A typology of technological change: Technological ...

Technological Forecasting & Social Change 97 (2015) 128–139

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Technological Forecasting & Social Change

A typology of technological change: Technological paradigm theory with validation and generalization from case studies Jonathan C. Ho a,⁎, Chung-Shing Lee b,1 a b

College of Management, Yuan Ze University, 135, Yuan-Tung Road, Jung-Li, Taoyuan, Taiwan School of Business, Pacific Lutheran University, Morken Center, Tacoma, WA 98447-0003, United States

a r t i c l e

i n f o

Article history: Received 30 December 2013 Received in revised form 23 May 2014 Accepted 30 May 2014 Available online 20 June 2014 Keywords: Technological change Technological paradigm Typology Disruptive innovation Industrial sector

a b s t r a c t Shifts in technological paradigms simultaneously disrupt existing industrial organization and raise opportunities for entrepreneurial companies. However, research on technological innovation centers the development of new technological solutions, while largely neglecting changes in customer problems or needs. This paper develops a typology for use as an analytical framework covering technological innovations and variations in market demand. The typology is then applied to the photographic industry, specifically the development of digital imaging technologies which disrupted existing film material and chemistry technologies in a paradigm shift from analog film to digital cameras. Taking a systematic view of product technologies, the typology identifies seven types of technological changes during the photography industry's process of digitalization. Case studies show that disruption of incumbent competencies can be attributed to the interactive effects of technological innovations and variations to market demand. Adaptive strategies corresponding to the identified types of technological changes are reported and discussed. The proposed typology is designed as a generic framework and is validated using an additional set of case studies from the media industrial sector. © 2014 Elsevier Inc. All rights reserved.

1. Introduction Technological changes can often disrupt a market or industry's established rules, orders, beliefs, and values. The impact of such disruption can be so profound that it can threaten the survival of firms that fail to adapt. Organizations will succeed only if they are adequately aware of the new conditions and are able to overcome organizational inertia and embrace the change. Schumpeter [1] defined creative destruction as the process by which entrepreneurs continuously create value while simultaneously destroying old values through the development of disruptive technological innovations. Due to the

⁎ Corresponding author. Tel.: +886 3 4638800x2587; fax: +888 3 4630377. E-mail addresses: [email protected] (J.C. Ho), [email protected] (C.-S. Lee). 1 Tel.: +1 253 535 8718.

http://dx.doi.org/10.1016/j.techfore.2014.05.015 0040-1625 /© 2014 Elsevier Inc. All rights reserved.

complex nature of fast changing technologies, the disruptiveness of technological innovations can be difficult to characterize and recognize. Firms that disregard the disruptive nature of technological innovation could be supplanted by new entrants which dominate the new technological paradigms [2,3]. For instance, IBM disregarded the disruptive nature of the personal computer (PC) and the once dominant computer giant gave way to the two new entrants, Intel and Microsoft. Despite Christensen's prominent work on the subject [2–4], disruptive innovations do not always offer superior performance, but are still able to invade the mainstream market. Utterback argues that radical technologies invade the market in different ways [5]. While technological changes follow different patterns, both Christensen and Utterback strive to explore the strategic implications of technological evolutions [6–11]. A more systematic research approach is needed to investigate the interrelationships among technological innovation, technology paradigms and the wider developmental environment.

J.C. Ho, C.-S. Lee / Technological Forecasting & Social Change 97 (2015) 128–139

Science and technology (S&T) policy makers in industry and government need to anticipate future technological evolution. Does technological evolution follow some general theories? Is it predictable? If so, what are the policy and strategy implications? This research aims to answer these questions by investigating the interrelationships among technological innovations, changes in market needs or problems, and adaptive strategies. The objectives of this research are: 1. to develop a typology that contains representative types of technological paradigm shifts; 2. to validate the typology's theoretical soundness by applying it to prominent technological transitions. This study is organized as follows: Section 2 presents a literature review. Section 3 introduces the proposed generic typology which serves as an analytic framework. Section 4 presents findings from a case study on the photographic industrial sector, used to validate the typology's utility. The final section presents conclusions, including strategic implications for managers, generalization of the typology and future applications. 2. Literature review The study of technological innovation began with Schumpeter's description of the creative destruction process [1]. More recently, the concept of disruptive innovation [3] has attracted renewed attention from researchers and practitioners. The disruptiveness of a technological transition depends on its acceptance by the market and industry. However, the creative destruction process is more than simply introducing an innovative product into an existing market to replace an incumbent, and a thorough analysis of the interaction among scientific advances, economic factors, institutional variables and existing technological trends in the process should yield useful insight for managers [12]. In general, industrial structure and sectoral patterns of innovation are frequently involved in research on technological changes [13–17]. Studies in this field suggest that a typological framework for analyzing technological changes should include constitutional factors of technological paradigms. 2.1. Technological paradigm Scientific and technological paradigms are comprised of beliefs, assumptions, perceived problems, intended solutions, and the community that contains these components [12,18]. A paradigmatic community is an organization that allocates resources to develop solutions to address a perceived problem. The decision to proceed from perceived problem to solution is constrained by the beliefs and assumptions of the community and is referred to as “strategy” [19]. The implementation of a process selected to resolve the perceived problem is referred as “organizational behavior” [20,21]. Typological research on strategy and organizational behavior includes Miles and Snow's classical strategy typological identification of four strategy types: prospector, analyzer, defender, and reactor [22]. Porter provides another prominent set of strategic types in his generic strategies: cost leadership, differentiation, and focus [23]. Depending on the environmental settings, many different factors have been incorporated to this

