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WEEK 3 Flashcards

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1
Q

Dominant design

A

single product or process architecture that dominates a product category.

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2
Q

Whats the percentage of a dominant design?

A

Usually 50% or more of the market

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3
Q

explain: A dominant design is a ‘’de facto standard’’

A

it may not be officially enforced or acknowledged, it has become a standard for the industry

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4
Q

Reasons to choose a dominant design

A

1.Increasing returns to adoption: the more the technology is adopted, the more valuable it becomes

2.The more the technology is used, the greater the understanding and knowledge.

3.Complementary assets are often developed that are specialized to operate with the technology.

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5
Q

learning curve

A

demonstrates how efficiency improves as individuals or firms repeatedly perform a task

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6
Q

Several factors influence the learning rate

A

the nature of the task, firm strategy, and prior experience

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7
Q

Absorptive capacity

A

the ability of an organization to recognize, assimilate and utilize new knowledge

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8
Q

Network externalities

A

when the value of a good to a user increases with the number of other users of the same or similar good

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9
Q

How does prior experience impact absorptive capacity?

A

A firm’s prior related experience shapes its ability to recognize the value of new information and use it effectively

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10
Q

Why do early technology offerings often have an advantage?

A

Due to learning effects, early offerings have more time to develop and improve compared to later entrants.

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11
Q

Installed base

A

refers to the number of users of a product, such as the total video game consoles installed in homes.

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12
Q

Complementary goods

A

are products or services that enhance another good’s value, like video games and online services increasing the worth of a console

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13
Q

self-reinforcing cycle

A

a larger installed base leads to more complementary goods, and more complementary goods attract more users, further increasing the installed base

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14
Q

How does government regulation impact compatibility in some industries?

A

It ensures compatibility among technologies by legally enforcing a dominant design, making it the industry standard.

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15
Q

What industries commonly have government-enforced compatibility?

A

Utilities, telecommunications, and television.

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16
Q

What is an example of a legally enforced dominant design?

A

The standardization of USB

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17
Q

What happens when a firm locks in its technology as the dominant design?

A

It can lead to a natural monopoly, where one company dominates the market.

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18
Q

What is path dependency?

A

Future outcomes depend on past decisions, making it difficult to reverse or replicate results.

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19
Q

How does a dominant design reinforce path dependency?

A

A dominant design makes it harder for new or different technologies to replace it in the future.

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20
Q

What are the consequences of path dependency for winners and losers?

A

Winners: Gain higher revenues and market influence.

Losers: Must adopt the dominant design with little room for change.

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21
Q

What are increasing returns?

A

when the rate of return (not just gross returns) from a product or process increases with the size of its installed base.

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22
Q

What is a Buyer Utility Map?

A

A tool that helps managers assess how a new technology delivers value across six utility levers and six stages of the buyer’s experience.

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23
Q

How is a technology’s value multi-dimensional?

A

it can improve customer experience at different stages, such as purchase, use, maintenance, or disposal

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24
Q

What are the six utility levers in a Buyer Utility Map?

A

Customer productivity
Simplicity
Convenience
Risk
Fun & image
Environmental friendliness

