Lecture 6 - Industry Evolution and Strategic Change Flashcards
What are the 4 stages of an industry lifecycle?
Introduction
Growth
Maturity
Decline
What is product innovation?
Experimenting with the design of the product
What is process innovation?
Experimenting with the manufacturing and distribution to get the product to market
Explain the stages of an industry lifecycle.
Introduction - product is new and exciting
Growth - everyone joins in
Maturity - everyone has it/one
Decline - out of fashion
What is important to remember about the industry lifecycle stages’ progression?
It can be nonlinear. Whilst they need to go sequentially from one stage to the one next to it, this can be forward or backwards, e.g. from growth to maturity to growth to maturity to decline.
Why can industry lifecycles be nonlinear?
Due to PESTEL factors, e.g. new technology makes a previously less interesting product more interesting again or reinvigorates its value proposition.
Typically, what does a product vs process innovation timeline look like? Why?
Product innovation comes first, then process delayed after that.
This is because process innovation can only happen after the product has been formed. It also continues longer after product innovation as manufacturing and distribution optimisation continues to be important as long as the product is important.
What happens in terms of design by the growth phase? Why?
A dominant design is settled on generally, e.g. a smartphone with a touchscreen and app store.
This is because it tends to be in the introductory phase that the various designs are explored, and those that have struck on a better design survive or are more successful whereas others with worse designs either copy them or are wiped out.
What tends to happen to manufacturing as the market moves from introduction to maturity?
Significant scaling up in size.
Moving to emerging market countries becomes more favourable as scale economies associated with mass transport become available and producing ‘at home’ becomes too expensive.
What are the 3 types of technological innovation on the supply side?
Competency enhancing vs competency destroying technological change
Architectural vs component innovation
Sustaining vs disruptive technologies
Explain competency enhancing vs competency destroying technological change.
For example, making a good electric car is not the same as making a good diesel car - different skills are required. Despite this, both are products in the same industry.
Explain architectural vs component innovation.
Structural changes that completely change how a company needs to work, e.g. again EVs shook up how the whole company needs to be structured.
Component changes are just to a specific more minor component, e.g. a revolutionary way to make the engine itself more efficient.
Explain sustaining vs disruptive technologies.
Similar to architectural vs component innovation.
Sustaining is more small scale patchwork changes to an existing product.
Disruptive is changing how it’s done fundamentally with something new, e.g. AI is a disruptive technology.
How can a cheaper and simpler product successfully enter the market?
By either:
* Creating a new market, or
* Appealing to a currently overserved and overpaying existing group
E.g. Google Drive/ecosystem appealing to people paying lots for Microsoft Office
What is demand side disruption? What are demand side disruptive products often like?
When a new product enters the market that shakes up what people are using by thinking specifically about what they are looking for.
Often cheaper and simpler, or introducing a new dimension of performance usually around a novel technology.
