15.393-MAS967 Technology Strategy for New Enterprises

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15.393-MAS967 Technology Strategy for New
Enterprises

• Class 2 The evolution of industries,
  technologies markets
• Professor Fiona Murray

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Course Details

• Reading is missing from the course pack it is
  now available on Sloanspace the course website.
• Course website is mas967
• The updated syllabus is also available on the
  websites
• Todays slides are also there

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High failure ratesclassic challenges for
start-ups

• Ralph Waldo Emersons problem...
• Robert Kearns problem...
• Xerox PARCs problem
• Technology Strategy is about a powerful set of
  tools to solve these problems -- geared towards
  emerging technologies technology-based start-ups

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Effective strategies rest on answers to three key
questions...
Markets
How will we create value?
Technologies
Can we capture this value in the face of
competition?
Do we have the organizational capabilities neces
sary to deliver it?
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First Module the first of three key questions
mainly focusing on examples from communications...
Markets
How will we create value?
Technologies
Can we capture this value in the face of
competition?
Do we have the organizational capabilities neces
sary to deliver it?
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The Industry life cycle as an S-curve
Performance
Maturity
Disruption
Takeoff
Ferment
Time
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Key punctuations in the lifecycle
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Performance
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MATURITY
Retention
TAKE-OFF
Variation
Selection
FERMENT
Time
RD Effort
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A Key Framework The industry life cycle
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Era of Ferment

• No one is sure how the new product
• Can be packaged or sold
• Who will value it
• How it can be produced/distributed
• Whether there is money in supplying it
• Industry is up for grabs
• PDAs used to be like this
• eBooks are like this now
• There is ENORMOUS uncertainty in many dimensions
  !!!
• Its fun !!!

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Takeoff- establishing the dominant design

• The way we do things around here Model T
• Key Technical Components, Architecture
• Key Customer Needs
• Who is going to buy this, how are they going to
  use it?
• Basic Elements of the Business System
• How shall we structure the value chain?
• Hard to define ex ante

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Understanding the life cycle is critical since it
shapes strategic choices
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Organizational issuesDisruption challenges
existing organizations severely
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Competition
Competition

• Squeezing the profit out margins often get thin
• Economies of scale typically important
• Lots of complementary assets brand,
  distribution etc.

Maturity

• Technical progress more limited within these
  boundaries
• Focus on improvements
• Firms worry about volume, quality and price
  can we make 20 million units this week?

Takeoff

• Industry up for grabs often based on innovation
• Is this really an industry at all What is
  nanotechnology anyway?
• Who wants this product? How can it be packed or
  sold?
• What is the right price?

Ferment
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Technological activity evolvesover the life
cycle
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The Product/Process Transition
In the beginning Innovation focuses around
product concepts, is led by small firms, and is
largely exploratory Competition is on features
profits are made through differentiation.
Once a dominant design emerges Innovation
focuses around process, delivery, service Most
firms are forced out the large firms that
remainare increasingly structured,
hierarchical.Profits fall as opportunities for
differentiation fade.
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Entrepreneurial Opportunities over the lifecycle
Opportunities
Actions
Few opportunities, but disruption is possible
Maturity
Lower cost solution to the dominant design
compete on production, distribution Or enabling
technology
Takeoff
New technologies new markets to be explored
e.g. current molecular machines???
Ferment
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Dynamics driving industry lifecycle Lifecycle
of technologies markets
New Market Established Market
New Technology High-tech Entrepreneurs High-tech entrepreneurs
Old Technology Some entrepreneurs ????
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Technology dynamics
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Fosters S Curve for a particular technology
Limits to performance
Parameter Value
Effort
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S curve examples

• Artificial Hearts
• Sailing ships
• Joint replacement
• Protein separation
• Switches
• .your favorite example

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Technological innovation often the key to
entrepreneurial opportunities presented by S-curve
Maturity
Performance
Takeoff
Effort
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Technology-oriented opportunities

• Bring improved performance through entirely new
  technology
• e.g. molecular switches
• Bring alternative performance through new
  technology
• e.g. nano-robotics
• Reframing the problem is an alternative way of
  stretching existing performance for entrepreneurs
  
• e.g. human insulin
• e.g. flexible chip manufacturing
• Entrepreneurs challenge is to stay on the
  S-curve and ensure that their curve becomes the
  dominant design