Dominant design

Last updated

Dominant design is a technology management concept introduced by James M. Utterback and William J. Abernathy in 1975, identifying key technological features that become a de facto standard. [1] A dominant design is the one that wins the allegiance of the marketplace, the one to which competitors and innovators must adhere if they hope to command significant market following. [2]

Contents

When a new technology emerges (e.g. computer GUI operating systems) – often firms will introduce a number of alternative designs (e.g. Microsoft – Windows, Apple Inc. – Mac OS and IBM – OS/2). Updated designs will be released incorporating incremental improvements. At some point, an architecture that becomes accepted as the industry standard may emerge, such as Microsoft Windows. [3] The dominant design has the effect of enforcing or encouraging standardization so that production or other complementary economies can be sought. Utterback and Suarez (1993) argue that the competitive effects of economies of scale only become important after the emergence of a dominant design, when competition begins to take place on the basis of cost and scale in addition to product features and performance. [4]

Dominant designs may not be better than other designs; they simply incorporate a set of key features that sometimes emerge due to technological path-dependence and not necessarily strict customer preferences. An often cited, albeit incorrect, example is the QWERTY keyboard, supposedly designed to overcome operative limitations on the mechanical typewriter but now almost universally preferred over other keyboard designs. [5] Dominant designs end up capturing the allegiance of the marketplace; this can be due to network effects, technological superiority, or strategic manoeuvering by the sponsoring firms.

Dominant designs are often only identified after they emerge. Some authors consider the dominant design as emerging when a design acquires more than 50% of the market share. [6] A more promising approach is to study the specific product innovations introduced by different firms over time to determine which ones are retained. [7]

Origins of the theory

Utterback and Abernathy first introduced the concept of "dominant design" in 1975. [8] They proposed that the emergence of a dominant design is a major milestone in an industry evolution and changed the way firms compete in an industry and thus, the type of organizations that succeed and prevail. A dominant design can be a new technology, product or a set of key features incorporated from different distinct technological innovations introduced independently in prior product variants. Their 1975 paper, however, never uses the term "dominant design". It does refer to "dominant strategy" and "dominant type of innovations". Yet, in their 1993 work, Suarez and Utterback reference the 1975 paper as the source of the concept of "Dominant design". [4] David Teece, of later fame for the theory of dynamic capabilities, overtly develops the concept of dominant design in his 1984 paper on Profiting from technological innovation, [9] in which he acknowledges the contribution of Utterback and Abernathy in their conceptual treatment of the evolution of technology in an industry.

Dominant theory process

The process by which a specific design achieves dominance consists of a few characteristic milestones: [10]

  1. A pioneer firm or research organization begins conducting R&D with the intention of creating a new commercial product or improving an existing design.
  2. The first working prototype of the new product/ technology is introduced, sending a signal to competitors to review the feasibility of their research programs.
  3. The first commercial product is launched, connecting consumers to this new architecture for the first time. It is usually directed at a small group of customers. This milestone acts as a “last minute call” for competitors to review and speed up their research efforts.
  4. A clear front-runner emerges from the early market. For example, in the personal computer industry, Apple Computers dominated after the introduction of their Apple I in 1976.
  5. Finally, at some point in time, a particular technological trajectory achieves dominance and this marks the final milestone in the dominance process.

Evidence and examples

Dominant design milestones have been identified in many product lines. The emergence of a dominant design typically coincides with the point at which the number of firms competing in the industry peaks. Once it emerges, it implicitly sends a message to producers and consumers that its key features is a "must have" by future products. Examples of a dominant design include the simple four function calculator and the iPod and iPhone. Other examples include:

