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Transcript of Dealing With Disruptive Technologies How CI Can Help! Brad Ashton Concurrent Technologies...
Dealing With Disruptive Technologies How CI Can Help!
Brad AshtonConcurrent Technologies Corporation1300 Pennsylvania AveWashington, DC 20004Tel: 202-312-2916Email: [email protected]
Presentation for 2004 FPTT Conference
June 16, 2004
Halifax, NSCanada
©2004 WB Ashton2
Overview
What is disruptive innovation & why is it important?
Identifying disruptive innovations
Anticipating Disruptive Innovations: Early Warning Analysis
Conclusion: Developing responsesNote: material in this presentation on disruptive technology draws heavily from work by C Christensen of Harvard University and his book, The Inventor’s Dilemma.
©2004 WB Ashton3
Technology Innovation Mechanisms
Incremental improvement (fine tuning)- better features, service or costs
Substitute for conventional technology (improved components)- better features, service or costs
Combine functions & conventional technologies - for performance or efficiency gains
Eliminate functions & conventional technologies - cut costs, time or risks of failure
Add new functions or features - add performance breadth, flexibility, reliability, ...
Real concern: potentially disruptive technologies - the “game changers”
©2004 WB Ashton4
Key Executive Worry - “Game-changers”
Game changer innovations often … “blindside” established players and are “disruptive” come from “outside” technologies or industries do produce warning signs or weak signals
Example game changers/ disruptive innovations Transistors, xerography, television PCs, digital communications, managed care The Internet
Game changer - strategic innovations or platforms that open opportunities for major new products and markets with radical new approaches
©2004 WB Ashton5
What kind of innovations are your focus?
Sustaining innovations – focus on incremental performance gain for established products along proven dimensions of customer satisfaction
Disruptive innovations – implement striking functionality, reduced costs, attractive value in non-mainstream application markets using a fundamentally new approach with high “leap frog” potential
INDUSTRY DISTRUPTIVE EXISTINGSteel Mini-mills Integrated steel millsMotorcycles Small off-road Powerful over-the-roadElectronics Transistors Vacuum tubes
Microprocessors DRAMExcavators Hydraulic-actuators Cable-actuators
Source: Christensen, C. 1997. The Innovator’s Dilemma. HBS Press. Boston, MA.
©2004 WB Ashton6
Why Some Market Leaders Fail
Companies with best technology tend to improve it, often incrementally – mainly by listening to customers
Market leaders often focus on existing top-end customers – not on on creating something entirely new serving the same function in a new market niche. Seek high margins.
While helping customers at top end of the market, the lower end goes unserved – until … A potentially disruptive innovation emerges in low-margin market
niches -- enabling a large group of less skilled people to do more things for themselves. This new market begins to grow.
Disruptive technologies can render existing technologies, business models and companies obsolete after gaining footing.
Source: C Christensen, The Innovator’s Dilemma
©2004 WB Ashton7
Disruptive Innovations are Not Seen as Winners in Early Stages…
DISRUPTIVE TECHNOLOGY INCREMENTAL TECHNOLOGY
PCs – IBM, Apple Computer
Portable, desktop copying - Ricoh
Minicomputer – Digital
Central copying - Xerox
Discount retailer – Kmart, Walmart
On-line brokers - Schwab
Variety stores – Woolworth, Kresge
Full-service brokers – AG Edwards
Source: C Christensen, The Innovator’s Dilemma
Descriptive Phrases: “Revolutionary vs. evolutionary” “Paradigm shifting” “Can change the competitive landscape, change the game”
©2004 WB Ashton8
Potentially disruptive technologies - 1998
Fuel cellsBiodegradable plasticsElectric carsSatellite communicationsBiosensors Napster
On-line stock tradingVoice recognitionHome networkingElectronic publishingNano-micro scale
machines & chemical reactions
©2004 WB Ashton9
Potentially disruptive technology - 2004
Technology Areas: Nano/ micro scale
machines, reactions Distributed energy Intelligent devices Grid computing Ultra-wide band
transmission Suggestions …
Technology Systems: Voice recognition Fuel cells Electric cars “Smart dust” Wireless networks RSS Suggestions …
©2004 WB Ashton11
Can Your Current CI Process Answer These Questions?
Core Competencies: What are your technology core competencies (TCCs) and what is going on in those areas? What are your NEXT GENERATION TCCs and what is the state-of-the art?
Functional business picture: Do you know how alternative innovations can perform your core business functions?
Competitive advantage: What key competency determines your performance vs. competitors’ performance? Who is the leader?
Competitors: How does each of your competitors perform on each TCC? What are they working on? What about NEW competitors?
Customers: How are low-end customers (yours & competitors) being served and how might a new competitor approach them?
Threats & Opportunities: What are the biggest threats to your TCC competency? Where can you get the best NEXT advantage?
©2004 WB Ashton12
Technology-Based Intelligence NeedsM
easu
re o
f Per
form
ance
Lev
el o
r Act
ivity
Elapsed Time or Engineering Effort
What performance characteristicsdrive the technology?
