The Dynamic of Technological Innovation

Develop around the dominant design process innovation

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Unformatted text preview: manufacturing Technical systems: McDonald’s – purely private innovation Electric Grid – will require both private innovations and changes in public policy Value Chains: getting coffee from coffee bean to Starbucks Classical Product Cycle Theory: Define product: New technology builds on predecessor Several technologies often compete Develop market Product becomes standardized Customers become accustomed to the function and configuration of the product A value network of suppliers, distributors, repairers, etc. develop around the dominant design Process innovation dominates product innovation Improvements in the components keep the product the same. Product becomes a commodity and is sold at low margins for its quality and price, not its uniqueness (Hard for new businesses to enter) this is why they offshore manufacturing One design becomes dominant Number of companies is reduced Large- scale production needed Distribution and marketing Management Production technology moves offshore This comes from previous points First mover advantage and disadvantages: Advantages: Defined dominant design Capture standard Earn Brand loyalty Disadvantages: Identify...
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