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Summary Strategy and Change Endterm (6013B0507Y)
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Summary Strategy and Change UvA endterm 2023. Extensive summary containing all literature, cases, knowledge clips and lectures.
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STRATEGY AND CHANGEWEEK 1
KNOWLEDGE CLIPS 1
Technology is the sum of techniques, skills, methods, and processes used in the production
of goods or services.
Strategic importance of technology: technology can create value for a company.
First-mover advantage --> companies can enjoy market share and higher markup. They can
enjoy intellectual property protection (patent or copyright)
Technologies change when an emerging high performing technology takes over an existing
technology.
Double S-curve model show the lifecycle of two technologies, in which a new technology
obsoletes the old one.
Era of ferment: uncertain and critical period in which the next generation of technology
occurs.
Science can be cumulative or revolutionary, same as technological knowledge.
> Each S-curve represents the cumulative nature of technology
Technology is developed in firms and based on their capabilities
> Technology gets its value and recognition by society
Technology is developed in firms and based on their capabilities
> Cyclical model, based on punctuated equilibrium model, represents this aspect of
technology.
> In each cycle of technology change the competency of incumbent firms might be
enhanced or destroyed.
Disruptive innovation criteria 1:
- Originates from low-end or new-market footholds
- Entrants may target over-looked low-end segments of the market with a product
considered inferior by the incumbent’s most-demanding customers
- Entrants may create markets where no market exists and turn non-consumers into
consumers
Disruptive innovation criteria 2:
- Does not catch on with mainstream customers until quality catches up to their
standards
AB line: tries to sustain their technology trajectory. They overshoot; the market doesn’t
require complex products.
CDE: starts from a tiny niche below demanded performance, but later starts serving the
mainstream of the market until it overshoots (E) and a new disruptive technology enters the
market.
,Disruptive innovation criteria 3:
- Involves some kind of business model innovation
- The research landscape we mapped out suggests that disruption is not about
technology alone, but rather the combination of technologies and business model
innovation
Innovator’s dilemma
- Large firms miss the boat because of prior success and their failure to recognise how
the market shifts.
- Failure to adapt to disruptive innovation is not the result of bad management, but a
result of good management.
- Large companies depend on their existing customers and investors for resources.
They get used to their network. They listen to loyal customers and investors, who are
usually not from a niche market targeted by disruptive technologies.
- They listen closely to these customers and investors and kill ideas for which there is
little need.
LECTURE 1
Evolutionary period = era of ferment
Revolutionary period = era of incremental change
Punctuation 1 = technological discontinuity
Punctuation 2 = emergence of dominant design
Overshooting: “too advanced” technology. Exceeds expectations of a good product.
Innovator’s dilemma = when firms have an established structure which does not fit the logic
of new technologies.
TUSHMAN AND ANDERSON 1986
RQ: what is the effect of competence-enhancing and competence-destroying discontinuities
on firms and the industry?
Technology are those tools, devices and knowledge that mediate between inputs and
outputs (process technology) and/or that create new products or services.
> Technology evolves in response to the interplay of history, individuals, and market
demand.
Technological progress happens in an evolutionary system but is punctuated by
discontinuous change.
Dominant design: product-class standard at the end of a period of technological
development. After the dominant design, technological development focuses on incremental
improvements instead of discontinuous renewal. The dominant design becomes a guidepost
for further product or process change.
Incremental technological progress, unlike the initial breakthrough, occurs through the
interaction of many organizations stimulated by the prospect of economic returns.
,Major technological innovations: technical advances so significant that no increase in
scale, efficiency, or design can make older technologies competitive with the new
technology.
Technological change is a bit-by-bit, cumulative process until it is punctuated by a major
advance.
Product discontinuities: emergence of new 1) product classes (automobiles), 2) product
substitution (diesel vs. steam locomotives), 3) fundamental product improvement (jets vs
turbojets)
Process discontinuities: represents a new way of making a given product. Product stays
essentially the same, but process changes. Includes 1) process substitution (man-made
diamonds vs natural diamonds), 2) process innovations that result in radical improvements in
industry-specific dimensions (lubbers’ machinery in glass vs blowing the glass yourself).
Competence-destroying technology: here the mastery of the new technology
fundamentally changes the current required competences within a product class. This leads
to major changes in the distribution of power and control within firms (organizational
structures) and industries (between firms).
Competence-enhancing discontinuities: are order-of-magnitude improvements in
price/performance that build on existing know-how within a product class. These changes do
substitute older technologies, but they do not substitute the skills required to master the
technologies.
Both competence-destroying and competence-enhancing discontinuities dramatically alter
previously attainable price/performance relationships within a product class. Existing firms
should exploit new possibilities opened up by a discontinuity if it is competence-enhancing.
Both technological discontinuities and dominant designs are only known in retrospect,
technological superiority is no guarantee to success.
Technology processes stages through relatively long periods of incremental, competence-
enhancing change elaborating a particular dominant design. These periods of increasing
consolidation and learning-by-doing may be punctuated by competence-destroying
technological discontinuities or by further competence-enhancing technological advantage.
Technological discontinuities trigger a period of technological ferment culminating in a
dominant design and, in turn, leading to the next period of incremental, competence-
enhancing, technological change.
H1: technological change within a product class will be characterized by long periods of
incremental change punctuated by discontinuities.
H1a: technological discontinuities are either competence-enhancing (building on existing
skills and know-how) or competence-destroying (require fundamentally new skills and
competences).
Competence-destroying discontinuities disrupt industry structure. New firms founded to
exploit the new technology will gain market share at the expense of organizations that, bound
by traditions, sunk costs, and internal political constraints, remain committed to outmoded
technology.
, H2: the locus of innovation will differ for competence-destroying and competence-enhancing
technological changes. Competence-destroying discontinuities will be initiated by new
entrants, while competence-enhancing discontinuities will be initiated by existing firms.
Uncertainty refers to the extent to which future states of the environment can be anticipate
or accurately predicted. Munificence refers to the extent to which an environment can
support growth. Environments with greater munificence impose fewer constraints on
organizations than those environments with resource constraints. Both competence-
enhancing and competence-destroying technological discontinuities generate uncertainty as
firms struggle to master an incompletely understood product or process. Technological
breakthroughs trigger a period of technological ferment, as new technologies are tried, and
new markets open. Technological discontinuities then will be associated with increases in
demand in environmental uncertainty.
H3: competitive uncertainty will be higher after a technological discontinuity than before the
discontinuity.
Technological discontinuities drive sharp decreases in price-performance or input-output
ratios. As both competence-enhancing and competence-destroying discontinuities reflect
major price-performance improvements, both will be associated with increased demand and
environmental munificence.
H4: environmental munificence will be higher after a technological discontinuity than before
the discontinuity.
H5: competence-enhancing discontinuities will be associated with decreased entry-to-exit
ratios and decreased interfirm sales variability. These patterns will be reversed for
competence-destroying discontinuities.
H6: successive competence-enhancing discontinuities will be associated with smaller
increases in uncertainty and munificence.
Technological discontinuities alter the competitive environment and reward those innovative
firms that are first to recognize and exploit technological opportunities. Those firms that are
among the first to adopt the new product or process proceed down the learning curve ahead
of those that follow.
H7: those organizations that initiate major technological innovations will have higher growth
rates than other firms in the product class.
TUSHMAN AND ANDERSON 1990
RQ: how does technological change move through time according to the cyclical model of
technological change?
Cyclical model: technological discontinuities trigger the era of ferment that is closed by a
dominant design and followed by an era of incremental change. This is then broken by the
next discontinuity.
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