technology and products

Copyright © 2009, Ólafur Andri Ragnarsson

Technology and Products

“Everything that can be invented has been invented”

- Purportedly said by Charles H. Duell, Commissioner, U.S. Office of Patents, 1899


Technology revolutions have this remarkable ability of being nearly invisible but yet so obvious right in front us.

Sustaining Technology

Gradual Improvements– Foster improved product performance– Each year new and improved products are offered


What is Technology?


Why study technology?

Do we know what technology is?All technology was once newHistory can remind us what technology is


The word “technology”was coined by Jacob Bigelow, an engineering professor at Cambridge University in Boston, in 1829– Techne is greek for art or skill– logos is greek for word, speech


Source:

Technology


Process by which an organization transforms labor, capital, material, and information into products and services of greater values

Product Performance


The value you get out of a product for which you have paid some cost

Product Performance


Innovation


The change in the technology


Innovation

How does technology change?


Technology Factory Tomas Edison’s

Menlo Park– World’s first first

industrial research lab

– 1876-1881


“I have not failed. I've just found 10,000 ways that won't work.”

The Long Nose of Innovation


Source: http://www.businessweek.com/innovate/content/jan2008/id2008012_297369.htm

Bill Buxton’s Long nose of Innovation

The Long Nose of Technology


Source: http://www.britannica.com/EBchecked/topic/187881/Douglas-Engelbart

Douglas Englebart 1965 Apple Machintosh 1984

Any technology that is going to have significant impact over the next 10 years is already at least

10 years old


Source: http://www.businessweek.com/innovate/content/jan2008/id2008012_297369.htm

Diffusion of Innovation

Innovation grows in three stages

1. Slow growth – The early phase of exponential growth

2. Rapid growth – The late explosive phase of exponential growth

3. A leveling off as theparticular paradigm matures


Technology S-Curve

Based on the notion of Technology Life Cycle– Improvements in performance varies throughout the

life of the technology


Performance

Technology S-Curve

Exponential trends can be composed of a sequence of S-curves where each curve is faster


Technology S-Curve


Technology Life Cycle

Life of technology follows the life cycleIn the early days

The innovators and technology enthusiasts drive the marketThey demand TechnologySmall percentage of the market

In the later daysThe pragmatists and conservatives dominate; they want solutions and convenienceThe big market


Technology Adoption Life Cycle

Adoption of technology follows the life cycle


What makes a product good so that people will adopt it?



VisiCalc


Edison Phonograph Victor Talking Machine’s Victrola

http://upload.wikimedia.org/wikipedia/en/5/5a/La_Donna_E_Mobile_Rigoletto.ogg


Enrico Caruso 1873-1921


Edison Phonograph Victor Talking Machine’s Victrola

http://upload.wikimedia.org/wikipedia/en/5/5a/La_Donna_E_Mobile_Rigoletto.ogg

Technological change is relatively easy


It’s the social, organizational and cultural change that is hard


Crossing the Chasm

The change in customers as technology maturesCrossing the chasm – or the Tipping point

Copyright © 2009, Ólafur Andri Ragnarsson Source: Geoffrey A. Moore: Crossing the chasm

What triggers the tipping point?


Anderson’s Grand Unified Theory of Technology Trends


Theory of Predicting the Future Anderson’s Grand Unified Theory of Predicting

the Future– All important technologies go through four states, or

at least four stages, in their lives– Each stage can be seen as a collision, with something

else. The stages are:


1. Critical Price2. Critical Mass3. Displace another technology4. Become nearly free


What caused the tipping point for the iPod?

Apple said it sold a record 22.7 million iPods, which commands a 70% share of the U.S. market for music players. (source: LA times)



When will the earlymajority pragmaticsstart buying a product?

The value of the productis sufficiently great orgood-enough


Early in the cycle, technology is importantWhen technology becomes good enough– Value becomes more important– Technology is no longer the variable that controls

purchases– Improvements loose their glamour– Customers are looking for things like

value convenience, productivity, ease-of-use, low-cost, reliability

– Emotions


Life Cycle of Technology

The move from Technology to Commodity


The need-satisfaction curve of technology

The Market of Commodites What happens when a market becomes mature?

– Karaoke Capitalism takes over Red oceans

– All the industries in existence today—the known market space

– Industry boundaries are defined and accepted, and the competitive rules of the game are known


Creating Blue Oceans Strategy for creating new markets

– Make the competition irrelevant Blue oceans denote all the industries

not in existence today—the unknown market space, untainted by competition


Value Innovation


Instead of focusing on beating the competition, you focus on making the competition irrelevant by creating a leap in value for your buyers and your company, thereby opening up new and uncontested market space

What is the impact of technological change?


