innovation b290 tushman, m. and p. anderson, 1986, administrative science quarterly 31 439-465...
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Innovation
B290
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Tushman, M. and P. Anderson, 1986, Administrative Science Quarterly 31 439-465
Cement industry
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Tushman, M. and P. Anderson, 1986, Administrative Science Quarterly 31 439-465
Computers
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Tushman, M. and P. Anderson, 1986, Administrative Science Quarterly 31 439-465
Passenger Aircraft
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The Technology Cycle
Source: Anderson, P. and M. L. Tushman, 1990, Administrative Science Quarterly 35(4) 604-633
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Technological change
• Discontinuity – Technology breakthroughs
• Competence enhancing– Transistors (for computer companies)– Float glass
• Competence destroying– Transistors (for valve companies)– Plastic– Flash memory– Xerography
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Types of Innovation
• Incremental vs. Radical
• Competence enhancing vs. competence destroying
• Component vs. architectural
• Sustaining vs. Disruptive
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Incremental vs. Radical
• Incremental – Small changes that improve the
performance of a product (or service)
• Radical– Dramatic change in performance, an
inflection point or discontinuity
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Component vs. Architectural
• Component – Does not alter the basic product
architecture• Thermal Conduction Module in 3083• Multi-core microprocessors (Pentium Core 2)
• Architectural– Takes existing components and
combines them in novel ways• IBM PC, Apple’s iPhone
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Competence enhancing/destroying
• Competence enhancing – Innovations that build on a company’s
current knowledge and resource base• Hybrid disk drives for Seagate
• Competence destroying– Innovations that require completely new
skills and resources• Digital image capture for Kodak (essentially
a chemical company)
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Sustaining vs. Disruptive
• Whether an innovation is sustaining or disruptive:– May have little to do with technology– More often, a function of the interaction
of changing markets and organizational imperatives
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Tech
nolo
gic
al D
isco
nti
nuit
y
Technology S curves
Time
Tech
nolo
gica
l kn
owle
dge
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Three different technologies
Ferrite heads
Metal in Gap heads
More recently:MagnetoresistiveGiant MagnetoresistiveTunneling Magnetoresistive
Thin film heads
1950 19901970 1995
Are
al D
ensi
ty
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IBM’s development trajectory
• IBM’s R&D scientists reported to management that different technologies (e.g., “Ferrite head”) had performance limits determined by the laws of physics
• As each technology ran out of steam the company had to be positioned to implement its successor
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Fujitsu and IBM (continued)
• As IBM approached the predicted technological limit– funding for the next promising technology
(e.g., thin-film) was increased– funding for further research into the
existing technology (e.g., ferrite heads) was reduced
• Thin film head improved increasingly rapidly while progress in ferrite heads slowed…
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…Fujitsu pushes on with Ferrite
Ferrite heads
Metal in Gap heads
More recently:MagnetoresistiveGiant MagnetoresistiveTunneling Magnetoresistive
Thin film heads
1950 19901970 1995
Are
al D
ensi
ty
Ferrite heads
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Technology S-curves
• May be a function of a particular technology
• Or may simply be a self-fulfilling prophesy
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Disruptive Innovation
• Why do incumbent firms often fail?– Companies listen to their most lucrative
customers– Emerging markets are too small (and risky) to
pursue– Forecasts of emerging markets are generally
wrong– A firm’s existing capabilities shape its
approach– Progress may allow technology to ‘leap’ from
one market to another
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The Hard Disk Drive Industry
• “Of the seventeen firms in the industry in 1976--all except IBM's disk drive operation had failed or had been acquired by 1995”
• (…and IBM sold it’s operation to Hitachi in 2003)• “all of the producers remaining by 1996
had entered the industry after 1976”• (Clayton Christiansen, HBS)
• Despite established firms' technological prowess, the firms that led in developing new, disruptive technologies were new entrants, not incumbents.
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Supply exceeds demand
Time
Perf
orm
ance
/ p
rice
Segment demand
“Old” technology
“Disr
uptive” t
echnology
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The Value Network
• New products are needed for new markets– Different set of CSFs
• Smaller form factor disks
• Incumbents consider the technology for this market inferior to that needed for their major customers/markets– New entrants fill the gap– Technology price/performance improves
• faster than the small (new) market needs• Enough to surpass incumbent’s technology
• New entrants supplant incumbents
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