A Harvard project' Teece's profiting from technological innovations * MASI * ALVINA * SA...

MGMT S-5016 * MASI * ALVINA * SA DON * VERDONCK * NG *

TEESE’S PROFITING FROM TECHNOLOGICAL

INNOVATION

David J. Teese

EMI Cat Scanner

RC Cola

Complimentary Assets

1

2 Imitability

Imitability

Appropriability

Regime

Dominant Design

Appropriability Regime

Most important dimensions: nature of technology and efficacy of legal mechanisms.

TRADE SECRETS

COPYRIGHT

PATENTS

LEGAL INSTRUMENTS

Nature of Technology

Product Process Tacit Codified

Tight A.R - ex. Coca Cola (trade secret)Weak A.R – ex. Bottled water industry

Dominant Design

Pre-paradigmatic stage and paradigmatic stage

Competition amongst firms manifests itself in competition amongst designs

One design or a narrow class of designs begins to emerge

Once a dominant design emerges, competition shifts to price and away from design Competitive success then shifts to a whole new set of variables

Innovation is not necessarily halted once the dominant design emerge

Dominant design is of great significance to the distribution of profits between innovator and follower

Dominant Design

Dominant Design: Examples

Most of the early PDA companies failed, even if they had innovative and sophisticated product designs. Palm emerged as the winner of PDA

Videotape format war between Betamax and VHS, where VHS became the video standard

Examples of Dominant Design

War of currents between Direct current and AC power

Microsoft Windows in the PC operating system

COMPLIMENTARY ASSETS

“ Assets, infrastructure or capabilities needed to support the successful commercialization and marketing of a technological innovation ”

CRM SOCIAL

MEDIA

VALUE

CHAIN

CRM IN PROFITABLE INNOVATION

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Porter’s Value Chain Model

Innovation

Competitive

Manufacturing

Distribution

Service

Complementary

Technology

Other

Other

Contractual Mode

Contractual Mode

• Inexpensive• Ideal with Strong

Appropriability• Gain from Partner

Pros

• Difficult to form Partnerships

• Bad PartnersCons

Apple

Apple Vs. Samsung

http://www.youtube.com/watch?v=Z19vR1GldRI

Apple Vs. Samsung

Integrated Mode

Innovation

Competitive Manufacturi

ng

Distribution

Service

Complementary

Technology

Other

Other

Integrated Mode

• Scalability• Ideal with Strong

AppropriabilityPros

• Expensive• Need a lot of

Complementary Assets

Cons

Google.com

Google.com

Google has spent north of $23.5 Billion in acquisitions Motorola for $12.5 Billion DoubleClick for $3.1 Billion YouTube for $1.7 Billion Waze for $1.3 Billion Android for $50 Million

Google Engineers – “Googlers”

Google.com

Implications

Research according to Strategy

Co-specialized assets make or break an innovation

Forging links within the Industry

Try to keep the Manufacturing in-house

A story of Dell

ASUSTeK slowly took upon itself the responsibility of manufacturing Dell’s laptops, and eventually usurped them

Conclusion

REGIME OF APPROPRIABILITY

DOMINANT DESIGN

COMPLIMENTARY ASSETS

CONTRACTUAL & INTEGRATED MODE