Technology And Products

Technology and Products

“Everything that can be invented
has been invented”
- Purportedly said by Charles H. Duell, Commissioner, U.S.
Office of Patents, 1899

Copyright © 2009, Ólafur Andri Ragnarsson

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 new
History 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
– logosis 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

Bill Buxton’s
Long nose of
Innovation

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

The Long Nose of Technology

Douglas Englebart 1965 Apple Machintosh 1984

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


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.ht
m

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 the
particular 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 cycle
In the early days
The innovators and technology
enthusiasts drive the market
They demand Technology
Small percentage of the market
In the later days
The pragmatists and conservatives
dominate; they want solutions
and convenience
The 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


Enrico Caruso
1873-1921

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 matures
Crossing 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 Price
2. Critical Mass
3. Displace another technology
4. 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 early
majority pragmatics
start buying a product?

The value of the product
is sufficiently great or
good-enough


Early in the cycle, technology is important
When 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
pastusages 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)

quot;This 'telephone' has too many
shortcomings to be seriously considered
as a means of communication. The
device is inherently of no value to us.quot;
- 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)
quot;Heavier-than-air flying machines are
impossible.quot;
- 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?quot;
- 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)

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

Computers (1977)

quot;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 quot;no.quot;”
- by Peter Ensenberger, Arizona Highways Director of
Photography, 2007


How will this innovationchange 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 Competition
Well know industry boundaries
Rules are established
Sustained Innovation

Disruption

Blue Ocean
New
Value Innovation Technology
Align innovation with utility,
price, and cost poisition


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

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

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


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


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



Source: Christensen et. al. Seeing what’s next

When
Disruptive 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”
NASDAQ
January 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.com
http://twitter.com/olandri
http://delicious.com/olandri
andri@ru.is

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