Technology Life Cycles and Their Drivers

Technology Life
Cycles and Their

Drivers
Dr. R.K. Mitra

ABV-IIITM Gwalior
2012 1
Strategic Management of
Technology
Technology Life Cycles and Their
Drivers
• Institutionalized Dependence on “Mainstream”
Institutionalized dependence or foundness for
‘mainstream’ has always opened the door for
attacks on new technology. Paradigm shifts are
often resisted.
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Technology
Technology Life Cycles and Their Drivers

Ex: The following letter written by Martin van
Buren to the President Andrew Jackson in 1829
on ‘railroads’.
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Technology
Van Buren’s comparison of canals to railroads
also highlights the fact that old paradigms are
often both well understood and finely honed,
while new ones are neither and can look almost
absurd by comparison.
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Technology

The book Seabiscuit describes the state of the
automobile industry circa 1903:
The horseless carriage was just arriving in San Francisco,
and its debut was turning into one of those unmitigated
disasters that brings misery to everyone but historians.
Consumers were staying away from the “devilish
contraptions”
Contd… 6
Technology
in droves. The men who had invested in them were the
subject of cautionary tales, derision, and a fair measure
of public loathing. In San Francisco in 1903, the horse
and buggy was not going the way of the horse and
buggy. For good reason. The automobile, so sleekly
efficient on paper, was, in practice, a civic menace,
belching out exhaust, kicking up dust, becoming
hopelessly mired in the most innocuous-looking
puddles, trying up horse traffic, and raising an
Contd… 7
Technology
earsplitting cacophony that sent buggy horses fleeing.
Incensed local lawmakers responded with monuments
to legislative creativity…. In some towns, police were
authorized to disable passing cars with hopes, chains,
wires, and even bullets….Doctors warned women away
from automobiles, fearing slow suffocation in noxious
fumes.
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Technology
S Curve of Technology Adoption
The overall set of buyer dynamics and typical buyer adoption
behaviour cycle can be described by an S curve.
This simple model illustrates that technology diffuses over
time in a nonlinear fashion.
The rate of adoption of an innovation typically starts off
slowly, increases as the innovation takes hold, and then slows
again as the innovation reaches saturation (See Exhibit).
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Technology
S Curve of Customer Adoption and Diffusion
Adoption
Time
10
Technology
S Curve of Technology Adoption
The first reference to the behavioral S curve is
generally attributed to Gabrielle Tarde-a
sociologist, not an economist-based on his
observations of human and group behavior 100
years ago.
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Technology
Consumer Segmentation and Adoption
The behavior and characteristics of the buyers of
an innovation are markedly different at different
points in time.
The overall S curve can be segmented into five
distinct populations – an idea developed by Everett
Rogers and made popular by Geoffrey Moore.
Contd… 12
Technology
Innovators and early adopters represent the
bottom part of the S. The early majority is
responsible for the initial takeoff of the
innovation.
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Technology
The late majority and laggards are at the top
tail of the S; they join in after the point of
inflection. The S curve can be reconstructed as
a normal distribution curve in Exhibit. Although
the time values of the mean and standard
deviation will differ for various innovations, the
curve is generally thought to be symmetrical
Contd… 14
Technology
and characterized by a normal distribution,
with roughly 15 percent innovators and early
adopters, 70 percent “mainstream market”
majority, and the other 15 percent laggards.
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Technology
The Normal Distribution of Consumer
Types
Innovators Early Early Late Laggards