Technology is one of the major factors in

change



Opportunity Threat

Example: Digital Photography


Predicting Technology Revolutions Predicting is difficult

– We tend to overestimate the immediate impact of technology and underestimate the long-term impact

– We tend to place emphasis on the technologies themselves, when it is really the social and cultural change that will be the most dramatic

Copyright © 2009, Ólafur Andri Ragnarsson Source: Norman, The Invisible Computer

We tend to view technology based on past usages but not the future

potential



Any sufficiently advanced technology is indistinguishable from magic

Railroads (1815)


“Rail travel at high speed is not possible because the passengers, unable to breathe, would die of asphyxia” - Dr. Dionysus Lardner, Professor of Natural Philosophy and Astronomy at University College, London

Telephone (1876)


"This 'telephone' has too many shortcomings to be seriously considered as a means of communication. The device is inherently of no value to us." - Western Union internal memo, 1876.

Cars (1885)


“The horse is here to stay, but the automobile is only a novelty – a fad”- The president of the Michigan Savings Bank to advised Henry Ford's lawyer Horace Rackham not to invest in the Ford Motor company saying

Airplanes (1903)


"Heavier-than-air flying machines are impossible." - Lord Kelvin, president, Royal Society, 1895.

Radio (1905)


“The wireless music box has no imaginable commercial value. Who would pay for a message sent to nobody in particular?" - David Sarnoff's associates in response to his urgings for investment in the radio in the 1920s

Television (1926)


“For God’s sake go down to the reception and get rid of a lunatic who’s down there. He says he’s got a machine for seeing by wireless!” - Editor of the Daily Express in response to a prospective visit by John Logie Baird, 1925

Computers (1943)


"I think there is a world market for maybe five computers.“- Thomas Watson, chairman of IBM, 1943

Computers (1977)


"There is no reason for any individual to have a computer in their home.”- Kenneth Olsen, president and founder of Digital Equipment Corp., 1977.

Internet (1970)


“The Internet is a shallow and unreliable electronic repository of dirty pictures, inaccurate rumors, bad spelling and worse grammar, inhabited largely by people with no demonstrable social skills.” - Chronicle of Higher Education, 1997

Digital Cameras (1991)


“But is the image quality of digital-capture high enough for large reproductions in a magazine like Arizona Highways that is known for the quality of its photography? Presently, the answer is "no."”- by Peter Ensenberger, Arizona Highways Director of Photography, 2007

How will this innovation change an industry, and what impact does this

have on the firms I care about?



Nordic Marketing Conference of Lottery Companies, Mývatn, September 1995

Sustaining Innovations Gradual Improvements

– Foster improved product performance– Each year new and improved products are offered


Market Leading Companies

Have a high probability of beating entrant attackers when the contest is about sustaining innovations– Incremental or radical improvements to already

existing products – Airplanes that fly further, computers that process

faster, and televisions with clearer images


The Digital Revolution


Transistor, 1947

Integrated circuit,1959

Intel 4004, 1971


Red Ocean Industry

Bloody CompetitionWell know industry boundaries

Rules are establishedSustained Innovation

D i s r u p ti o n

Blue Ocean

Value InnovationAlign innovation with utility,

price, and cost poisition

NewTechnology

Disruptive Technolgoy

The product performance is good enough to fulfill a unfilled need in the market

Current products can’t compete



The Disruptive Innovation Theory Existing companies have a high probability of

beating entrant attackers when the contest is about sustaining innovations

Source: (Christensen, 2000)

The Disruptive Innovation Theory

New organization can use relatively simple, convenient, low-cost innovations to create growth and triumph over powerful incumbents

Copyright © 2009, Ólafur Andri Ragnarsson Source: (Christensen, 2000)


Low-endCan occur when existing products and services are “too good” and hence overpriced relative to the value existing customer can use – Value Innovation



New-marketOccur when characteristics of existing products limit the number of potential consumers or force consumption to take place in inconvenient, centralized settings


WhenDisruptive Technologies

Cross the Chasm


“’This time it’s different’ are the four most expensive words in the investing language ”

- Sir John Templeton

The Hype Cycle

A graphic representation of the maturity, adoption and business application of specific technologies


The Internet Bubble

“The New Economy”


NASDAQJanuary 2000

The Railway Bubble

Railway Stock in Britain– The value of railway stock grew 4 fold from 1826 to

1846– Many companies, heavy overinvestment– The Bubble burst 1846


Summary Technology is a process Technology advances in cycles Innovation is about improving the performance

of technology It is sometimes difficult to convince others of

new technology People base their view on past uses not future

potential


Technology and Products About the Presenter

Ólafur Andri Ragnarsson, Chief Software Architect at Betware and Adjunct a the University of Reykjavík

On-line profile:http://olafurandri.comhttp://twitter.com/olandri http://delicious.com/olandri [email protected]


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