Here are some key reasons I see for VHS dominating the VCR market over Betamax: - VHS tapes were longer, allowing for more recording time which was important for movies. Betamax tapes were shorter. - VHS gained a critical mass of adoption more quickly by being more open. They licensed their technology to other manufacturers, increasing compatibility and adoption rates. - Rental stores predominantly stocked VHS, which helped drive consumers to that format for compatibility with rentals. - VHS was cheaper to produce, so the format and tapes were more affordable to consumers. Lower costs helped drive more adoption. - Network effects took over. As more people adopted VHS, it became the de

1. Victorious Secret
present:

2. EBIN504: Workshop 4
Dominant Designs and
Beyond
1. Dominant Design
1. From New Technology to
Mass Market

3. 1. Dominant Design
 What is a dominant design?
 What forces lead some designs to become the
standard for a category of product?
 What are the difficulties associated with the
process?
 What uncertainties do manufacturers face?
 How are consumers affected while the standard
is emerging?
 How do firms compete once a dominant design
is established?
 How do dominant designs shift through time?
 What factors might disrupt the status quo in an
established sector?
 How might this affect established firms?

4. 1.1 What is Dominant Design?
“A dominant design in a product class is, by definition, the one that wins the allegiance of the market
place, the one that competitors and innovators must adhere to if they hope to command significant
market following. The dominant design usually takes the form of a new product (or set of features)
synthesised from individual technological innovations introduced independently in prior product
variants.” (Utterback, 1996)
+ simple
LUCK
Image 1: The Dominant Design is not determined from a technical standpoint, but by society.

5.  Dominant designs emerge after the ‘ferment’ phase that follows a
major innovation.
 It can occur at the level of an entire product (Henderson and Clark
1990), or at the component level (Abernathy and Utterback, 1978).
 It represents a moment of relative stability before change begins
again, at first incrementally (Anderson and Tushman, 1990), and later
through major or radical revision which, after another period of
ferment, results in a new dominant design.
Several mechanisms may lead to
the emergence of a dominant
Era of Ferment Era of Incremental design.
• Design Competition Change
• Substitution • Elaboration of  It constitutes the best compromise
Dominant Design for addressing a predominant share
of market demand and as such is
TIME widely imitated across the sector
(Christensen et al 1998)
 As a consequence of economies of
scale that favor standardization
(Klepper 1997)
 As a consequence of network
Technological Dominant Design #1 Technological effects
Discontinuity Discontinuity
#1 #2

6. Dominant designs have been documented in
diverse product categories, including VCRs, nuclear
reactors, automatically controlled machine tools,
and watches (Utterback 1994).

7. Technical systems below „line of visibility“ converge to “cheapest”
design

8. Dominant Design is also the 8th stage in the technology life-cycle.
The next few videos showcase the technology life-cycle in more
detail and we found them quite interesting.
Stage Video URL
1. Origin of Idea http://www.youtube.com/watch?v=YAH4OkFKnoE&feature=relmfu
2. Proposal of Concept http://www.youtube.com/watch?v=zf34TZYRhRA&feature=relmfu
3. Verification of Concept http://www.youtube.com/watch?v=DT09EiG6Ihs&feature=relmfu
4. Laboratory Demonstration http://www.youtube.com/watch?v=I_TvwobmzAk&feature=relmfu
5. Field Trials http://www.youtube.com/watch?v=VI90HtLF9MI&feature=relmfu
6. Commercial/Operational Intro http://www.youtube.com/watch?v=7aKw7bxkI14&feature=relmfu
7. Era of Ferment http://www.youtube.com/watch?v=ulHewPH5YDE&feature=relmfu
8. Dominant Design http://www.youtube.com/watch?v=MkBUMwQX-V4&feature=relmfu
9. Era of Incremental Improvement http://www.youtube.com/watch?v=bc4w6LR_xsA&feature=plcp
10. Substitution http://www.youtube.com/watch?v=TWi7knlR0G8&feature=plcp

9. 1.2 What forces lead some designs to become the standard
for a category of product?

