Diffusion; Technology and the Competition n Narayanan Chapters 4 & 5

10/13/05 Course schedule Update n 10/13Lecture on Diffusion; other n 10/20Detailed paper outline and abstract deadline; n 10/20Lecture on technology and Competition n 10/27Lecture on Technology Intelligence n 11/3,10tbd (workday, etc.) n 11/17Dr. Noftsinger-lecture on Tech Transfer and Intellectual Property Strategy n 11/24Take home exam n 12/1Course roundup and eval.

Key Approaches in Text Materials n Technology and innovation are value drivers, and management decisions should be anchored in the fundamental objective of creating competitive advantage. The advantage may come from innovation and imitation and will depend on both market factors and firm resources. n Second, the text emphasizes an open systems view of management and underscores the role of environment in management decisions. Indeed, three environmental trends—globalization, time compression, and technology integration—are emphasized throughout the book. n The big picture is emphasized over the details of any specific approach. n The text underscores the importance of organizational learning—through scanning, by doing, reflecting, and analyzing—as a critical process in the management of technology. n Finally, there is bootstrapping between theory and practice.

Diffusion n “The process by which an innovation is propagated through certain channels over time among the units of the system” –Innovation:new technical solution perceived as new by others –Propagation:spread of an innovation beyond its inventor –Time:firms and individuals adopt innovations at different times –System:inter-linked units that play a role in diffusion process

Diffusion Vs. Imitation Innovation Imitation Diffusion Competitors Consumers Diffusion: 1. Dynamics of diffusion 2. Innovation attributes that facilitate or hinder diffusion 3. Factors that drive diffusion process

Diffusion Dynamics n S-curve of diffusion(see figs 4.4 & 4.5) –eras in diffusion history - i.e. stages –factors that affect shape of S-curve rate of diffusion potential set of adopters: firms or individuals that are likely to adopt an innovation

Diffusion dynamics continued n Reinvention:users change, demand or modify an innovation as they adopt and use it –changes in design and and/or performance specifications –creation of a standard model –development of complementary products –changes in an innovation that make new applications possible

Diffusion dynamics continued n Diffusion mechanisms –technology substitution:means by which adopter population chooses an innovation –bandwagon effect: later adopters imitating earlier ones What are the effects of uncertainty, information, knowledge, and learning on diffusion based on the above mechanisms?

5-Step process of Innovation adoption - see fig 4.6 n Awareness or Knowledge n Attitude formation n Decision n Implementation n Confirmation

Categories of Innovation adopters n Innovators n Early adopters n Early majority n Late majority n Laggards Differences among adopters within a firm: Socioeconomic status Personality variables Communication behavior

Factors that drive diffusion process n Attributes of the innovation –relative advantage –compatibility –complexity –trialability (scalability) –observability n Community effects and Networks n Characteristics of the population

Chapter 5: Technology and the Competition 1. Competitive consequences of technological change - creation of new industries. 2. Technological character of competitive domains 3. Dynamics of change in competitive domains 4.Analysis of technology emergence 5. Influence of environmental trends

Competitive realities of technological change n Creation of new products can make others obsolete n Affects changes in value chain n Changes the nature and relative importance of the supply chain n Results in competitive rivalry

Dynamics of change in competitive domains n Technology Emergence stage –nature of competitive domain (climate) n Incremental Change Phase –nature of competitive domain

Framework of Technology Emergence n Environmental components –institutional arrangements –public resource endowments n Managerial challenges in developing a radical innovation –forces to be tracked by firm –awareness and reaction to strategic uncertainties facing the firm –need to remain a player in tech community