Creating Value through Innovation:-
The chapter above showed how hard it is to go in another direction than the current one.
Disruptive Innovation and Blue Ocean Strategy will be reviewed in this subchapter, the purpose of doing a thorough review of these two theories are because they are the cornerstones in the
Framework. Disruptive Innovation illustrates how value can be created in new markets and in
Current markets at the same time, and it points to factors that are of high importance when trying to reconfigure old business models to disruptive ones. Blue Ocean Strategy does the same, but it provides more explicit tools to do this.
(2.1.2) Dominant Design and Industry Life Cycles Phases (ILCP):-
Another relevant concept is the one of dominant …show more content…
They (1978) argue that an industry life cycle consists of three stages; the first where one can detect a fluid pattern, then a transitional pattern and the last is the specific pattern. In the fluid pattern many firms compete with each other with different radical designs and the market has not yet decided on what niche will be the winning one, product innovation is high in the fluid phase (Abernathy & Utterback, 1978). In the transitional phase a dominant design is emerging, product innovation is becoming more incremental, and process innovation is increasing, connected to the text-search example above, it is the moment where Yahoo! and Google develop the seemingly best business models (figure 2.1). Companies that bet on the "wrong" features are being forced out by the market. The last stage, the specific pattern, is characterized by cost reductions and process innovation, even more companies are forced out and a few big players that can use their economies of scale remain in the industry (Abernathy & Utterback, 1978). The focus on cost reduction continues until a discontinuity occurs in the industry. The discontinuity is something that radically changes the industry or the market: it is often something put together from several innovations used in different markets and industries (Utterback & Suarez, 1993). The discontinuity restarts the patterns of the life cycle and reshapes the industry. Thus, Abernathy & Utterback (1978) and Utterback & Suarez (1993) theories also strengthen the argument that the current companies in the industry has the least to gain to change from the status quo. If there is a paradigm shift somehow, they will have to compete with new companies, and develop new designs where the outcomes of success and profitability are highly uncertain. The status quo will, however, be shook up, sooner or later (March, 1991; Gupta, 2006). To prosper for
The chapter above showed how hard it is to go in another direction than the current one.
Disruptive Innovation and Blue Ocean Strategy will be reviewed in this subchapter, the purpose of doing a thorough review of these two theories are because they are the cornerstones in the
Framework. Disruptive Innovation illustrates how value can be created in new markets and in
Current markets at the same time, and it points to factors that are of high importance when trying to reconfigure old business models to disruptive ones. Blue Ocean Strategy does the same, but it provides more explicit tools to do this.
(2.1.2) Dominant Design and Industry Life Cycles Phases (ILCP):-
Another relevant concept is the one of dominant …show more content…
They (1978) argue that an industry life cycle consists of three stages; the first where one can detect a fluid pattern, then a transitional pattern and the last is the specific pattern. In the fluid pattern many firms compete with each other with different radical designs and the market has not yet decided on what niche will be the winning one, product innovation is high in the fluid phase (Abernathy & Utterback, 1978). In the transitional phase a dominant design is emerging, product innovation is becoming more incremental, and process innovation is increasing, connected to the text-search example above, it is the moment where Yahoo! and Google develop the seemingly best business models (figure 2.1). Companies that bet on the "wrong" features are being forced out by the market. The last stage, the specific pattern, is characterized by cost reductions and process innovation, even more companies are forced out and a few big players that can use their economies of scale remain in the industry (Abernathy & Utterback, 1978). The focus on cost reduction continues until a discontinuity occurs in the industry. The discontinuity is something that radically changes the industry or the market: it is often something put together from several innovations used in different markets and industries (Utterback & Suarez, 1993). The discontinuity restarts the patterns of the life cycle and reshapes the industry. Thus, Abernathy & Utterback (1978) and Utterback & Suarez (1993) theories also strengthen the argument that the current companies in the industry has the least to gain to change from the status quo. If there is a paradigm shift somehow, they will have to compete with new companies, and develop new designs where the outcomes of success and profitability are highly uncertain. The status quo will, however, be shook up, sooner or later (March, 1991; Gupta, 2006). To prosper for