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25
Why is old technology hard to replace? (point 1)
1. Many people already use it (INSTALLED BASE). 2. There are many apps, accessories, and services for it (COMPLEMENTARY GOODS).
26
What happens when a new technology competes on features alone? (point 2)
It might be better and more advanced, but… If no one is using it, people won’t switch. If there aren’t many apps or accessories, it’s less useful.
27
How can a new technology succeed more easily? (point 3)
If it works with the old system (supports old apps, accessories, or makes switching easy), then… It keeps the benefits of the old tech (installed base & complementary goods). It adds its new improvements on top of that.
28
What happens when a product has no installed base at first?
At first, few people use it, so its value is low. As more people adopt it, its value grows rapidly due to network effects. Growth slows down when the market becomes saturated.
29
How does adding technological utility change the growth pattern?
The product starts with a higher value because of its built-in usefulness. Even before many users adopt it, it still has value. Network effects still help increase value as more people use it.
30
What do users compare when choosing between two technologies?
Network effects (more users = more value). Stand-alone technological utility (how useful it is on its own).
31
What is the "indifference region"?
The point where both technologies provide about the same value, so users don’t strongly prefer one over the other.
32
first movers
The first to sell a new product or service
33
early followers
Enter early but not first
34
late entrants
Enter after the product reaches the mass market
35
what are the first mover advantages
brand loyalty, monopoly rents (market power), pre-emption of scarce assets (they grap first the best location, materials, partnership, patents), exploitation of buyer and switching costs.
36
Reaping Increasing Returns, what is it?
More users = More value Early winner attracts more people Hard for others to compete later
37
disadvantages as first mover
1. high failure rate 2. high cost
38
Incumbent inertia
Large, established companies struggle to adapt because of rigid structures, existing commitments, and slow decision-making.
39
Key challenges when introducing a new technology
1. High Research & Development (R&D) Costs 2. Lack of Supply & Distribution Networks 3. Immature Enabling Technologies & Complements 4. Uncertain Customer Demand
40
Fast-Cycle Development
Improve the product quickly to compete with early movers
41
Parallel Development Process
Work on multiple stages of the product at the same time to launch faster.
42
Companies must decide when to enter a market, balancing risk and opportunity. Here are the key factors
1.How certain are customer preferences: can you guess whats important and not 2.How much improvement does the innovation provide over previous solutions: If the new product is a big upgrade, customers will adopt it faster. 3. Does the innovation require enabling technologies, and are these technologies sufficiently mature: Some products need other technologies to work well 4. Do complementary goods influence the value of the innovation and are they sufficiently available: some products need accessories or services to be useful 5. How high is the threat of competitive entry: If many competitors are about to enter, launching sooner may help secure market share. 6. Is the industry likely to experience increasing returns to adoption: If a competitor gains many users first, they might become impossible to beat (social media platforms). 7.Can a firm withstand early losses: First movers often lose money at the beginning. 8.Does the firm have resources to accelerate market acceptance: Some companies can speed up adoption by investing in advertising, promotions, and partnerships. 9.Is the firm’s reputation likely to reduce the uncertainty of customers, suppliers and distributors: A trusted brand can help customers feel more confident in adopting new technology.
43
What is the main goal of the paper of the first article?
To introduce the MULTI-MODE FRAMEWORK for analyzing how technologies interact beyond just COMPETITION.
44
What’s the first hypothesis of the paper? (ARTICLE 1)
Technological interactions should be viewed as more than just competition.
45
What’s the second hypothesis of the paper? (ARTICLE 2)
A multi-mode framework gives a richer way to study how technologies interact.
46
Technological innovation
creation of new products, processes, or techniques, regardless of how changes are viewed.
47
Competition
interaction between technologies
48
Where has the multi-mode framework been applied and where else can it be used?
It's used in BIOLOGICAL and ORGANIZATIONAL ecology and can also help analyze technological interactions.
49
How are technological interactions classified in the multi-mode framework?
By how one technology affects the growth rate of another.
50
Do technological interactions stay in the same mode over time?
No, they shift between different modes over time.
51
What are the three interaction models in the framework?
Pure Competition Symbiosis (mutual benefit) Predator-Prey Dynamics
52
What does the study recommend for managers?
Create specific strategies for each interaction model, not just use generic competition strategies.
53
What are the two directions in the unidirectional interaction modes?
Emerging tech impacts mature tech (positive or negative) Mature tech impacts emerging tech (positive or negative)
54
What three models describe how technologies interact?
Pure Competition (- / -): Both hurt each other → Substitutes Symbiosis (+ / +): Both help each other → Mutual Advantage Predator-Prey (+ / - or - / +): One wins, one loses → Disruptive Dynamics
55
What happens in Pure Competition mode?
Both technologies negatively impact each other’s growth → They compete as substitutes.
56
What happens in Symbiosis mode?
Both technologies help each other grow → They complement or collaborate.
