1. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved. 17-1 BUSINESS DRIVEN TECHNOLOGY UNIT 5: Transforming Organizations Unit Five Opening Case Masters of Innovation, Technology, and Strategic Vision

2. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved. 17-2 Unit Five The chapters in this unit include: – Chapter Seventeen – Fostering an Innovative Organization – Chapter Eighteen – Creating a Wireless Organization – Chapter Nineteen – Building Software to Support an Agile Organization – Chapter Twenty – Developing a 21st Century Organization

3. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved. 17-3 BUSINESS DRIVEN TECHNOLOGY Chapter Seventeen: Fostering an Innovative Organization

4. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved. 17-4 LEARNING OUTCOMES 17.1 Compare disruptive and sustaining technologies 17.2 Explain the innovator’s dilemma 17.3 Identify the four laws of disruptive technologies and their effects on an organization’s ability to remain competitive

5. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved. 17-5 CHAPTER SEVENTEEN OVERVIEW What do steamboats, transistor radios, and Intel’s 8088 processor all have in common? They are all disruptive technologies. – Disruptive technology – a new way of doing things that initially does not meet the needs of existing customers – Sustaining technology – produces an improved product customers are eager to buy, such as a faster car or larger hard drive

6. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved. 17-6 CHAPTER SEVENTEEN OVERVIEW The Innovator’s Dilemma – book by Clayton M. Christensen that discusses how established companies can take advantage of disruptive technologies without hindering existing relationships with customers, partners, and stakeholders

7. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved. 17-7 CHAPTER SEVENTEEN OVERVIEW Expected returns on new investments and existing investments

8. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved. 17-8 FOCUSING ON THE UNEXPECTED One of the biggest forces changing business is the Internet Organizations must be able to transform as markets, economic environments, and technologies change Focusing on the unexpected allows an organization to capitalize on the opportunity for new business growth from a disruptive technology

9. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved. 17-9 FOCUSING ON THE UNEXPECTED Companies that capitalized on disruptive technologies

10. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved. 17-10 FOCUSING ON THE UNEXPECTED The four laws of disruptive technologies 1. Organizations depend on customers and investors for resources – Successful organizations find it difficult to allocate resources for products not inline with mainstream demand 2. Small markets do not meet the growth needs of large organizations – Large organizations typically wait until new markets are “large enough to be interesting”

11. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved. 17-11 FOCUSING ON THE UNEXPECTED The four laws of disruptive technologies 3. It is difficult to analyze a market that does not exist – It is difficult to gain the essential first-mover advantage when nothing is known about the potential market 4. Technology supply may not equal market demand – Companies who want to stay on top need to be aware of what their mainstream customers value at each stage of a product’s life cycle, and be prepared to introduce more convenient, lower-priced products into established markets

12. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved. 17-12 CHAPTER SEVENTEEN Opening Case Study Questions 1.Determine which one of the seven companies profiled in the opening case has the most disruptive technology that is capable of making the greatest impact on e-business 2.Describe how Amazon.com has used technology to disrupt the book-selling industry 3.Do you think that Charles Schwab is a good example of disruptive technology? Why or why not? 4.Choose one of the seven companies and create a Porter’s Five Forces analysis to highlight potential issues that company should acknowledge in terms of its disruptive technology

13. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved. 17-13 CHAPTER SEVENTEEN CASE Maintaining TiVo’s Popularity TiVO gives customers a huge array of recording and viewing options, including the ability to pause live programs TiVo is now facing the reality that most disruptive technologies face – its competitors are stealing its revenue TiVo is attempting to combat its competition by introducing new product improvement

14. McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved. 17-14 CHAPTER SEVENTEEN CASE QUESTIONS 1.Do you consider TiVo a disruptive technology? Why or why not? 2.Review the four laws of disruptive technologies on page 187 and formulate a strategy for TiVo to follow to remain competitive 3.Do you consider it unethical for companies to copy TiVo’s technology? Justify your answer 4.Research the Internet and discover any new information relating to TiVo’s lawsuit against EchoStar