10. 1.3 What are the difficulties associated with the process?
At rare and irregular intervals in every industry, innovations appear that
"command a decisive cost or quality advantage and that strike not at the
margins of the profits and the outputs of the existing firms, but at their
foundations and their very lives" (Schumpeter,1942)
“Extraordinary innovations overthrow the paradigm” (Kuhn, 1962).
• Once a design becomes
an industry standard, it is
difficult to dislodge.
• Until an industry
converges on a standard,
no design achieves much
cumulative production
volume.
• Dominant design leads to
crowding out of firms

12. Dominant Design creates safety
and allows big investments
without big risks.
 (Nelson and Winter, 1982) – maintain that designers of a technology have at
every given point in time beliefs about what is technically feasible or worth
trying
 further performance improvements may be either blocked or will yield
diminishing returns (=>need fundamentally different design approaches) (Dosi,
1982)
 focus on a specific course of design can make people blind to other options
 pressure on firms to receive adequate returns on their investment
managers and designers pursue pathways that promise to bring about
marketable applications

13. 1.4 What uncertainties do manufacturers face?
 CONFUSION abounds in basic concepts and fundamental ideas
 LITTLE CLARITY on technological change and its impact on
organisational outcomes (Nelson, 1995)
Prior to emergence of DD After standard emerges
• Battle between variants • further technological progress is
driven by inherent technological
and economic forces
• Driven by social and political forces • a more consolidated community of
practitioners (Hounshell, 1995)
 The emergence of any DD foretells a period of chaotic change (market
and organizational) as it completely changes the playing field

14. 1.5 How are consumers affected while the standard is emerging?
The early phase of dominant design is a learning process, as a result, designers or producers will
focus on how to deliver new technology to consumers until they understand what core features
the technology have and how to use it (Markides & Geroski, 2004). Markides and Geroski also
considered that the learning process is consistent with the learning curve, which implies that
consumers’ cognition about the new product or services will be mature as time goes by.
Consumer perception is a crucial principle that can link new
technology and consumer more effectively. When a new product or
service forms a trend, most of consumers will debate about what
new product or services should or could do, and also will compare
with their own expectation.
As for innovators and early adopters, they are enthusiastic to share
their own ideas and experiences with other potential consumers,
which will speed up the learning process.
Meanwhile, the sets of standard can reduce consumers’ uncertainty
related to the dominant designs, so that the majority of consumers
will consider them as products that they should purchase (Raji,Gary
& Arvind, 2006).
Learning Curve Eventually, consumers already gain, to some extent, knowledge,
purchasing as well as user experiences, which enables producers to
lock in consumers and reduce competition from potential
competitors and other alternative products or services (Markides &
Geroski, 2004).

15. 1.6 How do firms compete once a dominant design is established?
At the beginning, leading firms in the market go down
the learning curves swiftly, they seek scale economies
to reduce product cost and create large cost strength
to defend their leading position. Meanwhile, these “First-mover advantages are almost permanent
pioneers over the learning process brand their competitive advantages that early movers can
products and services and build up relationships with realize and use to protect themselves against the
consumers. The reputation leads these firms to win competitive threats of later-moving, imitative
more competition. (Markides & Geroski, 2004). entrants.” (Markides & Geroski, 2004, p54)
Interestingly, most successful firms are colonizers, they accurately find “inherent possibilities” in the new technology, the
consumer perception and enter the industry at the right time (Markides & Geroski, 2004).
Besides, Tushman and Anderson (1986) considered that when a new product category forms, important for a firm is the rate of
product variation, which aid in its competition for dominance.
The competition of same design changes from rival design to rival variants.
In order to differentiate the core products form same platform, firms tend to seek market segments that they extend the product
family and more limit the variety of products and the scope of market than the early phrase of dominant design (Markides &
Geroski, 2004). Products have more distinguishable features and functions with other similar products, which, based on same price,
consumers are much easier to compare and decide their preference of a product (Markides & Geroski, 2004).
! But Markides and Geroski also pointed out that sometimes an emerging dominant design, depending its strength, shift from a
niche market to a mass market, which makes it more attractive to new and potential consumers.

16. 1.7. How do dominant designs shift through time?
When the firms enter into original variants of the products,
the dominant designs will emerge after a series of experimentation
and investments from companies.
 At first, it might produce competition
 then the product innovation shifts to improving the production process for the
dominant design.
 The results causes the increasing of process innovation, but the products
innovation decrease.
 After that, it becomes harder that participating in other new variants of the
products and the exit of process innovation also decline.
 Finally, the process leads to a shakeout.

17. 1.8. What factors might disrupt the status quo in an established sector?
The new innovation is the main reason to speed up changes in the currently
situation towards many companies, such as new skill, new product or process
innovation. However, the strong organizations embrace challenges and
ultimately thrive. A dominate design is standardization with a dramatic
breakthrough that would threaten the status quo for companies. When
dominate design happens, it will trigger the companies change to deal with this
opportunity or threaten.
The emergence of a dominate design is a vital step to create a new market
and it also bring out the consolidation into the market. These leading
companies will survive, while the rest of companies might be eliminated
(Constantinos and Paul,2005).
EXAMPLE
Flash Memory Industry; there are various type of flash memory cards and
only suitable for different 3C product. However, if a sort of flash memory
technology will be invested and it smaller and cheaper than existed ones, it
might replace other flash memory cards and become standardization soon.

