Investment in New

Technology and

Competitive Advantage

Bilen AkuzumMehmet Eren Kucukcolak

Melani SaritasOmercan Yavuzer

Where / How does innovation happen?

Steven Berlin Johnson• Born 1968

• Brown University – Semiotics

• Editor in NY Times, Wall street J.

• Author of 8 books

• Where good ideas come from?

Where good ideas come from?

• http://www.youtube.com/watch?v=NugRZGDbPFU

Where good ideas come from?

• The Slow Hunch Model o Slow and Gradual Innovation

• Incubation period

• Chance favors the connected mind

Where good ideas come from?

• The story behind GPS

• Darwin’s slow hunch

• Baby incubator for Africa

Why Innovation?«Those that can adapt their strategic vision to the

new competitive realities and develop new

capabilities may emerge more vigorous, more

competitive than before.»

Types of Innovation• Innovation Transilience: An innovation’s capacity to

transform existing systems of technology and marketing.

Four different type of innovations Architectural Regular Revulationary Niche Creation

Architectural• Radical techonology applied to new markets

Revulationary• Distributive change in technology applied to

existing markets and customers.

Niche CreationRefinements in technology applied to new customer

groups and new applications

Regular• Refinements in technology applied to existing

markets and customers• http://www.xerox.com/about-xerox/videos/fast_food_video/enus.html

Radical Technology

Refinements in Tech.

To New Market

To New Customers & Apps.

To Existing Market

To Existing Customers & Apps.

Characteristics of Innovation Types

Uncertainty / RiskHigh level of uncertainty (technical options-

customers choice-market

definition-competitors)

Low level of

uncertainity

(technical-market)

Significant uncertainty about customers choice,

Some implementation

risks

High level of technical

uncertainty,Low level of

market uncertainty

Source of ValueNew technical

evolution, redifining industry

Improving competition(co

st, quality),Internal

improvement

Product development and

further segmentation

New technical evolution

Supporting Investments

Equipment development

Training, maintenance

system changes

ApplicationsEngineering

Equipment development,Knowledge of organization, procedures

Competitive ContextNew market and

technical, configuration; may be

basis for entry

Implementation,nuances in engineering

and sales

Skill in marketing,Temporary

monopoly within new segment

Rewriting rules

Managerial SkillsAssimilate new ideas,

adapt to change

Careful planning, problem

solving within known

constraints

Spot emerging customer demands

Leadership in breaking industry

conventions

Investment Analysis• Simple DCF is useful for regular innovation• No well defined cash flows in niche creation or

architectural innovation• In complex cases, simple quantitative methods

may be misleading• Particular methods should be tailored• «In decisions about the firm’s strategic path,

there is no substitute for managerial judgment»

Prompter

• Hubert Schlaflyo Inventor of the first telepromptero Developed cable systems

First Prompter• 1948, for Television• 1950, Soap Opera • 1952, President Herpert Hoover • Mounted inside what looked like a

suitcase and controlled by a stagehand. 

Breakthrough• In 1952, when people realized that

president used prompter.

Refinements • A podium with concealed prompting devices, plumbing for

drinking water and a platform to lift or lower a speaker.

• Later replaced the suitcase-like unit with glass panels and eventually superimposed words in front of cameras.