Investment in New
Technology and
Competitive Advantage
Bilen AkuzumMehmet Eren Kucukcolak
Melani SaritasOmercan Yavuzer
Where / How does innovation happen?
Steven Berlin Johnson• Born 1968
• Brown University – Semiotics
• Editor in NY Times, Wall street J.
• Author of 8 books
• Where good ideas come from?
Where good ideas come from?
• http://www.youtube.com/watch?v=NugRZGDbPFU
Where good ideas come from?
• The Slow Hunch Model o Slow and Gradual Innovation
• Incubation period
• Chance favors the connected mind
Where good ideas come from?
• The story behind GPS
• Darwin’s slow hunch
• Baby incubator for Africa
Why Innovation?«Those that can adapt their strategic vision to the
new competitive realities and develop new
capabilities may emerge more vigorous, more
competitive than before.»
Types of Innovation• Innovation Transilience: An innovation’s capacity to
transform existing systems of technology and marketing.
Four different type of innovations Architectural Regular Revulationary Niche Creation
Architectural• Radical techonology applied to new markets
Revulationary• Distributive change in technology applied to
existing markets and customers.
Niche CreationRefinements in technology applied to new customer
groups and new applications
Regular• Refinements in technology applied to existing
markets and customers• http://www.xerox.com/about-xerox/videos/fast_food_video/enus.html
Radical Technology
Refinements in Tech.
To New Market
To New Customers & Apps.
To Existing Market
To Existing Customers & Apps.
Characteristics of Innovation Types
Uncertainty / RiskHigh level of uncertainty (technical options-
customers choice-market
definition-competitors)
Low level of
uncertainity
(technical-market)
Significant uncertainty about customers choice,
Some implementation
risks
High level of technical
uncertainty,Low level of
market uncertainty
Source of ValueNew technical
evolution, redifining industry
Improving competition(co
st, quality),Internal
improvement
Product development and
further segmentation
New technical evolution
Supporting Investments
Equipment development
Training, maintenance
system changes
ApplicationsEngineering
Equipment development,Knowledge of organization, procedures
Competitive ContextNew market and
technical, configuration; may be
basis for entry
Implementation,nuances in engineering
and sales
Skill in marketing,Temporary
monopoly within new segment
Rewriting rules
Managerial SkillsAssimilate new ideas,
adapt to change
Careful planning, problem
solving within known
constraints
Spot emerging customer demands
Leadership in breaking industry
conventions
Investment Analysis• Simple DCF is useful for regular innovation• No well defined cash flows in niche creation or
architectural innovation• In complex cases, simple quantitative methods
may be misleading• Particular methods should be tailored• «In decisions about the firm’s strategic path,
there is no substitute for managerial judgment»
Prompter
• Hubert Schlaflyo Inventor of the first telepromptero Developed cable systems
First Prompter• 1948, for Television• 1950, Soap Opera • 1952, President Herpert Hoover • Mounted inside what looked like a
suitcase and controlled by a stagehand.
Breakthrough• In 1952, when people realized that
president used prompter.
Refinements • A podium with concealed prompting devices, plumbing for
drinking water and a platform to lift or lower a speaker.
• Later replaced the suitcase-like unit with glass panels and eventually superimposed words in front of cameras.