Global Forces & Trends
Week 5 Day 1
TURN IN HOMEWORK NOW
Review of Reading
Disruptive Technologies
• One of the most consistent patterns in business is the failure of leading
companies to stay at the top of their industries when technologies or
markets change.
Review of Reading
Disruptive Technologies
• The most common error that leading companies make is that they base
their entire future strategy on the needs and anticipated demands of their current customers.
• They stay too close to their current customers.
Review of Reading
Disruptive Technologies
• Companies like IBM, Kodak, Fuji, Smith Corona & others, listened to their customers and spent their time and resources developing enhanced capabilities of existing products while new technologies made their products obsolete.
Review of Reading
Disruptive Technologies
• Using rational, analytical investment processes that most well-managed
companies have developed, it is nearly impossible to build a case for diverting
resources from known customer needs in established markets to markets and
customers that seem insignificant or do not yet exist.
Review of Reading
Disruptive Technologies
• The technological changes that damage
established companies are usually not radically new or difficult from a technological point of
view. They do however have two important characteristics:
1. They typically present a different package of performance attributes.(Often not valued by existing customers.)
2. The performance attributes that existing
customers value improve at such a rapid rate that the new technology can later invade those established markets.
Review of Reading
Disruptive Technologies
• Because these emerging technologies may not be valued by existing
customers; senior leaders must protect them from processes &
incentives associated with serving existing customers.
– Often through the creation of organizations completely independent from the mainstream business.
Review of Reading
Disruptive Technologies
• Performance trajectories - the rate at which performance of a product has improved over time.
– Excavators – cubic yards of earth moved per minute.
– Disk drives – storage capacity for the given size of the device.
– Photocopiers – pages per minute.
Review of Reading
Disruptive Technologies
• Sometimes companies make the
mistake of evaluating the success of a new product on the same scale of their existing business or existing successful products.
Review of Reading
Disruptive Technologies
• Generally, disruptive technologies look financially unattractive to established companies.
• Managing the development of new technologies is tightly linked to a company’s investment process.
Review of Reading
Disruptive Technologies
• Once a disruptive technology has
become mainstream, companies often make the mistake of merging its
operations with the larger organization to create efficiencies and share fixed expenses.
Review of Reading
Disruptive Technologies
• No matter the industry, a corporation
consists of business units with finite life spans: the technological and market bases of any business will eventually disappear.
• Disruptive technologies are part of that cycle.
• Companies that understand that cycle can create new businesses to replace the ones that must inevitably die.
Review of Reading
Disruptive Technologies
• Companies must give managers of
disruptive innovation free rein to realize the technology’s full potential – even if it means ultimately killing the mainstream business.
Review of Reading
Disruptive Technologies
• When managers of established
companies seek to develop and launch a disruptive technology that is rejected by important customers … they fail.
• Not because they make wrong
decisions, but because they make the right decisions for circumstances that are about to become history.
Team Project Exercise Disruptive Technologies
• Complete the Forms as they relate to your project company.
• Two copies: One to keep and one to turn in.
• Be prepared to report your findings.
Attendance
Trend Analysis: Technology is creating a knowledge-dependent global society.
• More & more businesses are based on the production & exchange of
information rather than manufactured goods or other tangible products.
Trend Analysis: Technology is creating a knowledge-dependent global society.
• Manufacturers and sellers of physical
products are able to capture and analyze much more information about buyer’s
needs & preferences.
– Makes the selling process more efficient &
effective.
Trend Analysis: Technology is creating a knowledge-dependent global society.
• Internet allows small businesses
worldwide to compete with industry leaders.
• The digital divide seems to be
disappearing. Low income and minority populations are rapidly gaining access to technology/internet. (Not just for rich white people any more.)
Implication Analysis:
Technology is creating a knowledge- dependent global society.
• Raising the level of education required for a productive role in today’s
workforce.
• Knowledge workers are generally better paid than less-skilled workers.
• This trend is enlarging the income gap between well-educated workers and
those with a high-school degree or less.
The gap will continue to grow.
Implication Analysis:
Technology is creating a knowledge- dependent global society.
• In ten years, most digital devices will combine multimedia communication functions and real-time voice
translation:
– Conversations originating in one of seven or
eight common languages can be heard in any of the others in real-time.
– These technologies will enable even more people to become knowledge workers (or knowledge enhanced workers).
Implication Analysis:
Technology is creating a knowledge- dependent global society.
• Telecommuting will make many
companies more efficient, cutting their expenses in the process.
• New technologies create new industries, jobs, and career paths.
– Can bring new income to developing countries.
Implication Analysis:
Technology is creating a knowledge- dependent global society.
• For some developing countries,
computer skills are making it faster and easier to create wealth than a
manufacturing economy ever could.
– India for example is rapidly growing a middle class, largely on the strength of their computer and telecom industries.
– Other countries will follow.
– This may drive the need for education in developed countries as cheap knowledge workers are available elsewhere.
Implication Analysis:
Technology is creating a knowledge- dependent global society.
QUESTIONS?
Assignment
• Read: Inevitable Strategies
