master thesis overview remco de kramer
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There are companies that make fortunes, but also those that vanish from existence, despite excellent products!
Master thesis project overview - Remco de Kramer
"There is a tide in the affairs of menWhich taken at the flood, leads on to
fortune; Omitted, all the voyage of their life Is bound in shallows and in miseries.”
William Shakespeare, Julius Caesar, Act IV, Scene 3: Within the tent of Brutus
Some companies succeed by getting their innovation adopted on a large
scale and “Cross the Chasm”. However most do not!
So what happens in the Chasm?
But first: what is the origin of this phenomena?
Discontinuous / disruptive product innovation in the high-technology sector
(where innovation requires the adopter to change behavior)
And in which context is this phenomenon most applicable?
Adapted from G.A. Moore (2005) from the book “DEALING WITH DARWIN”
Innovators
Techies
Early Majority
PragmatistsLate Majority
Conservatives
Laggards
Skeptics
Early Adopters
Visionaries
It is in the Technology Adoption Life Cycle!
time
Rel
ativ
e %
of c
usto
mer
s
•Look to adopt innovation to achieve revolutionary improvement
•Attracted by high-risk / high-reward projects•Envision great gains from adopting innovation
•Look for evolutionary changes to gain productivity enhancements•Averse to disruptive change; want proven applications, reliable service•Want to reduce risk in the adoption of the innovation
In order to be successful, we need to move from the early market to the mainstream
Because that’s where the vast majority of customers are!
To cross the “Chasm”, a lot of internal …… needs to happenWhich is influenced by the environment in which the company operates
How are we going to measure this change?
The internal factors are described through business model changes
The external factors are the forces that influence a chasm crossing which are
outside or within limited company control
But first, let’s explore theoretical concepts to increase our understanding
of the “chasm” phenomena
Notice the infliction points!
Technology Adoption Life Cycle (TALC) Main authors: Moore (1991) Rogers (1962)
Theory: The TALC is a means for classifying the market and its reaction to a high-tech product. Moore re-defined Rogers’ (1962) innovation diffusion
theory, by introducing gaps between user adoption categories the major gap being "the Chasm". The theory analyses the TALC from a marketing
perspective.
Title: Sales Take-off Main Authors: Shermesh & Tellis (2002) Agarwal (2002)
Theory: New products do not grow into maturity at a steady rate. The sales pattern is marked by a long introduction period when sales linger at low levels,
followed by a period of rapid growth. The theory analyses the TALC from various external perspectives; influence of competition, price, innovative
opportunity.
Title: Disruptive InnovationMain author: Christensen (1997)
Theory: A disruptive innovation is an innovation that eventually overturns the existing dominant technology paradigm in the market. Success depends on the
ability to “reach” the mainstream market and become the dominant design. The theory provides insight into how and where the technology in the TALC
develops before it reaches the mainstream market.
Title: Dominant Design (DD)Main author: Utterback (1996)
Theory: Describes the occurrence of a DD as the key technological design that becomes a de-facto standard in the market place. Before the occurrence of a DD product innovation is the emphasis, after that process innovation is, since
reductions in cost become the main concern. The theory analyses the TALC from a research and development perspective.
Title: Technology- to Customer Centered Approach Main Author: Norman (1998)
Theory: Integration of Moore's and Christensen's theories. Defines "the chasm" as a transition point where a technology satisfies basic needs and becomes a
consumer commodity instead of high-technology. The theory analyses the TALC from a human-centred product development approach by focusing on the
needs of the consumer.
Title: Disruptive Technology S-Curve Main Author: Christensen (1997)
Theory: A disruptive technology gets its commercial start in emerging value networks before invading established networks. The technology can invade if it professes to a point where it can satisfy the level of performance demanded in
an other value network. The theory analyses the TALC from a technical performance perspective related to conventional technologies.
Now we understand more……But what changes?