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stream of strategy-oriented typological research. The interaction between strategy and the broader environment determines organizational performance [24,25]. Environmental settings may include technology [26], organizational constituents [27] and organizational culture [28]. These critical factors are related to the paradigmatic community and its underlying components. Given this support in the literature, the present study incorporates Kuhn's components, along with the strategy and behavior of the paradigmatic community, to classify technological paradigm types. 2.2. Types of technological innovations Technological innovations are recognized as improvements on or alternatives to intended solutions. Abernathy and Clark [29] classified innovations as either sustaining or destroying technological capability and market linkages. Market linkages refer to customer relationship management, user applications, market knowledge, and channel and service relationships. Technological capability refers to knowledge related to the design, production, materials, equipment, and management of science and engineering. The Abernathy and Clark's two-dimensional taxonomy classifies innovations as regular, niche, revolutionary, and architectural types. In their study of patterns of technological changes and their impacts on industrial conditions, Tushman and Anderson [30] found that new and existing firms take different approaches toward technological innovation, with new firms seeking to develop competence-destroying technologies that will disrupt current practices, while existing firms seek to develop competence-enhancing innovations to decrease environmental uncertainty. Henderson and Clark [31] classified technological changes in terms of their impact on product structures or components. A technological change can either enhance or destroy a product's architecture (links of components) or component knowledge. Their model distinguishes four types of technological changes, namely incremental, modular, architectural, and radical. Architectural innovation poses a subtle challenge to incumbent firms as architectural knowledge is likely to be deeply rooted in the organization, and architectural knowledge can be difficult to recognize and change through organizational learning. Later on, Christensen's work on disruptive innovation added market demand for product performance and the time dimension to clarify the difference between sustaining and disruptive technological innovations [3]. In his model, disruptive innovations are further divided into low-end disruption and new-market disruption. 2.3. Changes in technological problem or need Nelson and Winter [32] first introduced the concept of “technological regime,” which refers to the technologists' beliefs regarding the feasibility and value of developing an as yet unrealized technology. Technological regime has since been adopted by scholars and practitioners to resolve both technical and managerial problems. In general, technological regime refers to the governing environment in which technologies are explored and exploited [33,34]. Malerba and Orsenigo [20] use opportunity, appropriability, knowledge base, and cumulativeness as the four core conditions

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for describing a technological regime. Although these four conditions have been widely accepted, the concept of technological regime itself has evolved as the technological environment has grown increasingly complex. Inevitably, regimes have come to include broader sociotechnical dimensions, including those taken from industrial structure [16,35,36], demography [37], user relations and market characteristics [13,35,38–41], and policy and regulation [42,43]. Werker [40] integrated Dosi's paradigm and Nelson and Winter's technological regime into a product life cycle model to explore the dynamics of market performance. In addition, social demands for sustainability also put pressure on industries to introduce environmentally friendly technologies [44,45]. The co-evolution of regime, industrial organization and society has emerged as a prominent research agenda [46]. Conceptual development of the typology is based on a critical review of the relevant literature and deductive reasoning. The development of typologies draws from the literature on technological paradigms [12,18,47], trajectories [21,42,48], patterns of innovations [14,49–51] and their interactions with market and industrial conditions [15,16,20]. Based on the above literature and theoretical inference, the typology for technological changes will be illustrated in the next section. 3. The typological case research method The methodological design for this research is based on the concept of typology and the case research approach. In typological case research one first develops a typology for technological changes and empirically tests it with selected real world cases. Typologies are often seen as classification systems which cluster things into categories [52]. However, the use of typologies as theoretical frameworks for organizational and strategic management [53] is supported by typologies provided by Miles and Snow [22] and Mintzberg [54]. Typological research methods enable researchers to investigate an overall grand theory and its underlying middle-range theories [53], which are generally defined as follows: Grand theory: the effectiveness of organizational behavior (the effectiveness of ideal types of strategies and/or policies). Middle-range theories: the internal consistencies (i.e., logical explanations) of individual ideal types. 3.1. A paradigmatic typology of technological changes The existing literature provides a systematic analysis of types or patterns of technological innovation. While the models developed by Henderson–Clark [31] and Tushman– Anderson [30] provide excellent frameworks for innovation analysis at the industry and sector levels, those developed by Abernathy–Clark [29] and Christensen [55] suggest that disruption can result from changes in market linkages caused by emerging market needs or customer problems. However, few studies have focused on such issues. According to Kuhn [18] and Dosi [12], paradigmatic shifts require a change in the perception of problems. In their study of the history of computing technologies, Ende and Dolfsma [33] contended that both technological knowledge and market demand shape the formation of new technological paradigms. To manage