Implications for innovation and competitive dynamics

Utterback and Suarez propose that once a dominant design emerges, it can have a profound impact on both the direction of further technical advance, on the rate of that advance, and on the resulting industry structure and competitive dynamics. Prior to the creation of the dominant design, firms are constantly experimenting and therefore cannot enjoy economies of scale. After the emergence of the dominant design, some firms accumulate complementary assets and exploit possible economies of scale, which in turn raises entry and mobility barriers in the industry. Firms that enter the industry during a period of experimentation risk choosing the wrong technological path, but have high upside if they choose the right one. Pre-dominant design entrants have been shown to have a higher chance of survival than those that enter after the emergence of the dominant design. [12] Utterback and Kim (1985) and Anderson and Tushman (1990) considered the effect of a disruption that invades a mature industry and thus starts a new cycle. In each cycle, the number of firms increases in the early ("fluid" or "ferment") period, reaches a peak with the emergence of the dominant design, decreases until a few firms dominate the industry, and then restarts again when a disruption creates the conditions for a new wave of entry and the re-enactment of the industry life cycle.

See also

Related Research Articles

<span class="mw-page-title-main">Disruptive innovation</span> Technological change

In business theory, disruptive innovation is innovation that creates a new market and value network or enters at the bottom of an existing market and eventually displaces established market-leading firms, products, and alliances. The term, "disruptive innovation" was popularized by the American academic Clayton Christensen and his collaborators beginning in 1995, but the concept had been previously described in Richard N. Foster's book "Innovation: The Attacker's Advantage" and in the paper Strategic Responses to Technological Threats.

<span class="mw-page-title-main">Innovation</span> Practical implementation of improvements

Innovation is the practical implementation of ideas that result in the introduction of new goods or services or improvement in offering goods or services. ISO TC 279 in the standard ISO 56000:2020 defines innovation as "a new or changed entity, realizing or redistributing value". Others have different definitions; a common element in the definitions is a focus on newness, improvement, and spread of ideas or technologies.

In industry, models of the learning or experience curve effect express the relationship between experience producing a good and the efficiency of that production, specifically, efficiency gains that follow investment in the effort. The effect has large implications for costs and market share, which can increase competitive advantage over time.

Technocapitalism or tech-capitalism refers to changes in capitalism associated with the emergence of new technology sectors, the power of corporations, and new forms of organization. Technocapitalism is characterised by constant innovation, global competition, the digitisation of information and communication, and the growing importance of digital networks and platforms.

User innovation refers to innovation by intermediate users or consumer users, rather than by suppliers. This is a concept closely aligned to co-design and co-creation, and has been proven to result in more innovative solutions than traditional consultation methodologies.

<span class="mw-page-title-main">Kim B. Clark</span> American academic

Kim Bryce Clark is an American scholar, educator, and religious leader who has been a general authority of the Church of Jesus Christ of Latter-day Saints since April 2015, and was the church's seventeenth Commissioner of Church Education from 2015 to 2019. He served previously as the 15th president of Brigham Young University–Idaho from 2005 to 2015, and as the dean of the Harvard Business School (HBS) from 1995 to 2005, where he was also the George F. Baker Professor of Business Administration.

Open innovation is a term used to promote an information age mindset toward innovation that runs counter to the secrecy and silo mentality of traditional corporate research labs. The benefits and driving forces behind increased openness have been noted and discussed as far back as the 1960s, especially as it pertains to interfirm cooperation in R&D. Use of the term 'open innovation' in reference to the increasing embrace of external cooperation in a complex world has been promoted in particular by Henry Chesbrough, adjunct professor and faculty director of the Center for Open Innovation of the Haas School of Business at the University of California, and Maire Tecnimont Chair of Open Innovation at Luiss.

Technology trajectory refers to a single branch in the evolution of a technological design of a product/service, with nodes representing separate designs. With Technology trajectory referring to a single branch we do expect the development of new technologies to precede recent uses and advance future technologies. The development of future technologies allows for the innovation of new ideas, research, and much more. It also can be defined as the paths by which innovations in a given field occur.

Market dominance is the control of a economic market by a firm. A dominant firm possesses the power to affect competition and influence market price. A firms' dominance is a measure of the power of a brand, product, service, or firm, relative to competitive offerings, whereby a dominant firm can behave independent of their competitors or consumers, and without concern for resource allocation. Dominant positioning is both a legal concept and an economic concept and the distinction between the two is important when determining whether a firm's market position is dominant.

