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CPET 575 Management Of Technology

Lecture on Reading II-2, II-3

Exploring the Limits of Technology S-Curve Part I: Component Technologies

Part II: Architectural TechnologiesClayton M. Christensen

Harvard University Graduate School of Business Administration

Paul I-Hai Lin, Professor http://www.etcs.ipfw.edu/~lin

M.S. Technology - IT and Advanced Computer ApplicationsPurdue University Fort Wayne Campus

Prof. Paul Lin

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Patterns of Industrial Innovation

Introduction

Context of the Study

An Aggregate, Industry-Level View of Technological Maturity in Rigid Magnetic Drives

Using S-Curve to Prescribe Development of New Component Technologies

Do Systematic Differences Exist in How in How Firms Respond to Potential Maturity in Component Technology

SummaryProf. Paul Lin

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Patterns of Industrial InnovationIntroduction

Technology S-Curve• A framework describing the substitution of new for old

technologies at the industry level

• A descriptive or predictive theory

• Technology life cycle, adoption

• Apply S-Curve in the strategic management of technology

• The industry’s leading incumbent firms Most aggressive in S-curve switching strategies

Technology• Process, Techniques, or Methodology

• Disk Drive Industries

• Product design, Manufacturing, Service ProcessesProf. Paul Lin

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Technology S-Curve Theory

• Introductory stage (the rate of progress in performance –relatively slow)

• Growing stage (better understood, controlled, diffused stage) -the rate of technological improvement increased rapidly

• Maturity stage (technology => natural or physical limit, requires greatest efforts to achieve performance improvement)

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Typologies of Technological Changes

Architectural technology change• Fundamental technological basis remains unchange

• Rearrangement in the way components are relate to each other

• Require intense degree of market innovation

• Ceiling Fan => Table Fan

Modular technology change• Fundamental change in technological approach

employed in a component where the architecture is left unchanged

• Change the type of motor in a ceiling fan

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Typologies of Technological Changes

Incremental technology changes• Improvement in component performance

• Refinements in system design

Radical innovation/changes• Change in architecture

• new approach at the component level

• Fan => motor powered fan

• Motor fan => Air-conditioner

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Types of Technological Changes

Radical new technologies • Frequently developed and brought into an industry by

“new entering firms”

• Not from incumbent leaders

• Examples Foam rubber (Roussel, 1984)

Aircraft engines (Constant, 1980)

Permanent magnets (van Wyk, Haour, and Japp, 1991)

A range of industries (Foster, 1986)

Substitution of steam for wind-powered ships

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Disk Drive Technologies – S Curve

1st Disk Drive: invented in 1956 by IBM’s San Jose laboratory

Disk Drive Components• Comprised of one or more rotating disks

• Data is recorded and read on concentric tracks on the surfaced of disks

• Recording area density

• Electronic circuitry

• Read/write heads

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Disk Drive Technologies – S Curve Performance Measurement: Recording area

density:

Exhibit 2 a: Area Density vs. Time• Millions of bits Per Square Inch (0.2, 0.4, 1.0, 2.0 ..

70) vs. Time (1970, 1972, .. 1988 1990)

• No apparent S-Curve pattern of progress

• Radical technologies have offered greater “greater recording density, speed, or reliability.

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Disk Drive Technologies – Performance Measurement

Exhibit 2 b – Area Density vs. Engineering Efforts• Millions of bits Per Square Inch (0.2, 0.4, 1.0, 2.0 ..

70) vs. Engineering Efforts (cumulative industry revenue as proxy for engineering efforts)

• See apparent S-Curve pattern of progress

• Why magnetic recording technology has held competing approaches at bay for long time –Engineering Efforts

• Performance of alternative techniques rarely surpasses that of the established technologies

• Less incentive to switch to alternative technologies

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Applying the Technology S-Curve

Why it is harder to obtain performance improvement as a technology reaches its maturity?• Scale phenomenon (too small or too large)

• System complexity

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Prescriptive S-Curve Strategy

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Using S-Curve to Prescribe Development of New Component Technologies

1st Disk Drive: invented in 1956 by IBM’s San Jose laboratory• History of IBM Magnetic Disk Drives,

http://en.wikipedia.org/wiki/History_of_IBM_magnetic_disk_drives

Disk Drive System Component Technology• Read/Write Technology Improvement

Thin Film Heads replace Ferrite and Oxide Technologies (1978)

Incumbents prefer to work on existing technologies and make incremental changes (performance improvement)