disruptive innovations, firms must be capable of recognizing change in customer problems or market needs and alter their strategies and behaviors accordingly [20,21]. Given the critical role played by market change in disruptive innovation, the present research adds types of market change to technological innovations as a typological dimension. Perceived problem and intended solution are two major constructs of technological paradigms [12,18]. The technological change typology contains two major paradigmatic dimensions, specifically changes in perceived problems or needs and types of innovation in intended solutions. The classification constructs for the intended solution are extracted from research on sectoral patterns of innovation [50,56–58] and innovation classification models [29–31]. Along the intended solution dimension, changes are classified into innovation types, specifically incremental, modular, architectural, or disruptive. Incremental innovations enhance component and architectural knowledge [31] and preserve existing technological capabilities [29]. Modular innovations destroy component knowledge but enhance architectural knowledge [31]. In Henderson–Clark's model [31], architectural innovations, as opposed to modular innovations, destroy knowledge of product linkages but maintain component knowledge. However, in Abernathy–Clark's model [29], architectural innovations destroy both technical and market capabilities. In the present research, Abernathy–Clark's architectural innovations are considered to be discontinuous innovations. The disruptiveness of an innovation is attributed to destruction of the value of incumbent firms' technical knowledge [3,49]. Such disruptiveness is especially severe if the change calls for technological knowledge from dissimilar scientific disciplines [50]. Architectural, modular, or radical innovations can all be disruptive, and the present research uses discontinuous innovation rather than disruptive innovation to ensure a clear distinction. The construct of perceived problem is related to relatively broad social and market needs. The perceived problems or needs are influenced by broader sociotechnical factors, such as user relations and market conditions [6,38,48], policy and regulations [44,59], infrastructure, industrial structure [13] and other social forces [46]. Along with the perceived problem dimension, changes are classified as deepening, widening, drifting, and emerging. Deepening refers to new market demands for enhancements to existing product functions. Such requirements could come from particular market niches, such as professional or advanced users. Any type of technological innovation that enhances product performance satisfies a deepening market need. In a dynamic innovation model, such as Christensen's [3], market demand for product performance increases over time. A market is usually composed of a few user groups demanding different levels of product performance. Widening refers to market demands for adding complementary functions to a product, and such demands are usually driven by technological advances and convergences. The widening of market needs increases market space for new firms [5]. Technological developments also influence market needs. For example, computers were initially designed to facilitate calculations, but advances in communication technologies now allow computers to be used for multipurpose communications [48]. Changes in social trends can also alter market


demands and drifting market needs are likely to reconfigure market structures [29]. Though the sustaining innovations developed by incumbent firms can be undermined by disruptive innovations, incumbents can also be left vulnerable by neglecting emerging customer needs [60]. Emerging markets could be a newly formed niche or a fresh mainstream market [3]. Based on the above literature, operational definitions for innovation types and market changes are summarized in Table 1. The two-dimensional typology distinguishes 16 possible types of technological changes. Disruptive innovation [3] is not included because innovative disruption to corporate competence, industrial relations or customer relations can occur as a result of any of the various types of technological changes encompassed by the typology. 3.2. Case research on the typology The current case research focuses on the evolution of the photographic industrial sector because the technological transition from film to digital cameras was disruptive and involved many related industries. Cases are chosen from industries along the photographic industrial sector supply chain to illustrate the interrelations among industries within the sector for comparison with previous sector research [15,39,50,56,58,61]. The transition from analog to digital had a dramatic impact on several industries closely related to photography including optical devices, recording and storage devices and camera brands. Fig. 1 illustrates the paradigmatic shift of photographic technological system. Case research helps investigators develop answers to why and how questions [62], while typology research can illustrate the causal relationships in theory building [63]. The capacity of case research to examine phenomena over time is critical to studying the process of technological change. Case research uses the analytical technique of explanation building to verify Table 1 Operational definitions of innovation types and market changes. Innovation types

Definitions

Incremental

Incremental innovations enhance component and architectural knowledge and preserve existing technological capabilities. Modular Modular innovations destroy component knowledge but enhance architectural knowledge. Architectural Architectural innovations destroy knowledge of product linkages but maintain component knowledge. Discontinuous Discontinuous innovations call for technological knowledge from dissimilar scientific disciplines. Market changes Deepening Market demands for enhancements to existing product functions. Widening Market demands for adding complementary functions to a product. Drifting Market demands for changes of product usages. Emerging Market demands for solutions to new customer problems.

Ref. [31]

[31]

[31]

[29,30,50]

[3] [5] [29,48] [3,60]

