Comparing the reverse product cycle model with the Abernathy Utterback model

Comparing the reverse product cycle model with the

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Comparing the reverse product cycle model with the Abernathy-Utterback model, you can see that the timing of radical and incremental change is different in manufacturing and service businesses: manufacturing industries start with radical innovation and move to incremental innovation, while service industries start with incremental innovation and move to radical innovation. As a result, the timing of advantage for new and established firms is different in manufacturing and services. In manufacturing, new firms are most advantaged when new technology is first developed and a dominant design has not yet emerged. By contrast, in services, established firms initially benefit the most from the new technology because it reduces the cost of delivering existing services. It is only later on, when the technology permits the creation of new services, and barriers to entry have been reduced by the decline in costs, that advantage shifts to new companies. download instant at 20
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download instant at Competence-Enhancing and Competence-Destroying Innovation In the years after Abernathy and Utterback published their model, researchers noticed an important puzzle that the model could not explain. In some cases, incumbent firms had little trouble transitioning to new radical technologies. This puzzle led Professor Michael Tushman of Harvard Business School and his students to modify the Abernathy and Utterback model to explain why incumbent firms were sometimes able to transition to radical new technologies and other times they were not. Professor Tushman and his colleagues explained that radical new technology does not always undermine the capabilities of incumbent firms because sometimes it can be competence-enhancing. A radical technology is competence-enhancing if it makes use of existing knowledge, skills, abilities structure, design, production processes and plant and equipment, whereas, it is competence-destroying if it undermines the usefulness of these things. As Professor Tushman explained, established firms are able to transition to a radical technology when that technology is competence-enhancing but fail to do so when it is competence-destroying. When radical technological change is competence- enhancing, incumbent firms invest in their development because they have an incentive to do so. Moreover, they have the capabilities to develop that technology successfully. However, incumbent firms cannot transition to competence-destroying radical technological change, leaving that type of technology to firms outside the industry, or, in many cases, to start-up companies. Even when incumbent firms invent competence- destroying technologies, they rarely introduce them. Competence-destroying radical technological change tends to be financially costly for incumbent firms, giving them little incentive to invest in their development. Moreover, their existing capabilities do not help download instant at 21
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download instant at them make use of those technologies, and, in many cases, actually hinder their ability to
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