Will a new dominant technology be sustaining or
disruptive?
When will ourtechnology mature?
Where are we?
When will the new technologybe commercially viable?
What are the emerging technical options?
How fast is the technology evolving / what total effort behind it?
Where is our competition?
Source: Adapted from Jay.E. Paap
©2004 WB Ashton13
New Product Introduction Time Line
SIGNAL
INTENSITY
•Discussions•Grey Literature
ScientificPapers
•R&D Alliances•Joint Ventures
Patents
ProcessDevelopment
ProductAnnounced
ProductSales
Technology Signals
Source: Adapted from Merrill Brenner, APC
©2004 WB Ashton14
Disruptive innovations- What are the signs?
Innovation Unique attractive features, functionality Cost advantages High development potential
Market Fits with existing value networks No interest from established players Remote, low-end market entry points
Growth pathways Potential for moves into mainstream markets Has potential to “change the game”
©2004 WB Ashton15
Disruptive innovations- Look in the right places?
Low margin market niches that can be brought into the market with the right technology
No interest in these low-end niches by market leaders – they focus on high end customers
Non-market leaders or new players introducing new products, services or business models
New entry-level product with attractive features and development potential – not viewed as a winner
©2004 WB Ashton17
Addressing Disruptive Innovations – 4 basic steps
1-Understand your industry’s basis of competition and driving forces behind change? How is your industry structured and how is it changing? What is your value proposition, chain, networks? What is the cost structure – and its viability? What key influencing factors are you facing?
©2004 WB Ashton18
Addressing Disruptive Innovations (cont)
2-Assess how innovation occurs in your industry And -- how it could occur to be disruptive … How have past innovations emerged and succeeded? Identify potential vulnerabilities (product weakness, costs,
customer value) What disruptions to anticipate (“what if..”) – framework,
questions, threats & opportunities Think about new innovations and their sources
©2004 WB Ashton19
Addressing Disruptive Innovations (cont)
3-Identify & track potentially disruptive innovation targets – assign someone to do “innovation scouting”
“Early warning for potential disruptors” - monitor and evaluate key technologies and innovation prospects – What signs to look for – build “early warning” indicators Where & how to look – identify collection sources & methods How to conclude – establish diagnostic analysis approaches How to report and convince – figure out how to be persuasive
©2004 WB Ashton20
Addressing Disruptive Innovations(cont)
4-Prepare Response Options Develop a range of response actions
(hypotheticals -- “disrupt yourself before someone else does”)
”Sell” the message; convince managers of need to invest in actions – without solid proof (real war stories, scenarios)
©2004 WB Ashton21
Indications & Warning Model
Warning Goal: to provide firm warning intelligence early enough to permit effective preparatory action BEFORE the future occurs...
High
Low
EVEVT
TIME
Decision makerFlexibility or Opportunity
Information Confidence or Validity
NOW FUTURE
Future target TOEs: • New product launches• Mergers / acquisitions• A technical milestone • A research breakthrough• Partnership agreements
ACT
©2004 WB Ashton22
Early Warning Cycle
6-Action6-Action
4-Communication
4-Communication
5-Evaluation5-Evaluation
1-ProblemRecognition
1-ProblemRecognition
2-Validation2-Validation
3-Threat / opportunityDefinition
3-Threat / opportunityDefinition
The warning cycle is complete only when specific action has been taken on a valid warning forecast.
ExternalEnvironment
©2004 WB Ashton23
Indicators - of New Product Launch
Leading Indicators - precursor variables that show observable activity BEFORE the target event occurs--that lead it in time (raw material purchases)
Lagging Indicators - antecedent variables that show observable activity AFTER the target event occurs--that lag it in time (customer reaction comments)
Concurrent Indicators - co-occurring variables that show observable activity WHEN the target event occurs--that parallel it in time (company announcement)
Indicator - observable clues that provide indirect evidence of a related phenomenon of interest.
©2004 WB Ashton24
Event timelines: Placing observations in time
UNIQUE NEW PRODUCT RELEASED
Observations
Time (event position in time)
BASEEVENT
4
5
2
1
ANTICIPATED FUTUREEVENT
1 (NOW) 2 3 4
New staff hired
Development partnership announced
Customer complaings
Production equipment installated
3
A patent issues
©2004 WB Ashton26
Early warning for new innovations in US Industry
EW is still in its infancy in most companies; basic EW intelligence skills are weak in technical areas
Some industries are beginning to use EW products (e.g. pharmaceuticals, telecomm, electronics, chemicals, energy)
Key current sources include technical literature, patents, news and technical meetings; human collection is weak and needs to improve
The data sources and tools are getting better all the time
EW is likely to grow in use and impact
©2004 WB Ashton27
Why Early Warning Often Doesn’t Work
The “Failure of Nerve….
Source: Clarke, A. 1985. Profiles of the Future. Warner Books. New York, NY.
“Human beings have a persistent tendency to see what they want to see despite overwhelming evidence to the contrary. ”
“Human beings have a persistent tendency to see what they want to see despite overwhelming evidence to the contrary. ”