<span class="mw-page-title-main">David Teece</span> New Zealand–American business academic

David John Teece is a New Zealand-born US-based organizational economist and the Professor in Global Business and director of the Tusher Center for the Management of Intellectual Capital at the Walter A. Haas School of Business at the University of California, Berkeley.

Complementarity assets is defined as “the total economic value added by combining certain complementary factors in a production system, exceeding the value that would be generated by applying these production factors in isolation.” Thus two assets are said to be complements when investment in one asset increases the marginal return on the other. On the contrary, assets are substitutes when investment in one does not affect the marginal return of the other.

Pavitt's Taxonomy categorizes mostly large industrial firms along trajectories of technological change according to sources of technology, requirements of the users, and appropriability regime. The taxonomy aims to classify innovation modes according to different sectoral groups and the flow of knowledge between such groups. It was first proposed by SPRU researcher Keith Pavitt at the University of Sussex and has since been applied in innovation research to describe and categorize industries and the firms therein. According to Castellacci (2008), "Pavitt's model of the linkages between science-based, specialized suppliers, scale-intensive and supplier-dominated industries provides a stylized and powerful description of the core set of industrial sectors that sustained the growth of advanced economies during the Fordist age."

The technological innovation system is a concept developed within the scientific field of innovation studies which serves to explain the nature and rate of technological change. A Technological Innovation System can be defined as ‘a dynamic network of agents interacting in a specific economic/industrial area under a particular institutional infrastructure and involved in the generation, diffusion, and utilization of technology’.

Industrial dynamics is the study of the means and processes through which industries change over time, through their own processes of evolution – as first analyzed by Joseph Schumpeter. It is the complementary study to that of an industry’s comparative statics, which still dominates economic analysis. Industrial dynamics, as studied by scholars such as Carlsson and Eliasson, reveal the basic underlying forces driving industry evolution. Some industries, particularly those with rapid product turnover or high levels of capital expenditure, reveal special dynamics moving through intrinsic upturns and downturns that are not necessarily related to the wider economic fluctuations. These are known as cyclical industrial dynamics. They have recently come under investigation in the specialized literature.

Corporate foresight has been conceptualised by strategic foresight practitioners and academics working and/or studying corporations as a set of practices, a set of capabilities and an ability of a firm. It enables firms to detect discontinuous change early, interpret its consequences for the firm, and inform future courses of action to ensure the long-term survival and success of the company.

The concept of technological paradigm is commonly attributed to Giovanni Dosi. The concept is sometimes seen as performing a similar role to the concept of "scientific paradigms", as advanced by Thomas Kuhn.

Lead market is a term used in innovation theory and denotes a country or region, which pioneers the successful adoption of an innovative design. It sends signalling effects to other "lag" markets, which in turn helps in triggering a process of global diffusion. Marian Beise, one of the foremost propounders of this theory as it has been understood so far, states: "Innovations that have been successful with local users in lead markets have a higher potential of becoming adopted world-wide than any other design preferred in other countries". Christoph Bartlett and Sumantra Ghoshal have described lead markets as "[…] markets that provide the stimuli for most global products and processes of a multinational company. Local innovations in such markets become useful elsewhere as the environmental characteristics that stimulated such innovations diffuse to other locations". To illustrate a lead market with some examples, Germany can be seen as a lead market for renewable energies and (premium) automobiles, while the United States would suit as a lead market for information technologies including e-commerce.

William J. Abernathy was an American professor at the Harvard Business School. With his empirical studies of the automobile industry, Abernathy contributed to explaining the industrial decline of the US automobile industry and influenced management thinking to pay more attention to innovation and long-term strategic decision making.

<i>Research Policy</i> (journal) Academic Journal

Research Policy is a monthly peer-reviewed academic journal published by Elsevier on behalf of the Science Policy Research Unit. It was established by British economist Christopher Freeman in 1971 and is regarded as the leading journal in the field of innovation studies. It is listed as one of the 50 journals used by the Financial Times to compile its business-school research ranks.