18. 1.9. How might this affect established firms?
The firm with dominant design will become main trend in the market; even if it is a new
company, because more and more customers tend to buy products from it. People always have a
myth that the company which produced the product they want to buy firstly is the best one, so
they might choose this brand certainly. According to this, dominant design will form centralized
market share highly.
On the other hand, dominant design causes other companies which still use old-fashioned
technologies fail, the appearance of dominant design declined the number of company in this
industry, and the rest of firm not only usually attend this area earlier, but also has quite large
size. In addition to the appearance of a dominant design, it is impossible to consolidate markets.
Dominant design could give the standard in the special area; it means most of companies need
to change their dimension to fit for the standard..
EXAMPLE
Flash Memory Industry; Flash memory is a good alternative storage device and it can be used in a
wide range of portable electronic devices such as digital cameras and mp3 players. Several
companies produce various types of memory cards all with different dimensions and the different
products are not interchangeable. As we can see from finger1, in 2007, there is no any market
share in SmartMedia(SM) card because this product is out of date in many aspects such as access-
speed, weight and size.
Follow by the development in SD Card which created in 2000, it has got booming in flash memory
market recently so that there is a trend that many 3C Manufacturer will produce product which
follow by this standardization in order to be compatible with others.

19. EXAMPLE (continued)

20. 2. From New Technology to Mass Market:
 Why does the technically most efficient product
not always emerge as the market standard?
 Give some examples of when this has happened –
begin with those given in the chapter are there
others you are aware of?
 What do you see as the key reasons why the VHS
dominated the VCR market? Are there any parallel
battles going on currently –give examples you are
familiar with.
 What impact do consumers have on the
emergence of dominant design?
 How do companies link core products and
complementary products/services and why is this
important? Give some examples explaining how
they have affected the competitive performance
of companies.

21. 2.1 Why does the technically most efficient product
not always emerge as the market standard?
 Just like innovation isn’t just about inventions, dominant designs are
not always about superior features.
Sometimes it is a satisfying design in
terms of technical possibilities that is
propelled by the accommodation of
commercial interests between suppliers,
users, and competitors (Anderson et al
1990; Basalla 1988), for example IBM and
Intel’s decision to share know-how for
blade servers may be an attempt to
hasten the emergence of a dominant
design, or VHS being cheaper to make led
to more companies adopting it, despite
Betamax’s superior design.
The chart shows things that need to
happen in order for a dominant design to It is interesting to note that some of the stages involved the public
emerge (in this example, with regards to relations and marketing of the product. As well as researching
genetically modified foods). what the end user values and what they will be willing to adopt.
People didn’t want to retrain how to type, which is one reason why
the Dvorak keyboard failed, despite its superior design.

22. 2.2 Give some examples of when this has happened –
begin with those given in the chapter are there others you are
aware of?
Example Image
The Colour Fax – Faxes are still widely used today thanks to the fact that many documents still
require a signature. The colour fax machine however never really took off, despite being superior to
it’s black and white counterpart. The first one was available in 1946, the main problem was that a
lot of people already had a black and white one, so it was a non-starter. Even if a consumer bought
one, it would only work if whoever they sent or received faxes from also had one.
Videophones – Although they are popular now thanks to smart phones and the internet, when
they were introduced into the commercial market back in the 1950’s they were a flop. At the time,
a lot of companies thought it would become the dominant design and create a revolution in face to
face interaction. However even when the phones became affordable, they found that the users
rarely looked into the camera. Nobody wanted to worry about how they looked each time the
phone rang.
The Segway - The product was very clever and it functioned fairly well, the company had a lot of
funding and the amount of mass media coverage was astounding, so what went wrong? It’s
expectations (partly due to the media coverage) were blown way out of proportion, a piece of
technology that people thought would rival in significance the internet or the PC. It was a clever
piece of technology, but not a solution. How do you park it? Charge it? Do you drive it on the
pavement or road? The infrastructure available did not support the product. There was no
compelling target market, as there wasn’t any real need for it. It was an invention rather than an
innovation, the inventors patented the product and kept it in the dark so much that they were
surprised at the public calling it “dorky”.

