technology and products
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Lecture on technology and how it evolvesTRANSCRIPT
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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
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Technology revolutions have this remarkable ability of being nearly invisible but yet so obvious right in front us.
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Sustaining Technology
Gradual Improvements– Foster improved product performance– Each year new and improved products are offered
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What is Technology?
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Why study technology?
Do we know what technology is?All technology was once newHistory can remind us what technology is
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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
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Source:
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Technology
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Process by which an organization transforms labor, capital, material, and information into products and services of greater values
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Product Performance
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The value you get out of a product for which you have paid some cost
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Product Performance
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Innovation
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The change in the technology
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Innovation
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How does technology change?
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Technology Factory Tomas Edison’s
Menlo Park– World’s first first
industrial research lab
– 1876-1881
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“I have not failed. I've just found 10,000 ways that won't work.”
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The Long Nose of Innovation
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Source: http://www.businessweek.com/innovate/content/jan2008/id2008012_297369.htm
Bill Buxton’s Long nose of Innovation
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The Long Nose of Technology
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Source: http://www.britannica.com/EBchecked/topic/187881/Douglas-Engelbart
Douglas Englebart 1965 Apple Machintosh 1984
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Any technology that is going to have significant impact over the next 10 years is already at least
10 years old
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Source: http://www.businessweek.com/innovate/content/jan2008/id2008012_297369.htm
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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
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Technology S-Curve
Based on the notion of Technology Life Cycle– Improvements in performance varies throughout the
life of the technology
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Performance
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Technology S-Curve
Exponential trends can be composed of a sequence of S-curves where each curve is faster
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Technology S-Curve
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Technology S-Curve
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Technology S-Curve
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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
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Technology Adoption Life Cycle
Adoption of technology follows the life cycle
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What makes a product good so that people will adopt it?
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VisiCalc
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Edison Phonograph Victor Talking Machine’s Victrola
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Enrico Caruso 1873-1921
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Edison Phonograph Victor Talking Machine’s Victrola
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Technological change is relatively easy
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It’s the social, organizational and cultural change that is hard
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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
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What triggers the tipping point?
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Anderson’s Grand Unified Theory of Technology Trends
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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:
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1. Critical Price2. Critical Mass3. Displace another technology4. Become nearly free
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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)
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Technology Life Cycle
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When will the earlymajority pragmaticsstart buying a product?
The value of the productis sufficiently great orgood-enough
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Technology Life Cycle
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
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Life Cycle of Technology
The move from Technology to Commodity
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The need-satisfaction curve of technology
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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
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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
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Value Innovation
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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
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What is the impact of technological change?
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Technology is one of the major factors in
change
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Opportunity Threat
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Example: Digital Photography
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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
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We tend to view technology based on past usages but not the future
potential
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Any sufficiently advanced technology is indistinguishable from magic
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Railroads (1815)
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“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
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Telephone (1876)
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"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.
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Cars (1885)
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“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
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Airplanes (1903)
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"Heavier-than-air flying machines are impossible." - Lord Kelvin, president, Royal Society, 1895.
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Radio (1905)
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“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
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Television (1926)
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“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
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Computers (1943)
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"I think there is a world market for maybe five computers.“- Thomas Watson, chairman of IBM, 1943
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Computers (1977)
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"There is no reason for any individual to have a computer in their home.”- Kenneth Olsen, president and founder of Digital Equipment Corp., 1977.
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Internet (1970)
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“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
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Digital Cameras (1991)
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“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
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How will this innovation change an industry, and what impact does this
have on the firms I care about?
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Nordic Marketing Conference of Lottery Companies, Mývatn, September 1995
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Sustaining Innovations Gradual Improvements
– Foster improved product performance– Each year new and improved products are offered
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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
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The Digital Revolution
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Transistor, 1947
Integrated circuit,1959
Intel 4004, 1971
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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
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Disruptive Technolgoy
The product performance is good enough to fulfill a unfilled need in the market
Current products can’t compete
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The Disruptive Innovation Theory Existing companies have a high probability of
beating entrant attackers when the contest is about sustaining innovations
Source: (Christensen, 2000)
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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)
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The Disruptive Innovation Theory
Low-endCan occur when existing products and services are “too good” and hence overpriced relative to the value existing customer can use – Value Innovation
Copyright © 2009, Ólafur Andri Ragnarsson Source: (Christensen, 2000)
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The Disruptive Innovation Theory
New-marketOccur when characteristics of existing products limit the number of potential consumers or force consumption to take place in inconvenient, centralized settings
Copyright © 2009, Ólafur Andri Ragnarsson Source: (Christensen, 2000)
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The Disruptive Innovation Theory
Copyright © 2009, Ólafur Andri RagnarssonSource: Christensen et. al. Seeing what’s next
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WhenDisruptive Technologies
Cross the Chasm
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“’This time it’s different’ are the four most expensive words in the investing language ”
- Sir John Templeton
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The Hype Cycle
A graphic representation of the maturity, adoption and business application of specific technologies
Copyright © 2009, Ólafur Andri Ragnarsson
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The Internet Bubble
“The New Economy”
Copyright © 2009, Ólafur Andri Ragnarsson
NASDAQJanuary 2000
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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
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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
Copyright © 2009, Ólafur Andri Ragnarsson
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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]
Copyright © 2009, Ólafur Andri Ragnarsson