Abstract

In order to manage technological change, executives need a common framework for conceptualizing how technologies develop. This framework must help managers identify recurring patterns of technological evolution, which lead to predictable consequences. Our project had three aims: 1) Develop a model of technological cycles to examine technology evolution in different industries across different time periods. 2) Validate and explore the model. Does the model accurately describe how technologies have unfolded in the industries studied? What determines the shape and length of the phases that comprise the cycle? What type of firms initiate the watershed events that punctuate each cycle? 3) Examine the effect of cyclical technological change on the rate of involuntary exit from an industry. Is technological change associated with "shakeouts" in an industry? We constructed a model of technology cycles that hinges on two key events: "technological discontinuities" and "dominant designs." A technological discontinuity is a product or process innovation that advances an industry's technical frontier by an order of magnitude. Typically it inaugurates an era of design competition, as the original innovation is improved and several versions vie for market acceptance. One of these versions emerges as the market standard, or "dominant design,' accounting for over 50% of industry sales or process equipment installations. The emergence of a dominant design changes the pattern of technological change to one of incremental advance. Progress now occurs via steady and gradual improvement of a single orthodox architecture, which dominates the industry's main market. We further identified two types of discontinuities which have different effects. Some innovations built on the industry's previous know-how; we termed these "competence-enhancing." Others obsolesced that know-how and introduced a different knowledge base; we termed these "competence- destroying."


Click on the link below for the final report in pdf.
tushman_anderson_1088.pdf