered the one to check with
Early Majority: 34%, Take time before adopting but are willing if it fits
Late Majority: 34%, adopt because of peer pressure
Laggards: 16%, Traditional and oft economically unable to take risks
The Chasm
The chasm between the early adopters of
the product (the technology enthusiasts and visionaries) and the early majority (the pragmatists)
2nd S-Curve¨
Disruptive technologies
Technology maturity curve
Shifted top right S curve in (Kummulierter Entwicklungsaufwand vs Technische Leistung)
Why do established companies tend to overshoot the market demand?
- Producers want to offer better products than competitors to yield superior margins
- Products can improve faster than performance demand in the market
Why established companies tend to ignore disruptive innovations
- Disruptive products are less expensive: less margin, less profit
- Disruptive products only serve small markets that are often fuzzy if not completely unknown
- Disruptive products enthuse at the beginning often the least profitable customers
- Disruptive Innovations lead to inferior performances at the beginning - inferior to established products
in known markets (e.g. PC versus typewriter) - They build on new value proposition / customer value (e.g. discounter versus supermarket)
- They are often smaller, cheaper and simpler to use (e.g. transistor versus vacuum tube)
- Great track record with incremental innovations
Managerial principles for mastering disruptive technologies
- Markets that to not exist cannot be analyzed
− „Discovery-based planning“ - Small markets cannot fulfil the growth demand of large companies
− Commercialize in units that correlate to the market size - Companies depend on their customers and investors
− Create a unit that is independent of «old» customers and investors
What do ambidextrous organizations combine?
Exploitative and explorative
businesses
Dominant design
A dominant design identifies key technological features that become a de facto standard. A dominant
design is the one that wins the allegiance of the marketplace, the one that competitors and innovators
must adhere to if they hope to command significant market following (Utterback and Abernathy, 1975)
Gartner Hype Cycle
Innovation Trigger -> Peak of Inflated Expectations .
-> Trough of Disillusionment -> Slope of Enlightenment -> Plateau of Productivity
Transaction Costs
In economics and related disciplines, a transaction cost is a cost in making any economic trade
Examples: Search and information costs, bargaining costs, policing and enforcement
costs
Effect of Transaction Costs on Divison of Labour
From vertical integrated companies to horizontal networked players
Transaction cost theory
Effect on the coordination of firms
Move to network and market
