chapter 2 the technology lifecycle infs 780. the evolution of technologies early technologies are...

Chapter 2

The Technology LifecycleINFS 780

The evolution of technologies

• Early technologies are uncertain and risky

• No standards• Performance is unknown• People accused of “dreaming”

The Technical Product Lifecycle

• 5 Stages•Introduction•Growth•Maturity•Decline•Withdrawal

The Lifecycle

Example: Telephones• Bell invented the

phone in 1876• Built on the telegraph

by Morse• Trying to solve

deafness

• Rapid growth• By 1882, 240,000

phones in AT&T network

• Many competitors

http://www.privateline.com/TelephoneHistory2A/Telehistory2A.htm

Introduction

• The new technology is emerging• No Best Practices

• Each firm offered competing phone standards

• Companies experiment• Some technologies fail

• Large competitive advantages available for successful firms• AT&T consolidated and enhanced service

Proprietary vs. Infrastructural Advantage

• Proprietary: One firm can “own” or control the technology• Bell was successful in defending his

patent and driving many competitors out

• Infrastructural: Offer advantages when shared• The phone network quickly became

part of the infrastructure.

Proprietary Attempts

• The Selden Patent• Patented the “Road

Engine (car) in 1879

http://www.bpmlegal.com/wselden.html

Wright Bros. patented Wing Warping to control flight

Glen Curtis used ailerons and overcame it

http://www.centennialofflight.gov/essay/Wright_Bros/Patent_Battles/WR12.htm

Introduction Issues• Level of Change determines risk

− High level of change means lots of risk

• Early IT systems were very risky as they involved massive structural change in the firm.

− How much risk did early retailers such as Macys undertake when moving to a position where they owned all inventory?

• Highly innovative technology is very risky – WHY?

Life Cycle Curves Vs. Risk

Examples

• Why did Armour Meatpacking flourish?• Was this risky?

Why?• How did this

innovation change business?

http://www.trainweb.org/railpix/misc2.html

More examples• How did the telegraph impact

business?• Communications became easy!• First firms to use had a huge advantage• Railroads were

revolutionized

http://www.2020site.org/telegraphy/invention.htm

Early electric generationNiagara Falls – lots of power, no way to distribute it to Buffalo, NY

Thomas Edison believed Direct Current (DC) was best to deliver power – but it could only go a short distance (1 mile)

NOTE: See PBS at http://www.pbs.org/tesla/index.html for a wonderful overview of Telsa and these events. All materials on this subject are from this site.

Nikola Tesla developed Alternating Current which he believed could be distributed over great distances. He also developed the AC motor

George Westinghouse was convinced Telsa was right and committed $$$ to building and distributing power to Buffalo, NY

I remember Tom [Edison] telling them that direct current was like a river flowing peacefully to the sea, while alternating current was like a torrent rushing violently over a precipice. Imagine that! Why they even had a professor named Harold Brown who went around talking to audiences... and electrocuting dogs and old horses right on stage, to show how dangerous alternating current was. George Westinghouse

It was a fierce struggle , but eventually, Westinghouse and Telsa won and in 1896 Buffalo was electrified.

This set the standard for electricity distribution to this day

Telegraph

• Imagine being a sales rep in 1850• Orders taken take months to get to plant

and be delivered• Errors cannot be corrected

• With telegraph, I can instantly enter my order, catch errors• Allowed development of modern retail with

Sears, Penney’s, etc.

• Telegraph rapidly becomes an infrastructure

Infrastructure

• As a technology reaches infrastructure point:• All firms need it to compete • Simply having it does NOT give an

advantage• The infrastructure forms the base for

any business – but yields no competitive advantage

Life Cycle: Growth

• Market now recognizes the technology• Risk is reduced as firms can avoid the

known failure points

• Still, little knowledge generally available on the use of technology• Can build small competitive advantage

• Costs stabilize & even decline

Growth issues

• Market takes off• High adoption rates

• AT&T in the 20’s – 50’s

• Technology can move toward infrastructure vs proprietary

• Knowledge is rapidly disseminated among users

Life Cycle: Maturity

• Technology moves into the commodity area.• AT&T in the 70’s – 90’s

• Products are well understood & copied

• “Secrets” are unveiled• competitive advantage is unlikely

• Costs begin to drop rapidly

Example

• Try to open a business today without a phone or electricity• You must have these expenses, but

there is no competitive advantage to your firm as a result

• Obviously, you do not want to invest more to provide these services than you have to!

Life Cycle: Decline

• Technology is total commodity•AT&T today

• Seek to re-define the system• No new investment• Seek to harvest

Life Cycle: Withdrawal

• Product is dropped• Think of slide rules!