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causal relationships between conditions before and after a technological change. The visual mapping technique [64] is adopted to facilitate case analysis by distinguishing real-world cases into types; explanation building will then be used to prescribe the ideal types. 4. Case studies on the photographic industrial sector In 1884, George Eastman patented photographic film technologies [65] featuring advantages of small size, capacity for multiple shots, and good image quality, allowing Eastman Kodak to dominate the camera industry for more than a century. In the early 20th century, advances in lens design and reflective imaging technologies shrunk the overall size of cameras and allowed them to capture images of objects in motion. In 1913, new lens and light control technologies enabled Oskar Barnack at Germany's Ernst Leitz Optische Werke to develop the Leica 35 mm prototype which set a new industrial standard for film cameras. In 1935, Kodak introduced the first color film which opened the era of color photography [65]. However, despite these huge advances in film technology and photochemistry techniques, photo development still required lengthy development processes in special facilities, giving rise to a separate photo printing industry. In 1963, Polaroid introduced the instant color film and camera, allowing users to shoot and print color photos on their own. In 1969, the charge-coupled device (CCD) was invented by Willard Boyle and George Smith at AT&T Bell Labs. Unlike chemical film, the CCD captures images by sensing light intensity and registering it on semiconductors, replacing the previous chemical process with an electronic one. Based on CCD technology, Sony introduced the first digital camera in 1981 [66], and the technology was soon adopted by many other camera companies. Since then, technologies related to digital cameras have made huge advances in many respects including resolution, exposure speed, rendering and display, to the point where most professional photographers have abandoned film and shoot exclusively with digital equipment. The proposed typology is used to analyze the impact of the technological transition from the film to digital paradigm on the photographic industrial sector. The era of film photography was driven by three technologies, two related to film and photo processing, and one related to optics. The film and photo processing technologies were developed by few dominant companies, such as Kodak and Fujifilm which were the primary technological sources of the photo recording material and printing industries [67]. While DIY hobbyists develop their own film, most photographers rely on commercial printing facilities with machinery primarily supplied by the dominant film companies. The film and commercial printing industry were classified as following the science-based pattern of industrial innovation [50] with a trajectory following the development of the chemical and material sciences. The photo printing service created another industry relying on commercial printing equipment and following a supplier-dominated pattern technological trajectory [50]. Optical devices for traditional film cameras were largely sourced from the major camera makers (i.e., Kodak, Canon and Nikon), and some optical specialization firms, such as Carl-Zeiss. The technological trajectory was driven by optics

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The Photography Technological System

Exposure Optics

Image Capture

Image Storage

Photo Finishing

Glass Spherical Lens

Film

Roll Film

Film Processing

Electronic Image Sensor (Discontinuous)

Memory Chip (Discontinuous)

Digital Printer and/or Online Sharing (Emerging)

High-end Glass Spherical Lens (Incremental)

Plastic Aspherical Lens (Architectural)

Priori Technologies Posterior Technologies

Professional Cameras Mobile Device Cameras Fig. 1. Systematic view of photographic technologies.

and their associated control mechanisms, and matched the specialized-supplier pattern [50]. Together these industries constituted the photographic industrial sector, but patterns of innovation varied with relative positions held by various industries within the sector. The developed paradigmatic typology of technological change is applied to guide the study of the digitalization in the photographic industrial sector. The typology with representative cases is depicted in Fig. 2. 4.1. Professional optics: The incremental-deepening type The professional optics industry exemplifies a case of incremental innovation in providing solutions and the enhancement of product functionality to meet market demand during the process of technological change. Optical device companies provide the photographic industry with optical and control devices including lenses, reflection mechanisms, and light and focus controls. In its prior paradigm, this industry was dominated by Canon and Kodak and provided the market with sophisticated and versatile lenses. It was widely believed that the precision required to produce these devices placed the optical device

industry at the core of the photographic industry. Even with the development of digital photography, professional and serious amateur photographers still valued these conventional technological solutions, but the mass market shifted toward simpler, smaller, and cheaper optical devices. Since nearly all camera manufacturers target both of these market segments, the transition did not significantly alter opportunity conditions of the photographic industry. While the knowledge base for optical devices is accumulative, its appropriability varied with firm strategy. The incumbents in the professional optics industry are threatened by the potential of other optics technologies, such as miniature optics of various materials, to match or surpass the performance of glass optics. 4.2. CCD sensor: The modular-widening type CCD sensor technology represents a case of modular innovation, where component knowledge is destroyed but architectural knowledge is enhanced in response to market needs for widened product functions. CCD and other types of image sensors are provided by semiconductor manufacturers,

Changes in Problem or Need Photo Sharing

Emerging

Miniature Opcs

Driing

Widening

Deepening

CCD Sensor

Photofinishing

Camera

Photo Storage

Architectural

Disconnuous

Professional Opcs

Incremental

Modular

Fig. 2. Types of technological changes in the photographic industrial sector.

Changes in Technologies


such as Texas Instruments and Fairchild Semiconductor, and camera producers, including Sony and Panasonic. The development and commercialization of CCD technology was followed by the introduction of Active-Pixel Sensors (APS), and other types of digital image sensors, manufactured by firms that compete for corporate market share on the basis of component performance and cost rather than brand. The introduction of digital image sensors disrupted the market values of technological competencies for film and related photofinishing products and services. The development of digital image sensor technologies helped reduce the size of photo-sensing devices, requiring the miniaturization of critical optical devices, resulting in the proliferation of digital camera applications, particularly in mobile devices including cell phones, and laptop and tablet personal computers. The tendency toward digital convergence has provided opportunities for companies like Largan Precision and Genius Electronic Optical, which supply smaller and less expensive plastic aspherical and hybrid lenses, allowing camera manufacturers to provide solutions with a wide range of image resolutions. In summary, the digitalization in the photographic industry was initiated by the development of the digital image sensor, which gave rise to related technological demands and opened a range of market opportunities. 4.3. Digital cameras: The architectural-widening type The case of the digital camera shows companies innovating architecturally in response to the market need of a wider range of product functions. While Kodak, Canon, Fujifilm, and Konica dominated the era of film cameras, only Canon has maintained its leading position in the digital era by leveraging its advanced optical technologies and focusing on high-end single-lens reflex (SLR) digital cameras [68]. The technological transition also provided Sony with the opportunity to emerge as the dominant digital camera manufacturer. Unlike Canon, Sony's competitive competence lies in its mastery of consumer electronic technologies. Although the first digital camera was invented in Kodak in 1975, the company failed to commercialize it, possibly as a result of the “inventor's dilemma” [3]. Instead, in 1981, Sony leveraged its competence in consumer electronics, branding and distribution to launch the first commercially viable digital camera and immediately became a market leader [66]. This illustrates the need of incumbent firms facing this type of technological innovation to determine the right architecture and to ensure their ability to reconfigure their products by securing required technologies.

