Henderson –Clark Model

S-CurveThe S-Curve emerged as a mathematical model and was afterwards applied to a variety of fields including physics, biology and economics. It describes for example the development of the embryo, the diffusion of viruses, the utility gained by people as the number of consumption choices increases, and so on.In the innovation management field the S-Curve illustrates the introduction, growth and maturation of innovations as well as the technological cycles that most industries experience. In the early stages large amounts of money, effort and other resources are expended on the new technology but small performance improvements are observed. Then, as the knowledge about the technology accumulates, progress becomes more rapid.

Consider the supercomputer industry, where the

traditional architecture involved single

microprocessors. In the early stages of this technology

a huge amount of money was spent in research and

development, and it required several years to produce

the first commercial prototype. Once the technology

reached a certain level of development the know-how

and expertise behind supercomputers started to spread,

boosting dramatically the speed at which those

systems evolved. After some time, however,

microprocessors started to yield lower and lower

performance gains for a given time/effort span,

suggesting that the technology was close to its

physical limit (based on the ability to squeeze

transistors in the silicon wafer). In order to solve the

problem supercomputer producers adopted a new

architecture composed of many microprocessors

working in parallel.

The Teece Model• David Teece clarified that two factors –

imitability and complementary assets – will have a strong influence in determining who will ultimately profit from an innovation. Imitability refers to how easily competitors can copy or duplicate the technology or process underpining the innovation. There are many examples of barriers a company could use to protect itself from imitation, including intelectual property rights, complex internal routines or tacit knowledge.

• Consider the case of RC Cola, it was the first firm to introduce a diet cola on the market, but since it could not protect itself from imitation soon Pepsi and Coca-Cola jumped in, and using their complementary assets (distribution channels, brand name, etc.) they appropriated all the profits of the segment. Complementary assets, therefore, are equally important. agreements, among others.

The Abernathy – UtterbackModel

• The first phase they called Fluid phase, where technological and market uncertainties prevail, a great deal of changes take place conteporaneously and outcomes may vary significantly. It is almost a large experimentation game in the market place. The manufacturing process relies on high-skilled labour and general purpose equipment, there is almost no process innovation and the many, small firms competing will base their advantage on differentiated product features. Competition will not be as fierce as in later phases because companies have no clear idea on potential applications for the innovation, nor on what direction the market might grow. There is low bargaining power from suppliers since no specialised materials are used in the production. The major threats come from the old technology itself and from the entrance of new entrants if the innovation was radical and competence-destroying.

Variable Fluid Phase

InnovationProduct changes/radical

innovations

ProductMany different designs,

customization

CompetitorsMany small firms, no direct

competition

OrganizationEntrepreneurial, organic

structure

Threats Old technology, new entrants

Process Flexible and inefficient

Transitional Phase – as producers start to learn more

about the technology application and about customer’s

needs some standardization will emerge. Usually by this

time the acceptance of the innovation starts to increase

and the market starts growing, signals that we are

entering into what the authors called the transitional

phase. The convergence pattern in this phase will lead to

the appearance of a “dominant design”, which is a

product degisn whose main components and underlying

core characteristcs do not vary from one model to

another, it often comes out as a new product syntethised

from individual innovations introduced independtly in

previous product variations.

Variable Transitional Phase

Innovation Major process changes, architectural innovations

Product Less differentiation due to mass production

Competitor

s

Many, but declining after the emergence of a dominant

design

Organizatio

nMore formal structure with task groups

Threats Imitators and successful product breakthroughs

Process More rigid, changes occur in large steps

Specific Phase – after the appearance of the dominant

design competition will shift from differentiation to

product performance and costs. Companies now have

a clear picture of market segments and will therefore

concentrate on serving specific customers.

Manufacturing will use highly specialised equipment

and employing high-skilled labour become less

important since there is a commoditisation taking

place, which in turn means that bargaining power of

both suppliers and customers will increase.

Competition becomes more intense and the market

moves towards an oligopoly. As a consequence

incumbets are able to secure their position through

supplier relations, distributtion channels and other

complementary assets that will create entry barriers to

new entrants.

Variable Specific Phase

InnovationIncremental innovations,

improvements in quality

ProductHeavy standardization in

product designs

Competitors Few, classic oligopoly

OrganizationTraditional hierarchical

organization

ThreatsNew technologies and firms

bringing disrupting innovations

ProcessEfficient, capital intensive and

rigid