The innovator s dilemma (Christensen) Sustaining innovation Disruptive innovation

Transcription

1 The innovator s dilemma (Christensen) Sustaining innovation Disruptive innovation 1 Change Management Peter G. Klein University of Missouri September 2009

2 Some recent trends Increased role of information technology Quantity and quality of available IT Diffusion of IT in the workplace Effects of IT on productivity Growth of the IT-producing sector New workplace practices that enhance the effects of IT ( complementarities ) in other sectors Example: hardware Speed: Moore s law Storage capacity: cost per megabyte fell from $100 in 1980 to <1 in 1999 Data transmission capacity: cost of sending 1 trillion bits fell from $129,000 in 1980 to 12 in 1999 Design: modularity 2 Change Management Peter G. Klein University of Missouri September 2009

3 Changes in R&D Increased private R&D expenditures (chart) Changes in the organization of R&D vertically integrated decentralized large firms small firms manufacturing services proprietary standards open standards standalone firms collaboration, clusters 3 Change Management Peter G. Klein University of Missouri September 2009

4 Real Non-Federal spending on R&D increased sharply after Chart 3-8 Real Research and Development Spending by Source and Type Billions of chained 1996 dollars Space (Federal) Non-Federal 50 Defense (Federal) 0 Civilian (Federal) Note: The values for 1999 are estimated. Source: National Science Foundation.

5 New economy versus old economics? The knowledge-based economy Growth and importance of networks Role of intangible assets Importance of services over manufacturing Emergence of new organizational forms Changes in nature of competition Is regular economics still useful? Online markets Information goods Network effects Commons-based peer production 5 Change Management Peter G. Klein University of Missouri September 2009

6 How new is new? New Economy Web pages, blogs, tweets Internet Online directories Personal computers Old Economy Pamphlets Telegraph Phone book Electricity, automobiles, refrigerators, washing machines, telephones, VCRs Commons-based peer production Markets 6 Change Management Peter G. Klein University of Missouri September 2009

7 Information goods What s traded on the market is marginal units of goods and services, not information. Information goods are economic goods (evaluated, subjectively, on the margin, like all consumer and producer goods). Information goods are nothing new (books, maps, lectures, guides, directories). The production process for information (high fixed cost, low variable cost) implies particular investment and pricing strategies. Two-part pricing (often with free giveaways to increase installed base) Price discrimination Increasing returns and incumbent advantages 7 Change Management Peter G. Klein University of Missouri September 2009

8 Network effects Network effects, path dependence, and lock-in: a new source of market failure? Examples: QWERTY, VHS, MS-DOS, A/C power, internal-combustion engine Some problems Imperfect knowledge The political process Are there any real-world examples? (Liebowitz and Margolis) 8 Change Management Peter G. Klein University of Missouri September 2009

9 Economics of the internet History of the internet TCP/IP and path dependence The internet and the invisible hand Related topic: open-source software, crowdsourcing, and other forms of distributed computing 9 Change Management Peter G. Klein University of Missouri September 2009

10 Organizing the firm for innovation (partial recap) Corporate R&D Long-term and short-term incentives Centralized versus decentralized R&D (scope economies, tacit knowledge) R&D alliances and consortia Internalizing spillovers Asset specificity and contractual hazards Modularity and open innovation Venture capital and entrepreneurship Flexibility Need for strong performance incentives (e.g., staging) Rise of corporate venture funds (even CIA!) 10 Change Management Peter G. Klein University of Missouri September 2009

11 Summary and conclusions Economic and management theories have much to say about firm boundaries and internal organization. Incentives Information Coordination Changes in boundaries and internal organization have diverse causes Changes in the competitive, technological, or political environment Experimentation and learning Changing the firm s management and organization can be costly Transition costs, inertia Organization and governance affect technological innovation. 11 Change Management Peter G. Klein University of Missouri September 2009