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been diversified into medical imaging, semiconductor lithography and other applications. Realizing the growing demand for smaller and cheaper optical lenses, i.e., the changes in market needs or problems, Largan adopted the analyzer strategy [22] to enhance optics component knowledge, and innovated architecturally by developing technologies for manufacturing plastic aspherical lenses [69] for the smartphone market segment. While drifting market demand provided good opportunity conditions for miniature optics, a strategic threat to the incumbents is the race between market demand and technological performance improvements. Innovation disruption happens when the performance of miniature optics reaches the technological limit that falls behind mainstream market demand. 4.5. Photo storage: The discontinuous-widening type The digitalization of photography rendered incumbents competences obsolete and altered industrial relations. While Kodak was unable to abandon the chemical material and process technologies, Fujifilm invested in its optical and imaging technologies and broadened their applications to products in the medical, graphic, and even life science domains [67]. Although Fujifilm still sells photographic film, the company responded to digitalization by shifting its chemical photofinishing business into digital photo printer manufacturing. Fujifilm's pattern of paradigm transition is similar to that of Canon but it was made more difficult by Fujifilm's deep roots in film-related technologies. Konica merged with Minolta in 2003, and the new company left the consumer camera and film market to dedicate itself to commercial printing, along with optical and imaging technologies for healthcare, sensors and measuring instruments. These three companies followed similar strategies to survive the technological transition, but adopted different strategies for film-related chemical material process technologies. With digitization, flash memory chips have largely replaced film as the primary recording medium. Unlike film, both image sensors and flash memories qualify for inclusion in the production-intensive innovation pattern in which innovations are driven by production technologies. In digital storage, flash memory has been commoditized with producers competing only on cost. This technological innovation disrupted the substituted film technology, while providing an opportunity for flash memory to diversify into the camera industry. 4.6. Photo finishing: The discontinuous-drifting type

4.4. Miniature optics: The architectural-drifting type Miniature optics firms innovated architecturally in response to changes in market needs or problems (i.e., drifting). During the technological change, the architectural knowledge required to exploit innovations changed but component knowledge was enhanced. Both film and digital cameras require optical devices, thus the knowledge base and cumulative conditions for the optical device industry did not experience drastic change. However, one key development has been the introduction of miniaturized lenses made from various materials for integration with computers or mobile phones. Thus, rather than focusing on the photographic industry, knowledge in optical devices has

The emergence of digital cameras dramatically altered the opportunity conditions for film and photo processing technologies. These technologies were disrupted because their commercial values were largely undermined by image sensors and consumer printers, thus, these technologies lost investment appeal. Commercial printing facilities were replaced by personalized photo printers available from a range of manufacturers including HP, Epson, Lexmark, and Canon. The industry is supplier-specialized but it is not dominated by the manufacturers. On the other hand, opportunities developed for technologies that allow photos to be instantly displayed, edited or distributed electronically, along with demand for on-demand

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printing. These changes in market needs or problems (i.e., drifting) are very significant. The shift away from commercial photofinishing services using film and related chemical material process technologies disrupted firm competencies in these areas. Kodak's reluctance to move away from the photo-printing businesses put the company hamstrung and led to years of disappointing financial performance.

3.

4.7. Photo sharing: The discontinuous-emerging type Through its Easyshare Gallery service, Kodak was once the dominant player in the market for online photo storage and processing. However, Kodak missed the emergence of emerging market demands for photo distribution and sharing. Kodak's management, culture, and rigid bureaucratic structure hindered a fast response to new technologies which dramatically changed the process of capturing and sharing images [70]. Although Kodak successfully convinced consumers to print digital images at its growing network of kiosks, and launched the first Wi-Fi enabled camera in 2005, it missed opportunities to capitalize on other innovations, including the integration of online photos into online social networks. Overall, Kodak failed to identify and capitalize on the disruptive attributes of digital photographic technologies to build a viable business. External technologies, including email, the Internet, flat panel displays, photo editing software, and social media have greatly enhanced the value of digital photography to users. Today, sharing photos relies on display and distribution technologies, rather than printing. This type of technological innovation provides great opportunities to firms with innovative technologies and business models.

4.

5.