57
What happens in Predator-Prey mode?
One technology gains while the other loses → Like disruptive innovation.
58
What is the Sailing Ship Effect?
When a mature technology improves itself in response to new technology, instead of dying out immediately.
59
How can emerging technology positively impact mature technology?
It can stimulate growth of mature tech at first before competing.
60
What happens when emerging technology negatively affects mature technology?
It competes for market share, reducing the mature tech’s growth.
61
How can mature technology help emerging technology grow?
By providing: - Established markets & customer base - Infrastructure & distribution - Regulatory approvals
62
How can mature technology harm emerging technology?
It can block, resist, or outcompete new tech, sometimes causing new tech to fail (like QWERTY keyboards winning over alternatives).
63
"A" (Predator Technology)
A new or dominant technology that could harm or replace another tech (B).
64
"B" (Prey Technology)
A weaker or older technology that is at risk of being replaced.
65
Why might a "predator" tech support a "prey" tech temporarily?
Because B’s growth helps A, so A might delay eliminating B to benefit first.
66
What happens if A sees a predator-prey interaction as pure competition?
A might kill B too early and miss out on benefits B’s growth could have provided.
67
Why can’t companies stick to one strategy in tech interactions?
Because interactions change over time, so strategies must be flexible and adaptable.
68
What’s the key lesson about technology interactions?
They’re DYNAMIC, not just about competition, strategies should evolve with shifting interactions.
69
What does this study examine? (ARTICLE 2)
The link between organizational aging and innovation in high-tech industries.
70
What debate does the study aim to resolve?
Whether aging helps or hurts an organization’s ability to function and innovate.
71
What is Hypothesis 1 in the study? (ARTICLE 2)
Older organizations will have a higher rate of innovation (positive relationship).
72
What does "local search" mean in this context?
It's when organizations search for new ideas or practices close to what they already do (near their current routines).
73
How is local search related to change?
Change happens through small, nearby improvements rather than huge leaps.
74
What’s one reason local search dominates innovation?
Decision-makers rely on past experiences (bounded rationality).
75
How do routines impact innovation?
Established routines become hard to change (institutionalized).
76
How do internal politics affect innovation?
Political groups inside the firm push to keep things the same.
77
Why do employees resist innovation?
They have careers invested in current skills, so change is risky for them.
78
How do customers limit innovation?
Current customer demands make it hard for firms to explore new markets.
79
Key Reasons Why Local Search Dominates Innovation
Past experience bias → Decision-makers rely on what worked before. Rigid routines → Change becomes hard. Internal politics → Push to protect the status quo. Employee self-interest → Career stakes resist change. Customer demands → Limit exploring new markets.
80
What happens as firms age?
They become rigid and less flexible because of strong routines.
81
Does aging reduce a firm’s internal efficiency?
No, obsolescence happens because the outside world changes, not because the firm gets worse inside.
82
What is a competency trap?
When past success locks a firm into old routines that stop working as tech changes.
83
What does H2 say about older firms and innovation?
Older firms rely more on past innovations instead of creating entirely new ones.
84
What does H3 predict about older firms’ innovation focus?
They focus on refining old technologies rather than exploring new areas.
85
What does H4 say about the impact of older firms’ innovations?
Their innovations are less influential in shaping future technologies compared to younger firms.
86
Why are older firms less likely to adopt new tech?
They are less flexible and struggle to integrate advances from other firms.
87
Who often leads in emerging technologies?
Startups and younger firms, not older ones
88
Where do older firms tend to focus their innovation efforts?
On incremental improvements to existing technologies.
89
What theories is the study based on?
Organizational ecology, evolutionary theory, and learning theory.
90
What is the sample of the study?
150 firms from semiconductors and biotechnology industries.
91
What two patent types did the study use to measure innovation?
Self-citing patents = Incremental innovation Non-self-citing patents = Radical innovation
92
Why did the study control for CEO changes?
To isolate the effect of organizational aging on innovation.
93
What’s a key challenge older firms face in innovation?
Struggle to keep up with external technological advances.
94
What is the common pattern of industry innovation?
Radical change → Stability & incremental innovation
95
Which type of company usually produces radical innovations?
Small startups, not older firms.
96
How do older firms perform during times of rapid change?
They fail to integrate breakthroughs due to rigid structures.
97
What are the two effects of aging on innovation?
- Efficiency increases (experience, routine) - Adaptability declines (misalignment with new tech)
98
Do older firms stop innovating?
No, but they stay in familiar areas and avoid new domains.
99
What did patent analysis reveal about older firms?
✅ older firms produce more more patents ❌ Mostly self-citing, not industry-changing ❌ Less cited by future patents → Reduced influence
100
How can older firms stay innovative?
✅ Avoid competency traps ✅ Look outside for new tech ✅ Build external partnerships ✅ Attract talent ✅ Encourage employee turnover for fresh ideas
101
What is this study’s main contribution?
Adds empirical proof to theories of aging and innovation in corporate strategy.
102

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