Discontinuous Innovation: The Fossilization of Kodak, Fuji and Agfa?
This is CHAPTER TWO of my presentation of flash memory and digital photography as is relates to SanDisk's potential to become an important industry player in the field of removable memory for portable consumer electronics. The content of my discussion will follow the table below. I am also including links back to prior chapters so as to facilitate participation by thread members who may have missed earlier portions of this investment case.
Table of Contents
Message 9880779
CHAPTER ONE
Tornado Watch: The Unrealized Potential of Flash Memory in Digital Photography and Portable Consumer Electronics
Message 9878229
CHAPTER TWO
Discontinuous Innovation: The Fossilization of Kodak, Fuji and Agfa?
The concept of a discontinuous innovation is quite simple. It is purely a technologic breakthrough that creates a novel product, process or service which has the potential to displace an existing technology. As users embrace this new technology they "put in place new infrastructures that were incompatible with what was prevalent at the time".
Consumers typically respond to discontinuous innovations ambivalently. This occurs because complementary services and products essential to getting the overall system functioning seamlessly are lacking. Simply stated, the necessary infrastructure is lacking. That is to say, a value chain needs to be created whereby consumers can enjoy the innovation to its fullest extent.
Who wants a car with no highways, a VCR without movies to rent, a microwave with no microwavable meals or recipes, a new game machine with no new games?
Thus, there is usually a "delayed gratification principle" as a value chain develops which can leave even a great innovation temporarily in limbo and subject to the reactions of the consumer. This process of acceptance or rejection is known as the Technology Adoption Life Cycle.
Moore overlays the various stages of market development (early market, chasm, bowling alley, tornado,...) on top of the Technology Adoption Life Cycle. Technology enthusiasts and independent developers are charged with keeping abreast of developments which could potentially revolutionize their industry niche. Visionaries, typically "highly placed executives" then try to leverage these advances to gain an edge on competitors in their respective industry. This is perhaps the first meaningful endorsement of a discontinuous innovation as visionaries hope to gain a significant lead over competitors who may not be aware of the utility and potential of such discoveries. Unfortunately, such endorsements do not necessarily predict or guarantee eventual success.
Three Important Departures
Kodak is the earliest visionary with respect to removable flash memory. This was heralded by the incorporation of a CompactFlash slot in a consumer-ready digital camera in 1996 (http://www.techweb.com/se/directlink.cgi?WIN19961201S0048). Kodak made a bold proclamation. In doing so it took a distinct detour from the standard recipe for a market shaking, gorilla making technology because it was directed at a consumer market. According to Moore, most discontinuous innovations enter industrial markets first due to the fact that complexity and expertise in product development is described as "prohibitive to consumer marketing". Consider at this juncture that this theme, an new industry standard focused directly on a consumer market, will recurr at several points in my discussion of this innovation.
The second distinctly unusual feature of CompactFlash is the fact that the visionary, in this instance Kodak, was sufficiently threatened by the technology alone that it facilitated design-ins both to pre-emptively avoid a leap-frogging by competitors (other 35mm film manufacturers) and to avoid extinction by the technology itself. As a result, a defacto standard was created.
Please note that in claiming this, I have intentionally overstated the impact of digital photography and flash memory solutions on the standard 35mm film market. This is because many photography enthusiasts will continue to use both technologies for the foreseeable future. An analogous situation exists for those of use who own both a microwave oven and a conventional oven/stove. The microwave itself was not so discontinuous as to eliminate the antecedent technology entirely.
Finally, other film producers, namely Fuji Film and Agfa, sensed an equal degree of urgency leading to the creation of a competing product line (their branded digital cameras) using a competing flash storage medium (Smart Media). This is the third departure from the classic stages of new technology development and acceptance because of the near simultaneous inclusion of the technology by competitors within the same market segment. "The herd" was in close pursuit. The rapid adoption of flash memory technology essentially hurdled over the chasm bounding directly from a gestational phase (the early market) and into the mainstream market.
This is what I refer to as a chasm-less transition. I will be so bold to say that as a result of the velocity with which the simultaneous and parallel adoption of digital photography and flash memory has proceeded bowling alley stage has been rendered imperceptible as well. In fact, one may question at this point whether digital photography alone is the driving force. It almost certainly is. But on its coattails rides flash memory all but concealed for view.
We could argue interminably about the driving force for this evolutionary process that has unfolded at hyperspeed. Is it Darwinian? Did Kodak, Fuji and Agfa sense their impending fossilization? Is it market driven and fueled by the growth of the internet and the need for rapidly digitized, compressed and transmitted imagery? Is it the novelty of the technology? Well, for the sake of argument it is all of these combined to create an unusually volatile and unstable climatic condition. The winds of change are blowing.
Ausdauer |