Distilled from the work of G.A. Moore who describes changes in “the chasm” and the strategy to cross it…
Before generating a conceptual model it is critical to determine the location on the TALC for which the model had explanatory power…
Based on:• Sales levels / sales saddle (Moore, 2002, Goldengerg, et. al. ,2002, Modis 1998)• Cumulative adoption (Meade and Rabello, 2003)• Customer profile (Moore, 2002)• Expert insights (Wieffels, 2002, p 98+)
pre- post-
To structure the mapping process internal factors have been categorized through the perspective of the business model framework
VALUEPROPOSITION
COSTSTRUCTURE
CUSTOMERRELATIONSHIPS
CUSTOMERSEGMENTS
ACTIVITYCONFIGURATION
CORECAPABILITIES
PARTNERNETWORK
REVENUESTREAMS
INFRASTRUCTURE CUSTOMEROFFER
Business Model components - Adapted from A. Osterwalder, Business Model Ontology, proposition in design science approach (2008)A business model describes the value an organization offers to various customers and portrays capabilities & partners required for
creating, marketing, and delivering this value and relationship capital with the goal of generating profitable and sustainable revenue streams
COMM & DISTRI-BUTION CHANNELS
The key resources we need to make our
business model function
The partners and suppliers we work with
The most important activities that have to be
performed to run ourbusiness model
The costs we incur to run our business model
A bundle of products and services that satisfies a specific
customer segment’s needs
The types of relationships you entertain with each
customer segment
The channels through which we communicate
with our customersand through which we
offer our value propositions
Our groups of customers with distinct
characteristics
The streams through which we earn our revenues from our
customers for value creating and customer facing activities
FINANCIALPERFORMANCE
VALUE PROPOSITION
MARKET DOMINATION STRATEGY
ORGANIZATIONAL BUILDING BLOCKS
SUCCES IN CROSSING THE
CHASM
Aggregated Conceptual Model – Internal and External Factors
EXTERNALFACTORS
VALUEPROPOSITION
COSTSTRUCTURE
CUSTOMERRELATIONSHIPS
CUSTOMERSEGMENTS
ACTIVITYCONFIGURATION
CORECAPABILITIES
PARTNERNETWORK
REVENUESTREAMS
ORGANIZATIONALBUILDING BLOCKS
MARKET DOMINATIONSTRATEGY
VALUE PROPOSITION
Pre-Chasm Business Model
COMM & DISTRI-BUTION CHANNELS
1. Technology-centric R&D
2. Product-centric R&D3. Technology expertise in
Human Resources4. Cultural archetype:
Pioneers
1. Strategic to validate technology in market
2. Tactical to speed product development
1. Emergent strategic planning process
2. Leadership role from research & development
1. Enabling competitive advantage
2. Product-oriented3. Prepare for technology
acceptance no focus4. Price skimming
strategy
1. Focus on technical community
2. Appealing to visionary values
1. Product-centric sales strategy
2. Word-of-Mouth3. Distribution ?
1. Strategy: ad hoc segmentation
SUCCESSMETRICS
1. Maximizing design wins2. Reaching technological
maturity3. Control cash-burn-rate
SUCCES IN THE EARLY MARKET
VALUEPROPOSITION
COSTSTRUCTURE
CUSTOMERRELATIONSHIPS
CUSTOMERSEGMENTS
ACTIVITYCONFIGURATION
CORECAPABILITIES
PARTNERNETWORK
REVENUESTREAMS
ORGANIZATIONALBUILDING BLOCKS
MARKET DOMINATIONSTRATEGY
VALUE PROPOSITION
Post-Chasm Business Model
COMM & DISTRI-BUTION CHANNELS
1. User & application centric R&D
2. Process-centric R&D3. Business expertise in
Human Resources4. Cultural archetype:
Settlers
1. Strategic to facilitate creation of ecosystem
2. Tactical for whole product infrastructure and niche market domination
1. Deliberate strategic planning process
2. Leadership role of marketing
1. Whole product2. Solution-oriented3. Optimize for
technology acceptance4. Price penetration
strategy
1. Focus on end-user enlist support economic buyer
2. Appealing to pragmatist values
1. Market-centric sales strategy
2. Industry lines & prof. organizations
3. Distribution ?
1. Strategy: niche segmentation
SUCCESSMETRICS
1. Time-to-segment dominance
2. Category market share3. Quick & small revenues
SUCCES IN CROS-SING THE CHASM
External Forces Influencing the chasm crossing
SUCCES IN CROSSING THE
CHASM
COMPETITION
DOMINAND DESIGN
CRITICALMASS
MARKET CIRCUMSTANCESe.g. TECHNOLOGY WAVES
Theoretical validation of the model by relating scholarly articles & management books to the factors
Empirical validation of the model by multiple case study research
Adjust the model if necessary to generate the definitive version
NOTE: Generation and validation of the model is a cyclical iterative process!
Operationalize changes in the business model & forces:Through scoring change progression by:expert evaluation of the company and the industry through:answering question sets resulting in:Business model building block ratings on 5 point likert-scales
Application for practitioners: Analysis tool
Application for academics: Contribute to validation of the Chasm theory
.ing Remco de KramerGraduate Student Innovation ManagementRSM Erasmus University
www.linkedin.com/in/remcodekramer