5. Strategic implications, generalization and future applications 5.1. Strategic implications Using the typology as an analytical framework, a case study of the photographic industrial sector identifies several types of technological changes with various strategic implications. Porter's generic strategies [23] and Miles and Snow's strategy archetypes [22] are related to the identified types of technological changes as follows: 1. The incremental-deepening type: This type of technological change is represented by technological innovations in professional-level optics, including those produced by Canon and Nikon for marketing to professional photographers. A focus strategy targeting professional users is viable. Subsequent advances in complementary consumer electronics technologies and improved production efficiency allowed the firms to later diversify into the consumer electronics market for amateur photographers. 2. The modular-widening type: The development of the digital image sensor was the core innovation which led to the digitalization of the photographic industry. This technological change rendered incumbent competencies in film and photofinishing technologies obsolete, while creating various market opportunities for both incumbents and new entrants. Incumbent firms like Kodak adopted the

6.

7.

analyzer strategy, which balances stable and flexible technological components to allow firms to pursue the widest range of market opportunities. New entrants without the liability of disrupted technological competencies could pursue a prospector strategy to exploit new product and market opportunities. Architectural-drifting type: Miniature optics were developed and adopted in parallel with development of digital image sensors and related electronic components. Market opportunities allowed miniature optics to replace conventional optics in consumer digital cameras and mobile devices. The diffusion of miniature optics across a range of market segments boosted market demand. Sony leveraged its competence in consumer electronics and branding to become the leader in digital cameras. To adapt to drifting market demand, camera and mobile device manufacturers adopted the analyzer strategy to integrate miniature optics in reconfigured product architectures. Correctly discerning the trend toward miniaturized lenses for consumer electronics, Largan leveraged its experience in precision machining to develop technologies for the low-cost mass production of plastic aspherical lenses. Miniature optics manufacturers adopted a defender strategy to increase production efficiency and maintain product performance and market share. Architectural-widening type: Digitalization required camera companies to reconfigure their product architectures, while broadening the range of products to include software and/or services for photography. This type of technological change could thus benefit from a mix of defender strategy to protect existing market share and analyzer strategy to diversify into an expanding market. Discontinuous-widening type: The digitalization of photography rendered film obsolete, while giving rise to new storage technologies such as flash memory, which had previously been widely used in consumer electronics before its diffusion into the photographic market. Flash memory firms would benefit from adopting a defender strategy to reduce production costs. Discontinuous-drifting type: Digitalization disrupted commercial photofinishing as photo viewing shifted from paper to screen displays, and printing shifted from commercial photofinishing operations to home printers. Suppliers of commercial photofinishing equipment, such as Kodak and Fujifilm should leverage their underlying technological competencies to enter other markets through the prospector strategy. Discontinuous-emerging type: Online photo sharing covers a range of emerging services and products driven by the development of the Internet, smartphones, and social media. Firms developing such products should adopt the prospector strategy to explore possible market opportunities for innovative product technologies or service business models.

Case studies of the digitalization of the photographic industry illustrate the utility of the typology for technological changes. Cameras integrate optical, recording and storage technologies. During a technology paradigm shift, technological systems do not necessarily fall into a dichotomy of sustained vs. disrupted. Rather, to allow for the effective application of appropriate strategies, product technology systems must be analyzed at the level of individual technologies or their underlying knowledge


bases. In a time of shifting paradigms, management should seek to determine the level of potential disruption posed by various technologies. In the photographic industry, optical technologies made the transition to digital with minimal disruption, while film and its associated chemical photofinishing processes were displaced by recording and storage devices. Although digitalization had a dramatic impact on the camera industry, the relative lack of disruption of certain sustained technologies gave companies the continuity and opportunity they needed to diversify their product lines. The dimension of changes to problem or market needs adds market variations to technological changes. The twodimensional typology broadens the existing literature on innovation management. Competence enhancement or destruction is determined by the collective effect of technology changes and variations to market needs. While certain types of changes result in the destruction of competence, they can also raise new market opportunities. Firms must first identify the types of change they face and then adopt corresponding and appropriate strategies to deal with developing technologies and market conditions. In the case study, Kodak was a pioneer during the film era, but its accumulated strength in chemical material technologies inhibited it from aggressively commercializing digital camera technologies. Kodak instead adopted a defender strategy for film-related technologies, thus allowing Sony to emerge as a leader in digital cameras. 5.2. Generalization of the typology Generalization of the typology further enhances its utility to industry and its contribution to innovation research. The typology's generalizability can be illustrated by applying it to

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a relatively broad industrial sector. The media industrial sector includes the development, delivery, storage/archiving, and marketing of news and entertainment content. The first step of the typological analysis entails applying the typology to an industrial technological system. Fig. 3 illustrates the technological system for the media industrial sector. A critical distinction is made between the system's priori and posterior technologies. The traditional media industry was based predominantly on print and analog broadcast models, such as book and magazines, vinyl records, cassette tapes, and radio and television broadcasting. Since late 1980s, society has seen the rapid transformation of the media industry through the widespread adoption and diffusion of electronic computing and communications technologies. “New media” formats include publishing of digital content on CDs, DVDs, various electronic devices, and over the Internet. Networked devices allow today's consumers to access any content, anywhere and at any time, and also empowers them to create and share new content in real time, and to solicit interactive feedback. The proposed typology is used to analyze the impact of the technological transition from analog to digital on the media industry. The core technologies of the traditional media industry were paper-based printing and publishing techniques, vinyl and magnetic tape storage mediums, and analog audio and video broadcasting systems, allowing for the one-way distribution of content to large numbers of people. The digital revolution has not only disrupted or changed most aspects of the traditional media industry but has also radically transformed and expanded the social and cultural role it plays. New media technologies are meant to facilitate the individual's personal utilitarian and hedonic activities. Such

