MANAGING TECHNOLOGY:

AN APPRECIATION OF THE TECHNOLOGY LIFE

CYCLE CONCEPT

DR.RAZIB ARSHAD
FACULTY OF MANAGEMENT
UNIVERSITI TEKNOLOGI MALAYSIA
 Appreciating the importance of understanding
technology lifecycle concept in MoT.
 Differentiate between Technology Lifecycle and Product
Lifecycle and their relationship.
 Appreciating characteristic of competition in different
stages of technology lifecycle
 INTRODUCTION

 Why study technology life cycle?

Its great use in forecasting and planning

Important for competitive positioning of a firm

 THE S-CURVE OF TECHNOLOGY PROGRESS

 The performance of technology follows a recognized pattern over

time.

 When technology performance is plotted against time it follows the

S-curve.

 Technology progresses through a three stage technology life cycle,

i.e.
a. New Invention (Introductory) Stage
b. Improvement (Growth) Stage
c. Mature Stage

 Technology’s rate of improvement depends on the effort devoted to

its development.
 The S-curve of Technological Progress

New Mature
Invention Improvement
Stage Stage
Stage

Time
Foster "S-Curves“ (1986)
Source: Nieto et al. (1998) Performance analysis of technology using the S curve model: the case of digital signal processing (DSP) technologies, Technovation,
18(6/7) pp. 439–457
Changes in Natural Limits of Technology

Performance
Parameter
Limit of B

Limit of A

A A’

Time
Technology Life Cycle and Market Growth

 The presence of a market or the creation of a

new market represents the reward for
technological development

 Technology only generate income when it

reaches the market.

 As technology develops following the life cycle

market penetration and growth takes place.
 Technology Life Cycle and Market Growth Stages
Market
Volume
1 2 3 4
1 Technology Development
2 Application Launch
3 Application Growth
4 Mature Technology
5 Technology Substitution
6 Technology Obsolescence
5 6
1 Concept Design Prototype Time
2 Product Launch
3 Market Growth
4 Mature Stage
5 Substitution Products
6 Product Obsolescence
 Dynamic Relationship Between Technology
and the Market
• Strong dynamics between technological innovation and
marketplace.

• Stimulating Forces for Innovation:

a) Technology Push:
- Where technological development creates market.
- Normally involves radical innovations.
b) Market Pull:
- Where technological development is stimulated by the market.
- Normally involves incremental innovations.

• Both push and pull if integrated (and when combined with right
management attitude towards technology and availability of
resources) can accelerate technological change
Source: Nieto et al. (1998) Performance analysis of technology using the S curve model: the case of digital signal processing (DSP)
technologies, Technovation, 18(6/7) pp. 439–457
Life Cycle of Multiple-Generation Technologies

 Technology may consist of many sub-

technologies and derive from different
generation of innovation.

 The sub-technologies may have their own

technology lifecycle.

 Each stages of the sub-technology’s life cycle

will have an influence over the life cycle of the
main technology.
 Technology Life
Subtechnology II Cycle
Life Cycle

Subtechnology I
Lifecycle
Subtechnology III
Life Cycle

Time
 TECHNOLOGY ADOPTION LIFECYCLE

The technology adoption lifecycle (TALC) describes how

a market develops for a new product category.
Understanding TALC helps business managers focus
product management, develop future
marketing strategies and allocate resources for radically
innovative products (also known as discontinuous
innovations).
 Stages of the Technology Adoption Lifecycle 
• 1.    The Early Market (consists of visionaries and technology enthusiasts): The
market at this stage consists of visionaries and technology enthusiasts. The
technology enthusiasts (often referred to as "innovators") fundamentally believe that
new technology is better than existing technology and will therefore always be
amongst the very first to adopt new products. Visionaries on the other hand believe in
technology as a path to competitive advantage and thus aggressively adopt any new
technology to further their business.
•
2.    The Chasm:  In the chasm the product category encounters a pause in market
development. The length of the pause depends on how radical the disruptive
innovation is. The pause occurs often as a result of weak or incomplete value chains
and because pragmatists (mainstream market) do not trust visionaries as a reference.
The success of the product category depends on the pragmatists' view of the outcomes
of the pilot projects initiated by the Early Market. In this phase, entrepreneurs need to
analyze current pilot projects and developments to understand how an improved
offering can serve niche markets in order to gain momentum in the next phase of
market development.   
• 3.    Bowling Alley/Pragmatists:  In this phase of the lifecycle, the innovation
appeals to customers within narrowly defined market niches, who are conservative
but open to new ideas, and who are influential and active in the community. The
product category now appeals to specific niche markets. The sales to these niche
markets are predictable and provide high margins. However, outside of the niche
markets, sales are opportunistic and may require mass product customization to
meet individual client needs. At this point, industry analysts and media may begin
to follow the development of the product category.