23. 2.3 What do you see as the key reasons why the VHS dominated
the VCR market? Are there any parallel battles going on currently?
–give examples you are familiar with.
Sony's Betamax video standard was first commercialized in 1975, followed a
year later by second mover JVC with their VHS. Amazingly it took around 10
years of battling before VHS stood as the winner.
Interestingly VHS’s dominance is not attributed to technology as Betamax had
arguably the technical superiority of the two, but rather to a combination of
other factors
Firstly, Sony's owner, Akio Morita, stated that they had difficulty and disputes
with regards to the licencing of the product, which slowed the growth of
Recommended YouTube Betamax and allowed VHS to gain a foothold in the market.
Video:
VHS machines, were much cheaper to manufacture and so would look a lot
Betamax vs VHS emergence more lucrative for companies deciding which format to back. From the
of dominant design consumers perspective the most immediate difference at the time was the
difference in recording length. Typical Betmax tapes would record for around
60 minutes, not enough to record an entire movie. VHS however could record
http://www.youtube.com/wa up to 3-hours, perfect for movies or a television series. Sony later offered
tch?v=FYQt0xi9PRM solutions but it was too little, too late.
Some people argue that pornography was also a deciding factor. Sony did not
allow this kind of content on their Betamax whilst it was readily available on
VHS (Argawel et al, 2002)

24. A new fight is on the horizon between the west coast tech giants Apple
and Amazon, regarding e-publishing between Apple’s iBooks and
Amazon’s Kindle. It could be said that the real battle that is taking place
is their underlying formats: EPUB 3 and KF8.
EPUB has surfaced as the unofficial but
widely accepted open format among
publishers. Apple cleverly chose EPUB
as it’s format for iBooks, and the format
is used in countless other e-readers and
devices (e.g. Nook).
Amazon, on the other hand, has gone solo with their KF8 (Kindle Format 8). It
replaces .azw, essentially the .mobi format with added DRM. Amazon’s KF8 is much
more versatile than EPUB. Currently it is only available on the Kindle Fire, but Amazon
has plans to port it back to their e-ink Kindles and to the Windows version of their e-
reader.
Apple is the underdog in this fight with their iBooks sales dwarfed by Amazons e-
books, but all that could change with the release of Apples new hardware this week.

25. 2.4 What impact do consumers have on the emergence of
dominant design?
Dominant designs are the innovations of thought and imagination to modify the design of
the product or service which may or may not succeed in market. There is a great impact
on consumers on emergence of Dominant design, as the name itself point towards
positive improvement to be dominating.
The Dominant design not only shows an improvement in its physical design but also the
technology behind its use is modernized.
Viz. the black/white television set in early 50s – 60s were very bulky and the picture
quality was bad are compare to the slim and sleek LED television with High definition
picture quality
This creative change in design and technology
provoke consumers to buy product.
Further, not only the dominant design play important
role but technology also the technological change in
product where consumer is experiencing new
features, easy to use, compactness and its
competency which had a greater impact on the
consumer buying behaviour towards new product and
adapt its design.
Commenting on the other product dominant designs
like QWERTY keyboard, petrol, Pen, Bulb, Telephone
etc. are great designs of its kind which have changed
the lifestyle of the consumer drastically.

26. 2.5 How do companies link core products and complementary
products/services and why is this important? Give some
examples explaining how they have affected the competitive
performance of companies.
Core Product Complementary Product
The product which is underlying consumer benefit(s) The product which is closely related to the core
offered by some of the actual and augmented product, people are encouraged to buy the
components combined together. There are desires and complementary product with the core product.
Complementary goods are the opposite of substitutes:
want we expect from the product we purchase
Demand for a good will fall if the price of a substitute
Example:- What are benefits of the Perfume? I guess is reduced
Women don’t need the spesicif color of perfume or
the shape of the bottle of perfume but the smell of the
perfume is much more important which make them
feel more attractive and confident.
Some of the complementary and core goods: Car and Petrol, Fan and Electricity, Pen and Ink, Fish and chips.

27. There is a direct as well as an indirect link between core and complementary
products. Most companies sell both types of products, but some of them do not sell
the complementary products.
EXAMPLE: Kellogg’s do not sell their complementary product i.e. milk,
Car companies do not sell petrol where as “Camel” sell pen and ink under
same brand.
It’s not always that the company
sells its complementary than its core
product, it do affect the competitive
market.
The rise in price of Oil and Petrol
affects the Automobile industries.
The demand of the core product
declines due to rise in prices of
complementary product.

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