The Meida Technological System

Content

Delivery Network

Storage

Customer Interface

Analog production

physical distributon channels; video/audio broadcasting

Paper-based film, tape, vinyl

Physical storefront

Digital production (Both incremental and discontinuous)

Electronic networks (e.g., Internet, WWW, EDI) (Discontinous)

Digital medium (modular)

Online retailers, digital service providers (architectural)

CD-ROM, DVD, hard disk, flash memory, non-volatile memory card, cloud services

Electronic customer relationship management (eCRM)

Priori Technologies

Posterior Technologies

Online media, publisher, and entertainment; Computer-generated imagery (CGI); Social media (user-generated contents)

Fig. 3. Technological system of the media industrial sector.

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technologies are usually accessed remotely on the Internet and help users fulfill their needs for information retrieval, interaction, self-expression and self-actualization [71]. According to Southwell and Lee [72] Web 2.0 technologies allow individual users to be actively involved in the consumption and generation of content. Thus the new media technological ecosystem consists of technologies that facilitate the generation, delivery, storage and presentation of content. The technology trajectory is driven by the advancement of information and communications technologies that connect individuals in novel and meaningful ways. The second step involves assessing types of technological change in the industrial sector and putting them in their corresponding positions in the typology. The typology of technological changes in the media industrial sector is illustrated in Fig. 4. The third step is to formulate strategies corresponding to technological changes. Various types of changes and affected industries are discussed below.

is often viewed as a component of enterprise content management (ECM) systems and is seen as being related to digital asset management, document imaging, workflow systems and records management systems.

1. Content generation: The incremental-deepening type The development of information and communications technologies has revolutionized the production and distribution of a variety of content (e.g., computer-generated imagery). However, new media technology systems are considerably different from conventional corporate information systems, such as enterprise resource planning (ERP), productivity tools, and work flow systems [73]. Such systems are generally implemented and deployed within an organization and are used by individuals within the organization to enhance the production of numerous types of content. The underlying technologies advance along the existing technological trajectory and enhance existing organizational competences to expand their product and/or service offerings.

Electronic customer relationship management (eCRM) makes use of new media technologies to help firms maintain and optimize their communications with clients. eCRM reconfigures the existing components and organizational functions of new media technologies (e.g., marketing information management, public relations, and customer services). Users can gather, organize, analyze, and distribute customer information through electronic commerce or online interactions, allowing their organizations to engage in meaningful dialogue with individual customers to better understand and fulfill their needs. In addition, new customer interface modes enable organizations to identify the emergence of new market demands or problems. For example, firms can offer personalized content for individual customers based on their previous purchase history and preferences.

2. Digital media: Modular-widening type

5. Digital content provider: Architectural-drifting type

Digital storage media complements the traditional archive and storage methods used in content management systems,

New media companies offer a range of content products and services including news and information (e.g., New York

3. Online retailing: Architectural-widening type Firms can innovate by leveraging existing technologies and reconfiguring the overall architecture of their products or services to create new markets. For example, Amazon.com has integrated different types of traditional and new media technologies (hardware, software, the Internet) to deliver an array of old and new media products and services, thus increasing the number of potential combinations of various market needs through a multi-functional retail channel. In addition, digital communications tools allow groups of different sizes to share, sell and swap goods (e.g., old media) and information (e.g., new media). 4. eCRM: The architectural-emerging type

Changes in Problem or Need

eCRM

Emerging

Digital content/service provider

Driing

Widening

Deepening

social media

Digital producon (CGI)

Digital medium

Online retailing

Eletronic delivery networks

Modular

Architechural

Disconnous

Content generaon

Incremental

Fig. 4. Types of technological changes in the media industrial sector.

