1. Simulation Innovation I: Technology Disruption in the Simulation Industry Roger Smith SPARTA Inc. rsmith@sparta.com 407.380.0076 Conference Orlando, Florida June 20-21, 2005 http://www.halldale.com/ © Copyright 2005, Roger Smith

2. Simulation Innovation 1947 19852005 Innovation & New Technology Displace Established Technology & Practitioners

3. Time Product Performance Progress due to sustaining technologies Performance demanded at the low end of the market Performance demanded at the high end of the market (Christensen, 1997) Christensen’s Disruptive Innovation Progress due to disruptive technologies Market disruption opportunity

4. Squeezed OutNicheUpper Half Share Low EndOwn the Market Time Product Performance Progress = Waves of Disruption High-end Customer Demand Low-end Customer Demand Defense Simulation D 3 = Web Services SIMNET CCTT OOS Forterra AW-VTT FSW Closer Than You Think! D 1 = PC Games D 2 = Console Games America’s Army Spearhead MS Flight

5. Disruptive Forces in Simulation Customer Perspective Societal Immersion in Games Military Acceptance of Games Computer Technology Graphics Cards Game Companies & Market Physical Devices Theme Park Ride Technology Electric vs. Hydraulic Motion Actuators

6. Squeezed OutNicheUpper Half Share Low EndOwn the Market Simulation: Weather, Markets, Medical Corporate Training, Education Time Growth Strategy Product Performance Defense Simulation D 1 = PC Games D 2 = Console Games D 3 = Web Services Move Up: Change Customers Move Vertical: Change Technology Move Down: Change Industries Defense Training & Analysis

7. Recommendations Disruptive innovations move through markets Move Vertical to new technologies Move Up to new customers Move Down to new industries

8. References Utterback, J. (1996). Mastering the Dynamics of Innovation. Harvard Business School Press. Christensen, C. (1997). The Innovator’s Dilemma: When new technologies cause great firms to fail. Harvard Business School Press. Christensen, C. & Raynor, M. (2003). The Innovator’s Solution: Creating and sustaining successful growth. Harvard Business School Press.