1. The Six Countries’ Conference on Disruptive Technologies
DISRUPTIVE TECHNOLOGIES, FIRMS’ STRATEGIES, AND GOVERNMENT POLICIES Professor Y.L. Doz The Timken Chaired Professor of Global Technology and Innovation INSEAD, Fontainebleau, Singapore VANCOUVER, CANADA, June 5th 2003
Professor Y. Doz

2. Three core questions What is a disruptive technology?
What are its strategic implications, for incumbents?
For challengers?
Why does it matter to governments?
Technology, Innovation, Discontinuity, Radical Innovation, Architectural
Innovation, Transilience, Competence enhancing, destroying……
Professor Y. Doz

3. What is a disruptive technology?
Performance
Third technology
Second technology
First technology
Source: Adapted from Foster (1986) and from Christensen (1992)
Time / Resources devoted
Professor Y. Doz

4. What is a disruptive technology?
Performance
(log. Scale)
First technology
What the technology offers
What the market needs
Third technology
Second technology
Source: Adapted from Christensen (1993)
Time
Professor Y. Doz

5. A well researched example:
hard disk drives
Intersecting Trajectories of Capacity Demanded versus Capacity Supplied in Rigid Disk Drives
Source: Christensen, 1993
Professor Y. Doz

6. Disruptive, or not? Some key questions
Innovation or Technology?
. Social “technologies” (low cost airlines)
. Value innovations (regional jets)
Mainframe
Mini
Desktop
Portables
. Architectural vs modular / elemental
. Same or different technological trajectory
14” 8”
5.25”
3.5”
Winchester
2.5”
Supportive or disruptive?
3. Radical / substitutive or incremental / complementary?
. Bio technology and pharmacy
Professor Y. Doz

7. Disruptive, or not? Some key questions
For Whom?
(e.g., small office copiers)
new
XEROX
base
market
access
Same
new
CANON
competence
Same
Professor Y. Doz

8. Disruptive, or not? Some key questions
How fast: Tornado or mild breeze?
- Dynamics of diffusion: Network effects and critical mass
- Misguided incumbent response
“Happening” or “created”?
- Innovations are “created”
- Creative destruction
- Strategic innovation
- New technologies are resources / tools for innovation
Professor Y. Doz

9. Why are incumbents (often) sitting ducks?
Economic interest
. Better-off funding incremental supportive innovation
. Risk of accelerating substitution and destroying value
. Increasing returns to competence/installed base, trajectory lock-in
Organizational logic
. Structural “fit”, interaction routines, collective tacit skills
. Successful strategies grow into mindless recipies
. Orthodoxies, rigidities, cultural homogeneity
. Internal resource allocation processes
. Lack of relevant, and well-located absorptive capacity
Social heritage
. Network embeddedness (customers, suppliers, partners)
. “Ties that Bind”, unwillingness to challenge past commitments
. “Value networks” require collective agreement on change across firms
Professor Y. Doz

10. The incumbent's weak response
Late, slow, half-hearted, tentative and ineffective
On the “wrong” trajectory (accelerate their own, ignore the new)
Lacking critical mass, under funded, under supported
Expensive
. Time compression diseconomies
. Lasting stalemate
Often strategically flawed
. Transfer of “old” value creation system
Professor Y. Doz

11. To challengers, disruptive technologies open a window of opportunity:
They are disruptive for incumbents, supportive for challengers
They mix technical , social and value innovations, making them difficult for incumbents to emulate …
They create / open vast new “low-end” markets to use a staging areas...
They originate and spread below / beyond the radar screen of incumbents
They draw on distant and diverse sources of knowledge
They rely on new, or hard to enter, social networks
Professor Y. Doz

12. Incumbents that respond successfully
Widely distributed prospecting for and active sensing of new knowledge, worldwide, including emerging / latent market needs
Cultivating absorptive capacity and knowledge melding
Professor Y. Doz

13. Mobilizing Globally Dispersed Knowledge
Prospecting and accessing distant
innovative competencies
and lead market knowledge
LOGIC: Discovery & Reconnaissance
Melding dispersed capabilities and lead market opportunities to pioneer new solutions
LOGIC: Entrepreneurship & Mobilization
Optimising the scale and configuration of Operations
LOGIC: Efficiency, Flexibility, & Financial Discipline
(Source: Doz, Santos, Williamson - "From Global to Metanational” - HBS Press, 2001)
Professor Y. Doz

14. STMicroelectronics in HDD electronics
Engineering and Design skills in fast microprocessors: Bristol, U.K.
Process Technology R&D in BICMOS (mixed) and CMOS (digital); Manufacturing(Front End): Grenoble, France
Joint Design center with Seagate: Scotts Valley, CA
Engineering and Design skills in digital servo controllers:
(JV) SSD - Dublin, Ir.
Process Technology R&D in Bipolar and BCD; Design competence on analog and mixed chips: Milano, Italy
Lead Customers R&D and Engineering:
Seagate, Western Digital (California,Colorado, ...)
Competence on R/W technology:
(JV) EXAR, CA
Coordination and strategic capability: Geneva, Switzerland
Engineering and Design Capability / Close understanding of customer application / Design Center: S. Jose CA
Customers’ Manufacturing: Singapore, and other Far East sites
Design of ‘packaging’, testing and final assembly (Back End) capability: Malaysia, Singapore

15. The Innovation Turbine
MetaCorp 29
The Innovation Turbine
Sensing
Magnet
Magnet
Crucible
Crucible
Attracting
Relay
Relay
Leveraging
Professor Y. Doz

16. Tapping the world for new knowledge (Shiseido in Fragrance)
Carita
Sensing
“Les Salons”
French Suppliers
Zouari
Gien Plant (France)
Beaute Prestige International
Chantal Roos
Issey Miyake
Jean-Paul Gaultier
Melding
Product Development Process
Yokohama:
Product Strategy Managers
Worldwide Distribution
Ofuna (Kamakura) Plant
Leveraging
Professor Y. Doz

17. Incumbents that respond successfully
Widely distributed prospecting for and active sensing of new knowledge, worldwide, including emerging / latent market needs
Cultivating absorptive capacity and knowledge melding
Sustaining a pluralistic dialogue, internally and externally
Creatively challenging existing orthodoxies and business models
Letting “autonomous” strategic processes flourish, and select, at various levels, from their outcomes
Fostering Internal differentiation of organization
Professor Y. Doz

18. Why should disruptive technologies matter to governments?
Open, close opportunities for local industries, obsolete some, create new ones
Geographically displace knowledge bases of given industries, markets …
May change the rootedness of underlying knowledge, and, hence, the need for knowledge clusters
May call for new knowledge networks, and hence new knowledge “hubs” (co-located core, global links)
May change the social regime of an industry (e.g., from products to networks), and its value creation and value capture points and drivers
Professor Y. Doz

19. PixTech: A Metanational Start Up
Research &
Development
Futaba
Motorola
Raytheon
US Financial Market TI
F.E.D. Alliances
Capital
Research
LETI
Materials Tech.
PixTech
Rhone-Poulenc
Nichia
Manufacturing
Distribution
Unipac
Sumitomo
SAES Getters
Professor Y. Doz

20. Small and medium entreprises
What is “selected” by new “disrupted” conditions:
- cultural “memes”
- strategic initiatives, proposals, commitments
- individual firms
- networks
_Creating an internal strategic ecology does not work when you are small!
Are SMEs more or less adaptive than larger firms?
Can global knowledge prospecting, sensing, accessing and melding be achieved by SMEs? How?
Are networks adaptive mechanisms or straightjackets?
Professor Y. Doz