Changes in Technologies


Times and the Economist), business and finance (e.g., Bloomberg and Wall Street Journal Interactive), software (e.g., Microsoft), video streaming (e.g., Comcast and Netflix), mobile content distribution (e.g., Amazon), mobile software applications (e.g., Apple and Android), e-books (e.g., Apple and Amazon), search and analytics (e.g., Google), and virtual communities (e.g., Yahoo!). Such firms provide innovative services by incorporating new media, existing information, and communications technologies, while reconfiguring individual components and the overall architecture in the content generation, delivery and presentation value chain. In addition to delivering media content, such service providers also create and fulfill new market needs for new media content. 6. Electronic delivery networks: Discontinuous-widening type Electronic delivery networks, such as electronic data exchanges, the Internet, and corporate intranets present a discontinuous innovation to traditional physical media distribution networks. For audio and video broadcasting, the paradigm has shifted from analog to digital platforms. However, digital electronic delivery networks have been found to co-exist and complement traditional supplier networks, thus expanding the market for the distribution and delivery of media content. 7. Digital production: Discontinuous-drifting type Computer-generated imagery (CGI) uses computer graphics to create or modify images in art works, printed media, video games, films, television programs, commercials, and simulators. This new media production technology covers a wide range of applications including interactive simulations, visualization, computer-generated animation (CGA), and virtual worlds. CGI is a discontinuous innovation that has changed the technologies and techniques used to produce media content and has radically enhanced the functionality and performance of new media. The demand for CGI applications is increasing and has now extend beyond the production of media content. 8. Social media: Discontinuous-emerging type New media allows users to create and share original content, manipulate information, participate in social networks, and engage in self-presentation and expression [74]. User-generated media (UGM) includes social networks (e.g., Facebook), professional business networks (e.g., LinkedIn), wikis (e.g., Wikipedia), blogs and microblogs (e.g., Twitter), videos (e.g., YouTube), images (e.g., Instagram), and interactive discussions on virtual communities and news sites. Shao [71] argues that individuals engage with UGM in different ways for different purposes: they consume content to fulfill their information, entertainment, and emotional needs; they interact with the content and other users to build and enhance social connections and virtual communities; and they produce original content to satisfy their need for self-expression and self-actualization. Social media is a discontinuous innovation that has revolutionized traditional ways of generating and sharing content. In addition, social media has created new market opportunities for companies to create new products and services. Generalizing the typology to the media industry can reveal paradigmatic changes within the industry. Identifying types of change with their associated implications is critical

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to strategy formulation. Additional case studies could allow for the generalization of viable strategies for various types of paradigmatic changes. 5.3. Future applications The typology can be used to analyze different types of technological changes. The photographic industrial sector demonstrates the effectiveness of the typological approach in investigating technological change. However, not all types of technological change encompassed in the typology were identified. Further application of the typology to analyze other technological systems or industrial sectors should yield insights for management regarding the impact of firm strategy or government policy. The recent surge of research on green energy technologies has been driven by increasing concern about climate change and the depletion of fossil energy sources. In the telecommunications industry, paradigm shifts could be driven by changes in government regulation or consumer usage patterns. Research on these various industrial sectors will reveal different types of technological changes. The soundness and insightfulness of such research is dependent on in-depth interpretations of the interactive implications among the technological changes and market conditions. In addition, adaptive strategies for various types of technological change require further study. This research adopted the strategic typologies developed by Miles and Snow [22] and Porter [23] to identify correspondence with the proposed typology. Segev [75] empirically identified different industrial characteristics for the two typologies. It is recognized that the use of an ideal strategic typology in response to paradigmatic technological change is not confined to the business (competitive) level and usually lies beyond the scope of any individual industry. Future research on adaptive strategies to critical technological change will promote corporate viability and profitability in times of paradigmatic technological change. Acknowledgment The authors would like to express their appreciation to National Science Council of Taiwan for funding this research (Project Number: NSC97-2410-H-155-012-MY3). Special thanks are extended to the anonymous reviewers for their time and valuable comments. We are particularly grateful for the kind assistance given by Dr. Tugrul U. Daim, the editor of this PICMET special issue. References [1] J.A. Schumpeter, Capitalism, Socialism and Democracy, First Harper Colophon edition Harper & Row, New York, 1942. [2] C.M. Christensen, Why great companies lose their way, Across Board 35 (1998) 36–41. [3] C.M. Christensen, The Innovator's Dilemma, HarperCollins, New York, NY, 2000. [4] C.M. Christensen, R.S. Rosenbloom, Explaining the attacker's advantage: technological paradigms, organizational dynamics, and the value network, Res. Policy 24 (1995) 233–257. [5] J. Utterback, The dynamics of innovation, Educ. Rev. 39 (2004) 42–51. [6] C.M. Christensen, M. Overdorf, Meeting the challenge of disruptive change, Harv. Bus. Rev. 78 (2000) 66–76. [7] C.M. Christensen, F.F. Suarez, J.M. Utterback, Strategies for survival in fast-changing industries, Manag. Sci. 44 (1998) 207–220.

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J.C. Ho, C.-S. Lee / Technological Forecasting & Social Change 97 (2015) 128–139 Jonathan C. Ho is an associate professor of the College of Management, Yuan Ze University, Taiwan. Prior to current position, he was technology researcher of the Industry Technology Research Institute and quality manager of Applied Materials Inc. Dr. Ho received the B.S. degree from Chung Yuan Christian University in Taiwan. His graduate degrees include the M.S. degree in Mechanical and Aerospace Engineering from the University of MissouriColumbia, the M.S. degree in Engineering Management, and the Ph.D. degree in Systems Science: Engineering Management from Portland State University. His research interests include strategic management of technology, technology evaluation and forecasting, and competitive strategy in high-tech industries.

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Dr. Chung-Shing Lee is a Professor of Technology and Innovation Management (TIM) and the Director of the ePLU E-Commerce and Technology Management Center. Prior to his current position, he was a faculty research associate in the Center for Advanced Life Cycle Engineering (CALCE) at the University of Maryland in College Park, Maryland. His research has appeared in journals such as the Technovation, Research Technology Management, Technology Analysis and Strategic Management, Internet Research, International Journal of Services Technology and Management, Competitiveness Review, Journal of International Technology and Information Management, and the International Journal of Technology Transfer and Commercialization.