1. Lecture 3 Innovation Management GM0401 Johan Brink

2. Today's lecture Diffusion of innovation Development of technologies Dominant design Technologies as systems

3. Innovation as a process Perhaps the best definition is that: ”Innovation process is as much a journey as a destination” (Van de Van et al. 1999). It means that: ”the more we know about this journey, the more rewarding it is likely to be”.

4. Product diffusion Innovation adoption How does a new product diffuse in society?

5. Percentage ownership Internet Cell phones PC Television Micro- wave Radio VCR Electricity Airplanes Telephones Automobiles

6. Rogers empirical Innovators: 2.5% Early Adopters: 13.5% Early majority: 34% Late majority 34% Laggards 16% E. Rogers, Diffusion of Innovations (1962)

7. Rogers model KnowledgePersuationDecisionImplementationConfirmation Previous practice Felt needs Innovativness Social norms Mandate Peer review Relative advantage Compatibility Complexity Triability Observability YES NO Switch/changeUse

8. Bass model A theoretical model dN(t)/dt= [p+q*N(t)/m]*[m- N(t)] N(t)=Cumulative units in the market m=total market size (saturation) p= nonimitation (internal) q= imitation (external) That is when N(t)=m the market is saturated

9. Crossing the chasm & the tipping point

10. Technology What is technology?

11. Radical vs. Incremental Radical innovations –include breakthroughs that change the nature of products and services –contribute to the technological revolutions –usually requires greater investment in basic research –may follow different diffusion patterns Incremental innovations –include minor changes to existing products, which cumulatively improve the performance or cost of products and services –Incremental innovation is the most common from and tends to reinforce the position of establish firms, allowing them to exploit what they know to help them do things better (Utterback, 1994).

12. Technology Performance Time

13. Competing technologies In 1794 the Earl of Stanhope built a steam-powered vessel named the Kent. 1820 North sea 1830 Mediterranean sea 1840 Atlantic 1850 China Performance Time Sail Steam

14. Hulls Steam –Slow (fouling)- 10 knots compared to almost the double for sail –Reliable? TonnageTimberIron 1850120,00012,800 1860147,00065,000 1870161,000255,000 188020,000495,000

15. Great age of sail ships 1860-1880 Sail –Increase cargo capacity (x2) –Advances in oceanography Trade winds: storms & Currents –Steel wires Suez channel (1869)

16. Great age of sail ships 1860-1880

17. 1880-> Decline?

18. Future? Performance Time Sail Steam Nuclear Oil

19. Dominant designs Early lead Network effect Scale Past investments

20. VHS Beta-Max

22. Niche markets 3 MW, 80M 50-10 kW, 10-20M

23. Attackers advantage! 1972->1992 –100Mb from 5400 to 8 cubic inch –from 5400$/MB to 5 $/MB

24. Technology as systems

25. Summary Diffusion of innovation Development of technologies Dominant design Technologies as systems