2. Simulation Innovation II: A Three Phase Model of Innovation Roger Smith SPARTA Inc. rsmith@sparta.com 407.380.0076 Orlando, Florida August 2-5, 2005 http://www.afams.af.mil/conn_conf/ © Copyright 2005, Roger Smith

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

4. Two Models of Innovation Disruptive Innovation: Established companies lose their market share to innovative new entrants in the field. The Innovator’s Dilemma, Clayton Christensen (Harvard) 3-Phase Innovation: The rate of major innovation in products and services follows a 3-Phase pattern over time. Mastering the Dynamics of Innovation, James Utterback (MIT)

5. Fluid Phase Explosion of different designs, Era of radical product innovation Transitional Phase Standardization of design, Emergence of process innovation Specific Phase Contraction of competitors, Era of incremental innovation Rate of Major Innovation time (Utterback, 1996) Utterback’s 3-Phases of Innovation Product Innovation Process Innovation Lowest Cost Dominant Design

6. Fluid Phase Explosion of different designs, Era of radical product innovation Transitional Phase Standardization of design, Emergence of process innovation Specific Phase Contraction of competitors, Era of incremental innovation Product Innovation Process Innovation Rate of Major Innovation time (Utterback, 1996) Simulation Innovation Examples SIMNET SAF’s CBS CCTT DIS ModSAF ALSP Dominant Design LVC DIS 2.0.4 ALSP IEEE 1278 (DIS) IEEE 1516 (HLA) CTIA TENA System Mods Sim Center & Exercise Support

7. Fluid PhaseTransitional Phase Specific Phase Product Innovation Rate of Major Innovation time Unsuccessful Path: Stay The Course

8. Successful Path: Jump Industries Board Wargaming Computer Simulation Computer Games Expertise Fluid: R&D, New Products Expertise Transitional: Mass Production Expertise Specific: Services Cellphone, Handheld, Web-based

9. Fluid Phase Product Innovation Process Innovation Rate of Major Innovation time Transitional Phase Specific Phase (1) Open with rapid and prolific innovation (3) Push standards and build community around yours (4) Focus on low-cost products and services Successful Path: Skate the Top (2) Create and own the dominant design Dominant Design Lowest Cost

10. Every Organization Will Not Survive 85% Stay the Course 10% Jump Industries 5% Skate the Top

11. Recommendations Flexible Change the company to follow the market Fluid >> Transitional >> Specific Specialized Jump across domains to grow specific expertise Retain your specialized expertise Immovable Stay the Course Until Extinction Most companies follow this path

12. 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.