• 4.    The Tornado/Pragmatists: The Tornado represents the stage where the
market development expands outside the niche markets of the previous phase and
develops into a mass market. Here we see a period of rapid growth that generates
mass appeal amongst the pragmatists and early adopters, as the product has
penetrated a variety of market segments. Vendors are eager to supply this product
category and this creates a war for market share which in turn brings down prices.
A market leader will eventually emerge at this stage and enjoy shorter sales
process, better margins and more media coverage than the competition. The
technical analysts now scrutinize the strengths and weakness of each industry
player.
•
5.    Main Street/Conservatives: Here the market has entered the mature
stage of its lifecycle, experiencing declining growth rates. The declining
prices appeal to the conservative/late majority consumers. These customers
tend to be more risk-averse than previous segments. The reason they
purchase the product is to avoid a competitive disadvantage. At this point, to
secure a viable future within niche markets, some competitors modify their
offering while others compete solely on price. The focus of the media
changes from discussing the product category and its players to the market
itself.
•
6.    Total Assimilation/Skeptics: At this stage, near the end of the
lifecycle, it is the laggards or skeptics who embrace the product. Some after-
sale services offered by marketers will provide lingering revenues; however,
a new technology category has begun elsewhere to capture the market. By
this stage, the interests of the media and analysts have changed and evolved.
www.marsdd.com/entrepreneurs-toolkit/articles...
 Application of
TALC
An important aspect of technology management is deciding where your product
category belongs on the technology adoption lifecycle. These include:
•knowing where your product fits on the technology adoption lifecycle
•knowing your product can be at different stages of the lifecycle in different parts
of the world. Remember to specify geographic location when performing a global
analysis
•realizing that rapid adoption of your product in the early stages does not guarantee
a tornado effect for the product category without strong support from pragmatists
•realizing that the possibility exists to experience a tornado effect in the early
pragmatist market. This can occur when an application resolves a problem for a
particular market segment which in turn may escalate demand beyond your
potential supply
•bearing in mind that the possibility exists to go to Main Street and attain supply-
and-demand equilibrium without experiencing a tornado effect. This takes place
when a product is considered of value only in niche markets
•remembering that your product may fail anywhere in the lifecycle
Competing in Various Phases of Technology
Life Cycle
• Early Stage –
- Competition is based on innovation. pioneering technology.
- Companies depend on innovation to add value.

• Early Growth Stage - pacing technology.

- There are still room to change the basis of competition.
- Growth strategies and marketing strategies must be balanced.

• Growth Stage - key technology.

- A dominant industry/product standard beginning to emerge.
- Firm should increase its technological capabilities to create/enhance
uniqueness.

• Maturity Stage - base technology.

- Technology becomes a commodity.
- Little ability to gain a strong competitive edge through product innovation.
Competing in Mature Technology

• Market characteristics of mature technology – standard

technology, saturated market, shrinking market share because of
too many players, slim profit margin etc.

• Rules of competition:
a. Competing on price and quality instead of product innovation.
b. Process innovation is central in gaining competitive advantage.
c. Market segmentation.
d. Reliance on economies of scale to reduce price.
e. Firms which dominate market will survive. Merger and
acquisition of firms is not unusual.
f. Large organization tend to suffer due to their rigidity,
bureaucratic and multilayered. Reorganization is inevitable.
e. Substitution is on the way. Be alert and ready for emerging
technologies.
Competing in Mature Technology

• Market characteristics of mature technology – standard

technology, saturated market, shrinking market share because of
too many players, slim profit margin etc.

• Rules of competition:
a. Competing on price and quality instead of product innovation.
b. Process innovation is central in gaining competitive advantage.
c. Market segmentation.
d. Reliance on economies of scale to reduce price.
e. Firms which dominate market will survive. Merger and
acquisition of firms is not unusual.
f. Large organization tend to suffer due to their rigidity,
bureaucratic and multilayered. Reorganization is inevitable.
e. Substitution is on the way. Be alert and ready for emerging
technologies.
Abernathy-Utterback model (1994)
DIFFUSION OF TECHNOLOGY

• The process by which an innovation is communicated over time, to

members of the social system, through certain channels leading to
its adoption.

• The rate of adoption depends on:

a) the degree to which the innovation is perceived to offer better
advantage than the existing one.
b) compatibility with the values and needs of the potential adopter.
c) perceived switching cost.
d) ease of access.
d) observed/proven results.