strategy in technology intensive companies
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Complex and Dynamic Market Chains
Rapid Market Changes
Shrinking Product Life Cycles
Unique Cost Structure
Network Effects
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There is less vertical integration, resulting in long market chains with many organizations along the chain
At the downstream end there are sometimes many niche market opportunities
Market chains are in many cases unstable, with many companies moving up and down the chain
Successful strategies require developing strong relationships with various players along the value chain
Relationships can be focused on sales, marketing, operations or technology
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New emerging technologies and disruptive technologies create changes , resulting in discontinuities
Disruptive, enabling technologies can invalidate products or entire business models
Difficulty predicting the evolution of customer feature demands and use models
Strategic decisions cannot rely on conventional market research and assumptions
Strategic plans must be dynamic and allow for rapid changes and modifications or be able to withstand change
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Rapidly shrinking product development cycles allowing fast introduction of new features and products creating cannibalization
Too many features are developed – resulting in high development costs and complicated products
Shrinking product/technology Adoption cycles resulting in shorter product life span
Developing a platform strategy that will allow introducing
new products on the platform
Achieving rapid high sales volume by expanding to many global markets and offering low prices
Innovation
Adopters Visionaries Pragmatists Conservatives Laggards
2% 5% 40% 40% 13%
L I f e C y c l e
The Chasm
Follow instincts
Revolutionary
Rule Breakers
Avoid Crowd
Risk takers
See future
possibilities
Analyzers
Prefer steady
change
Rule followers
Crowd followers
Avoid risk
See today’s
problems
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High upfront fixed costs of research and development and low marginal production costs
Results in high priced products upon introduction with rapidly dropping prices
Companies must achieve high volume sales quickly, resulting in strong price competition
Strategies must identify means for reducing upfront fixed costs, such as outsourcing
Marketing must focus on achieving high volumes quickly
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The value of a product or service to the user depends on the number of other users or if more complements become available
Largely rely on standardized or competing platforms or components developed by other vendors
Encourages companies to invest heavily to become industry standards, or at least to comply with standards
It is common for companies to give away a basic version of their product to encourage adoption and become the standard
The most successful companies are those who build multi-sided platforms (MSPs), which spawn large ecosystems of users and suppliers of complementary products and services
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1. Lack of Market Segment Focus
2. Excessive Pace of Product Improvement
3. Incomplete solutions
4. Too many features
5. Channel mismanagement
6. Failure to Establish the Right Competitive Barriers
7. Misinterpretation of the Technology Adoption Lifecycle Model
8. Irrelevant Market Research
9. New development vs. product customization