Summary Chapter 3 - Chapter 3: Types and Patterns of Innovatione

Full name: Trần Thị Thùy Dương

Student’s ID: 17124016

SUMMARY CHAPTER 3

CHAPTER 3: TYPES AND PATTERNS OF INNOVATIONE

OVERVIEW: Technology trajectories are most often used to represent the technology’s rate of performance improvement or its rate of adoption in the marketplace.

TYPES OF INNOVATION: Product vs. Process, radical vs. incremental, competence-enhancing vs. competence destroying and architectural vs. component will be discussed. They share relationships. For example, an architectural innovation is often more radical and more competence destroying than a component innovation.

Product innovation is expressed in the output of an organization. Process innovations are innovation in the way an organization manage its business, often focused on improving effectiveness/efficiently of a product. New processes may enable the production of new products, so process innovation can speed up the firm’s ability to develop a product innovation. Product innovations are often more visible than process innovation, but both are very important to an organization’s ability to compete.

Do decide if an innovation is radical or incremental you define the degree that the innovation represents a departure from existing practice. Radicalness can be conceived as the combination of newness and degree of differentness. But, an innovation that was considered radical (like the steam engine) may eventually be considered incremental when the knowledge base about the innovation becomes more common.

Competence-enhancing innovations build on the firm’s existing knowledge base. Whereas a competence-destroying innovation does not build on the firm’s existing competencies or considers it outdated.

A bicycle is a system of  component and each of these components is also a system of components until these are elementary particles. When an innovation causes a change  of the complete architecture of the bike with components it is called an architectural innovation. If an innovation causes a change to individual (≥1) components, like the padding or a nylon cover of the bike it is called a component innovation.

TECHNOLOGY S-CURVES: The S-curves in technology improvement and in technology diffusion are related but it is fundamentally different processes. Improvement in performance may help faster adoption, greater adoption may motivate further investment in improving preformance.[pic 1]

S-curves in technological improvement: The improvement of a technology starts slowly as fundamentals are poorly understood, when the understanding increases the performance speeds up until the “limit of the technology”.

A technology is discontinuous (see graphs left) when it fulfills a similar market need, by building on an entirely new knowledge base (from chemical to digical photography). Technologies do not always get the opportunity to reach their limits, they may be outdated by new discontinuous technology. The first technology is called the incumbent technology. The second technology is called the disruptive technology.[pic 2]

The upper figure shows a steeper S-curve for the disruptive technology. The lower figure shows a higher “limit of the technology” for the disruptive technology. As a result, the return to effort invested in the new technology might be much higher than effort invested in the incumbent technology. If the disruptive technology has much greater performance potential for a given amount of effort, it is likely to displace the incumbent technology in the long run, but the rate at which it does so can vary significantly.

S-curves in technology diffusion: Obtained by plotting the cumulative number of adopters of the technology against the time. The S-curve exists since adoption is initially slow when unfamiliar technology is introduced in the market. It accelerated as the technology becomes better understood and utilized by the mass market, and eventually the market is sutured so the rate of new adoption declines. The S-curve of diffusion are in part a function of the S-curves in technology improvement: as technologies are better developed, they become more certain and useful to users, facilitating their adoption.