Adopters Majority Majority
Time
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Technology
Technology suppliers must appeal to the
innovator and early adopter customer
segments in order to gain a foothold for a new
product. Innovators are typically emotional,
risk-taking technophiles, who often embrace
change for change ’sake.
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Technology
Early adopters are more closely integrated
into the market and often have influential
opinions. Like innovators, they embrace
change and seek to establish a new older.
Unfortunately, the skills and features that win
over these segments don’t necessarily translate
well to the more mainstream market. The
early majority, however, has a significantly
different profile from the first two groups.
These mainstream users are heavily integrated
into the current market system. They typically
are more deliberate Contd… 18
Technology

and make more practical and less emotional
decisions regarding purchases. This behavior
has earned them the label “pragmatists,” in
contrast to the earlier, more intuitive and
adventurous buyers, willing to take a chance
on something new.
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Technology
Moore describes a “chasm” between the early
and mainstream markets, created by the need
to address these markets in different ways in
order to speed a product or innovation toward
broader market acceptance. This change in
emphasis poses a problem for innovating firms,
since incumbents are often much better
equipped to meet the desire for complete
products and low-risk purchases.
Contd… 20
Technology
The innovating firm’s lead in an early adopter
market can vanish as the innovation goes
mainstream. While speed and newness can
capture the early market, this market segment
is also the most fickle and will often abandon
yesterday’s innovation for the “next new thing.”
An innovator must be prepared to make the
leap and compete in the mainstream in order to
have long-term viability. 21
Technology
Geoffrey Moore has used different
nomenclature in describing segments over the
technology adoption life cycle.
The Technology Adoption Life Cycle 22

Technology
Geoffrey Moore’s Market Development Goal
Technology-Enabled Market Development 23

Technology
The first phase, or early market, is a time when
early adopters (technology enthusiasts and
visionaries) take up the innovation while the
pragmatic majority holds back.
The market development goal at this state
is to gain a few flagship customers who
help publicize the technology and
celebrate its potential benefits.
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Technology
The early market is followed by a chasm, a period
of no adoption, when the early adopters have
already made their choices, but the pragmatist
majority is still holding back.
The barrier to further progress is that pragmatists
are looking to other pragmatists to be references,
but no one wants to go first. The market
development goal at this stage is to target
an initial beach-head segment of pragmatists
who can lead the second wave of adoption.
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Technology
In the development of most technology-enabled
markets, specific niches of pragmatic customers
adopt the new technology before the general
pragmatic population. We call this period the
bowling alley because the market development
goal is to use the first group of adopters as
references to help win over the next group, and
the next, and so on. Typically the “head bowling pin”
is a niche of pragmatists who have a major business
problem that cannot be solved with current
technology but that does respond to a solution built
around the new innovation.
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Technology

These are the department managers in charge
of a broken, mission-critical process…….Once
this first group starts to move it takes much less
of a motive to overcome the inertia of the
next group.
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Technology
As pragmatist adoption builds in niches, one of
two futures emerges. In one, adoption
continues to remain localized to niche markets,
creating a pattern we call “bowling alley
forever.” In this pattern, each niche’s solution is
relatively complex and differentiated from every
other niche’s. As a result, no mass market
emerges, and the market development goal
is simply to expand existing niches and
create new ones as the opportunity arises.
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Technology
In the other pattern, a “killer app” emerges –a single
application of the innovative technology that provides
a compelling benefit that can be standardized across
multiple niches. The killer app transforms niche
adoption into mass adoption, creating an enormous
uptick in demand for the new technology across a
wide range of sectors. We call this period the
tornado because the onrush of mass demand is
so swift it creates a vortex that sucks the
supply out of the market and puts the category
into hypergrowth for a number of years.
Contd…29
Technology

The market development goal here is to win
as much market share as possible during a
period when the entire market is choosing
its supplier for the new class of
technology-enabled offering.
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Technology
Once the supply side of the market finally
catches up with the backlog of demand, the
tornado phase subsides, and the marker
reaches a state we call Main Street. The new
technology has been broadly deployed and, with
the support of conservatives, now settles
down to a (hopefully) long engagement as the
incumbent technology. The market development
goal here is to continuously improve the
value of the offerings, decreasing its base
costs, and Contd… 31
Technology

recouping margins by increasing the number of
value-adding extensions that can supplement it.
The ultimate extension in many cases is to
convert the offering from a product sale to a
services subscription, allowing the customer to
gain the benefit of the product without having
to take on the responsibility for maintaining it.
32
THANK YOU
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Technology Life

Cycles and Their

Dr. R.K. Mitra