ITFT - Henderson clark model

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Henderson Clark Model


  • 1. Henderson Clark Model

2. S-Curve The S-Curve emerged as a mathematical model and was afterwards applied to a variety of fields including physics, biology and economics. It describes for example the development of the embryo, the diffusion of viruses, the utility gained by people as the number of consumption choices increases, and so on. In the innovation management field the S-Curve illustrates the introduction, growth and maturation of innovations as well as the technological cycles that most industries experience. In the early stages large amounts of money, effort and other resources are expended on the new technology but small performance improvements are observed. Then, as the knowledge about the technology accumulates, progress becomes more rapid. 3. Consider the supercomputer industry, where the traditional architecture involved single microprocessors. In the early stages of this technology a huge amount of money was spent in research and development, and it required several years to produce the first commercial prototype. Once the technology reached a certain level of development the know-how and expertise behind supercomputers started to spread, boosting dramatically the speed at which those systems evolved. After some time, however, microprocessors started to yield lower and lower performance gains for a given time/effort span, suggesting that the technology was close to its physical limit (based on the ability to squeeze transistors in the silicon wafer). In order to solve the problem supercomputer producers adopted a new architecture composed of many microprocessors working in parallel. 4. The Teece Model David Teece clarified that two factors imitability and complementary assets will have a strong influence in determining who will ultimately profit from an innovation. Imitability refers to how easily competitors can copy or duplicate the technology or process underpining the innovation. There are many examples of barriers a company could use to protect itself from imitation, including intelectual property rights, complex internal routines or tacit knowledge. Consider the case of RC Cola, it was the first firm to introduce a diet cola on the market, but since it could not protect itself from imitation soon Pepsi and Coca-Cola jumped in, and using their complementary assets (distribution channels, brand name, etc.) they appropriated all the profits of the segment. Complementary assets, therefore, are equally important. agreements, among others. 5. The Abernathy Utterback Model The first phase they called Fluid phase, where technological and market uncertainties prevail, a great deal of changes take place conteporaneously and outcomes may vary significantly. It is almost a large experimentation game in the market place. The manufacturing process relies on high-skilled labour and general purpose equipment, there is almost no process innovation and the many, small firms competing will base their advantage on differentiated product features. Competition will not be as fierce as in later phases because companies have no clear idea on potential applications for the innovation, nor on what direction the market might grow. There is low bargaining power from suppliers since no specialised materials are used in the production. The major threats come from the old technology itself and from the entrance of new entrants if the innovation was radical and competence- destroying. 6. Variable Fluid Phase Innovation Product changes/radical innovations Product Many different designs, customization Competitors Many small firms, no direct competition Organization Entrepreneurial, organic structure Threats Old technology, new entrants Process Flexible and inefficient 7. Transitional Phase as producers start to learn more about the technology application and about customers needs some standardization will emerge. Usually by this time the acceptance of the innovation starts to increase and the market starts growing, signals that we are entering into what the authors called the transitional phase. The convergence pattern in this phase will lead to the appearance of a dominant design, which is a product degisn whose main components and underlying core characteristcs do not vary from one model to another, it often comes out as a new product syntethised from individual innovations introduced independtly in previous product variations. 8. Variable Transitional Phase Innovation Major process changes, architectural innovations Product Less differentiation due to mass production Competitor s Many, but declining after the emergence of a dominant design Organizatio n More formal structure with task groups Threats Imitators and successful product breakthroughs Process More rigid, changes occur in large steps 9. Specific Phase after the appearance of the dominant design competition will shift from differentiation to product performance and costs. Companies now have a clear picture of market segments and will therefore concentrate on serving specific customers. Manufacturing will use highly specialised equipment and employing high-skilled labour become less important since there is a commoditisation taking place, which in turn means that bargaining power of both suppliers and customers will increase. Competition becomes more intense and the market moves towards an oligopoly. As a consequence incumbets are able to secure their position through supplier relations, distributtion channels and other complementary assets that will create entry barriers to new entrants. 10. Variable Specific Phase Innovation Incremental innovations, improvements in quality Product Heavy standardization in product designs Competitors Few, classic oligopoly Organization Traditional hierarchical organization Threats New technologies and firms bringing disrupting innovations Process Efficient, capital intensive and rigid