Hitachi and Fujitsu switched in mid 1980s

Did not improve the performanceProf. Paul Lin

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Disk Drive Technologies – S Curve

Disk Drive System• Radical component improvement

Investment by resource rich companies on thin-film photoliothography technology to create much smaller, more precise electromagnets on the head

Thin film heads cost IBM over $300 million, longer than 10 years

The whole industry spent over $1 billion

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PART II: Architectural Technologies

Architectural technology change• Fundamental technological basis remains unchange

• Rearrangement in the way components are relate to each other

• Follow S-curve patterns

In Disk Drive Industry• It was the advent of new architectural technologies,

not component technologies, that caused the downfall of industry’s leading firms

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PART II: Architectural Technologies

Entrant, Attacking Firms with Architectural Technology In Disk Drive Industry• It was the advent of new architectural technologies,

not component technologies, that caused the downfall of industry’s leading firms

Reasons• Architectural innovation generally found earliest use

in emerging markets

• Entrant, attacking firms succeed - better at attackingemerging markets

• Not because they possessed superior capabilities to develop the architectural technology

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Leaders in Developing and Shipping Each New Architecture Products

Entrant firms were the leaders in developing and shipping each new architectural generation of products.

Why were the established drive makers able to lead the industry in development technology, while they were dethroned at points of architectural change?

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Winners of New Architecture Technologies and Products (Disk Industry)

Why were the established drive makers able to lead the industry in development technology, while they were dethroned at points of architectural change?• Incumbent Firms and New Component Technologies

Leading New component technologies (drivers of performance improvement, designed them into new product models, sold to existing customers in the established market)

• Incumbent Firms and New Architectural Technologies Incumbent firms were typically among the first in industry to

develop working prototypes of the new architecture products

Quality of incumbent leaders’ architectural designs (cost and performance) was fully competitive with that of entrant firms

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Winners of New Architecture Technologies and Products (Disk Industry)

Why were the established drive makers able to lead the industry in development technology, while they were dethroned at points of architectural change?• New Architectural Technologies, Applications, and

Markets Redefine product’s functionality

Parameters, system performance – assessed

For new markets and new applications

• Incumbent’s failed to innovate in the “Market”, rather than fail to innovate in the laboratory

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Disk Drive Technologies – 1973 to 1990, and Markets

Architectural Features• 1) Reduced sizes, 2) Reduction of total part count, 3)

Parts and system integration methods

Five Successive Architectural Technologies (Winchester drives)• 14-, 8-inch Architecture

Customers – makers of mainframe and minicomputers

Performance measurement: Total Capacity and Speed

100-500 M-bytes, 30 ms access speed

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Disk Drive Technologies – 1973 to 1990, and Markets

5.25-inches Architecture (Emerged in 1980)

• Performance: 5 Mbytes, 160 ms Ignored by mainframe and minicomputers market due to it’s

performance

• Other dimensions of performance were irrelevant in the large computer markets (superior features) Capacity per Cubic Inch

Total cost

• Emerging market applications? Desktop personal Computing – Heavy demand in this emerging

market

Established firms were late to spot opportunities to exploit attractive, emerging market

180 Kbytes, 360 Kbytes, 512 Kbyte, 1.2MbytesProf. Paul Lin

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Disk Drive Technologies – 1973 to 1990, and Markets

5.25-inches Architecture (Emerged in 1980)

• New architecture technology become established in the market

• Improve the performance at much faster rate Capacity, Speed

• Able to compete with earlier drives used in mainframes and minicomputers on the Capacity, Speed

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Disk Drive Technologies – 1973 to 1990, and Markets

5.25-inches Architecture (Emerged in 1980)

• Entrant firms’ gains in new architecture technology and markets 1) Much higher volume, 2) Deeper technological experience, 3)

Lower cost

• Invaded the larger-computer markets with these capabilities

• Quickly capture these markets

• New firms dethroned prior industry leaders in 5 of the 7 architecturally defined disk drive products generation

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Disk Drives Technology Comparisons

2nd Gen Tech, Initially was inferior to the 1st Gen. tech

3rd Gen Tech, initially was inferior to the 2nd Gen Tech

But with the rate of improvement, the new architectures surpassed the old.

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Exhibit 2. A Different S-Curve Model of Architectural Innovation (page 280)

New technology 2 is deployed in a new application “B”, with different performance requirements

At some point of commercial maturity, the new architecture become capable of addressing the performance demanded in the original market

More effectively than the established technology

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Conclusion

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