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What are the types of technology changes?
There are three types of trends and conditions — technology diffusion and disruptive technologies, the information age,and increasing knowledge intensity — through which technology is significantly altering the nature of competition and in doing so, is contributing to unstable competitive environments.
Technology diffusion is the rate at which new products become available and are used. For example, when consumers switched to computers or other types of word processing technology, it caused a decrease of sales for typewriters.
Perpetual innovation is how fast and consistently new information technologies replace their predecessors. The product life cycles are shorter, and as a result these rapid diffusions of new innovations place a competitive premium of being able to quickly introduce new, innovative goods and services into the market place.
When products become somewhat impossible to differentiate because of the extensive and rapid diffusion of technologies, rapidity to market with innovative products may be the primary source of completive advantage. Another pointer of rapid innovation diffusion is that today, it may take only 12 to 18 months for firms to gather information about their competitor’s research and development and product decisions.
Disruptive technology is an innovation that destroys the value of an existing technology and creates new market for a particular product or service. New markets are created by the technologies underlying the development of products such as iPods and PDAs, but based on price or image, appeal to a different target demographic than what the pioneer products of the technologies may have initially been marketed to.Products of these types are thought by some to represent breakthrough innovations.
A disruptive innovation technology can create what is essentially a new industry or can harm a learning process for a particular industry. Some industries are able to adapt based on their superior resources, experience, and ability to gain access to the new technology through multiple resources (such as acquisitions, alliaces, and ongoing internal basic research).When a disruptive technology creates a new industry, competitors usually follow. One example for disruptive innovation is Amazon.com –Amazon.com’s launching created a new industry by making use of the disruptive technology we know as the internet today!
In addition to making innovative use of the internet to create Amazon.com, Jeff Bezos also uses core competence in technology to study information about its customers. These efforts result in opportunities to understand individual consumers’ needs and then target goods and services to satisfy those needs. (Amazon.com: using Technology to create change).