Knowledge-intensive services, abbreviated as KIS, are services that involve activities that are intended to result in the creation, accumulation, or dissemination of knowledge, where knowledge-intensiveness refers to how knowledge is produced and delivered with highly intellectual value-add. Knowledge intensive business services are the knowledge-intensive service activities for developing a customized service or product solution to satisfy the client's needs and they are provided mainly for other companies or organizations. These concepts are continuously discussed, formulated, and developed as a part of the constantly evolving academic discipline of knowledge management.

References

  1. ↑ Suarez, Fernando F. (2004). "Battles for technological dominance: an integrative framework" (PDF). Archived (PDF) from the original on 2024-01-15. Retrieved 2024-01-14.
  2. ↑ Utterback, James (1994-01-01). "Mastering the dynamics of innovation". Harvard Business School Press. Archived from the original on 2024-01-15. Retrieved 2024-01-14.
  3. ↑ Anderson, Philip; Tushman, Michael L. (1990). "Technological Discontinuities and Dominant Designs: A Cyclical Model of Technological Change". Administrative Science Quarterly. 35 (4): 604–633. doi:10.2307/2393511. ISSN   0001-8392. Archived from the original on 2024-01-15. Retrieved 2024-01-14.
  4. 1 2 Utterback, James M.; Suárez, Fernando F. (1993-02-01). "Innovation, competition, and industry structure". Research Policy. 22 (1): 1–21. doi:10.1016/0048-7333(93)90030-L. ISSN   0048-7333.
  5. ↑ Stamp, Jimmy. "Fact of Fiction? The Legend of the QWERTY Keyboard". Smithsonian Magazine. Archived from the original on 2019-05-07. Retrieved 2021-07-05.
  6. ↑ Anderson, Philip; Tushman, Michael L. (1990). "Technological Discontinuities and Dominant Designs: A Cyclical Model of Technological Change" (PDF). Archived (PDF) from the original on 2024-01-15. Retrieved 2024-01-14.
  7. ↑ "Strategies for Survival in Fast-Changing Industries". 1996. Archived from the original on 2024-01-15. Retrieved 2024-01-14.
  8. ↑ Utterback, James M; Abernathy, William J (1975-12-01). "A dynamic model of process and product innovation". Omega. 3 (6): 639–656. doi:10.1016/0305-0483(75)90068-7. ISSN   0305-0483. Archived from the original on 2020-02-06. Retrieved 2024-01-14.
  9. ↑ Teece, David (1986). "Profiting from technological innovation: Implications for integration, collaboration, licensing and public policy". Research Policy. 15 (6): 285–305. doi:10.1016/0048-7333(86)90027-2 – via Elsevier Science Publishers B.V.
  10. ↑ Suarez, Fernando F. (2004). "Battles for technological dominance: an integrative framework" (PDF). Archived (PDF) from the original on 2024-01-15. Retrieved 2024-01-14.
  11. ↑ Pogue, David (2006-03-09). "Almost iPod, but in the End a Samsung". The New York Times. ISSN   0362-4331. Archived from the original on 2019-12-29. Retrieved 2022-05-06.
  12. ↑ Utterback, James (1995-01-01). "Dominant designs and the survival of firms". Strategic Management Journal. Archived from the original on 2024-01-14. Retrieved 2024-01-14.
  1. Changing the Dominant Design (Gary S Vasilash)
  2. Invention and innovation: an introduction – Open University –
  3. Innovations and Dominant Design in Mobile Telephony from The Research Institute of the Finnish Economy – Koski and Kretschmer
  4. Why the World Went Windows
  5. Environment: Opportunity or Threat? – Clive Savory
  6. The Curse of Qwerty Jared Diamond
  7. Role of universities in the product development process: strategic considerations for the telecommunications industry, Alok K Chakrabati
  8. Dominant Designs and the Survival of Firms – Utterback and Suarez
  9. Utterback, J. M. and F. F. Suarez (1993). 'Innovation, competition, and industry structure', Research Policy, 22 (1), pp. 1–2.
This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.