Aug 3, 2009
Technology Markets, Technology Organization, and Appropriating the Returns from Research (Christensen and Chesbrough, 2001)
Technology Markets, Technology Organization, and Appropriating the Returns from Research (Christensen and Chesbrough, 2001)
From an examination of the evolution of two hard disk drive technologies from the early 19070’s through to the late 1990’s, the authors derive a technological-organizational framework of factors which affect a company’s ability to derive returns from research.
Introduction:
The organization of the firm affects its ability to profit from its innovation activities. Research has focused on the role of the type of technology in the ability of incumbent firms to adapt to innovation opportunities, and some scholars have suggested that organizational strategy must be aligned with the technology they chose to develop. This paper offers a framework for thinking about how to do this.
An Empirical Evaluation of Architectural Efficiency:
- Firms will vary in their ability to use interdependent technologies in the early stages of their deployment.
- They also vary in whether or not they make heads and media themselves, and whether they do or not should matter.
Implications for Aligning Organizational Structure with Technological Character:
For the case of interdependent technologies, designers do not have complete knowledge of how the various attributes of a component need to be specified in order for the product to work satisfactorily when assembled. Further, definite measurement methods may not exist, making it difficult to predict how changes in components will affect the design requirements of other elements.
Interdependence requires that optimal designs and product architectures be defined iteratively and interactively by an integrated development organization. Additionally, as most of the knowledge involved in integration is tacit, it will be hard to share within and across firms. Accordingly it will be hard for firms to enter intermediate markets as suppliers. On the other hand, modularity requires clear and explicit design rules, where designers can be easily shown how product design affects the manufacturing process. In this case, an internal supply chain can be deconstructed into a network of suppliers.
The Cyclical Character of Modularity and Interdependence:
Even though there are great advantages to modularity, it is not necessarily a stable state. New architectures which surpass old limits take time to develop and thus a continuous cycle of interdependence and modularity exists. A firm’s ability to profit from their innovation activities at any stage in the cycle will thus depend on the type of technology and its organizational approach (see Exhibit 5 in text).
Decentralized organizations will handle modular technologies better – there may be insufficient infrastructure, poor management of interactions and misalignment when dealing with integrated technology. Integrated technology thus will fare better within a centralized organization, but modular technology may suffer through unnecessary coordination, reduced scale economies and misalignment.
Original Text:
in Strategic Management of Technology and Innovation (Burgelman, Christensen and Wheelwright)
Strategic Management of Technology and Innovation
