Please enable JavaScript.
Coggle requires JavaScript to display documents.
Technology strategy - Coggle Diagram
Technology strategy
Technical standards & Format wars
Technical standards
Def:
Guidelines producers follow for making products or components (
Example:
QWERTY keyboard, USB Type-C,...)
Benefits
Ensures product
compatibility
with complements
Simplifies consumer choices
Lowers production costs and risks
for complementary goods
Provides cost and differentiation advantages for companies
Boosts industry
profitability
Establishment
Standards arise when their value is recognized
Set by industry
collaboration btw business
/
association medium
/gov
Public domain standards: Open for any company
Format wars
Definition:
Competition to control product differentiation and its value for customers
Network Effects:
Demand is driven by the availability of complementary products
Positive Feedback Loops:
Rising demand for a technology boosts demand for its supporting products
Alternative standards are
excluded
as consumers avoid switching costs
Strategies for Winning a Format War
General principle:
Use
network effects
to grow the user base and outpace competitors
Ensure a
Supply of Complements
Leverage Killer Application
: Applications of new compelling technology, drive mass adoption
Aggressive Pricing and Marketing
: Low prices on core products to build demand, higher prices on complements (razor and blade strategy)
Collaborate
with competitors
License
the format to expand its reach
Costs in High-Technology Industries
Diminishing Returns
Output increases, marginal costs rise ~ Inputs increases, output decreases after a certain point
High-Tech Firms
High fixed costs, low marginal costs
Profitability
Move to
higher fixed costs
and
lower marginal costs
→
Profitability increased
, using low prices to boost sales and increase profit margins
Capturing First-Mover Advantages
First Mover:
First to introduce a new product or feature to the market.
First-Mover Advantage:
Slows imitation by competitors
Disadvantages:
High costs, risk of mistakes, and potential investment in outdated tech
Strategies
Market innovation alone or through partnerships (Alliance, JV,...)
License the innovation to others
Advantages:
Network effects, positive feedback loops, brand loyalty, sale increased, customer switching costs
Disadvantages:
High pioneering costs, risk of missteps
Key Factors:
Complementary assets, barriers to imitation, capable competitors
Technological Paradigm Shift
Occur
Old tech reaches its limits, new disruptive tech enters the market
Definition
New technologies that revolutionize industries structure and competition
Disruptive Tech
Innovations that start outside the mainstream market but improve over time to invade it → Disrupt existing markets → failure of established firms → Hesitate to invest
Strategic implications for established companies:
Failure to adapt leads → decline; need new business models
Strategic Implications for Entrants:
Can focus on new opportunities without legacy constraints, but must decide to partner or go solo
Technology S-curve:
Life cycle of a technology in 3 phases (
Established → Discontinuity → Successor technology)