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Professor Y. Doz DISRUPTIVE TECHNOLOGIES, FIRMS STRATEGIES, AND GOVERNMENT POLICIES Professor Y.L. Doz The Timken Chaired Professor of Global Technology.

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Presentation on theme: "Professor Y. Doz DISRUPTIVE TECHNOLOGIES, FIRMS STRATEGIES, AND GOVERNMENT POLICIES Professor Y.L. Doz The Timken Chaired Professor of Global Technology."— Presentation transcript:

1 Professor Y. Doz 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 5 th 2003 The Six Countries Conference on Disruptive Technologies

2 Professor Y. Doz 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……

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

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

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

6 Professor Y. Doz Disruptive, or not? Some key questions 1.Innovation or Technology?. Social technologies (low cost airlines). Value innovations (regional jets) 3. Radical / substitutive or incremental / complementary?. Bio technology and pharmacy MainframeMiniDesktopPortables. Architectural vs modular / elemental. Same or different technological trajectory Winchester Supportive or disruptive?

7 Professor Y. Doz Disruptive, or not? Some key questions 4.For Whom? (e.g., small office copiers) new Same marketaccess base competence XEROX CANON

8 Professor Y. Doz Disruptive, or not? Some key questions 5.How fast: Tornado or mild breeze? - Dynamics of diffusion: Network effects and critical mass - Misguided incumbent response 6.Happening or created? - Innovations are created - Creative destruction - Strategic innovation - New technologies are resources / tools for innovation

9 Professor Y. Doz 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

10 Professor Y. Doz 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

11 Professor Y. Doz 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

12 Professor Y. Doz 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

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

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

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

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

17 Professor Y. Doz 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

18 Professor Y. Doz 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

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

20 Professor Y. Doz 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?


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