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VIEWS: 6 PAGES: 17

									    LIFE CYCLE

            By
Assoc Prof Dr. Amran Rasli
                    Confusion
• the term life cycle has been misunderstood and has long
  been abused by academicians and practitioners alike.
  Some people conveniently assume that they are the
  same particularly with regards to technology and product
  life cycles.
• It is to be noted that the technology life cycle which is
  associated with a product or technological service is
  different from product life cycle which is concerned with
  the life of a product in the market-place in respect of
  timing of introduction, marketing measures and business
  costs. The technology underlying the product may be
  quite marginal but the process of creating and managing
  its life as a branded product will be very different.
                 The 5 Phases
(a)     The research and development (R&D) phase
   (sometimes called the "bleeding edge") when gains from
   inputs are negative and where the prospects of failure
   are high
(b)     The ascent phase when out-of-pocket costs have
   been recovered and the technology begins to gather
   strength (sometimes called the "leading edge")
(c)     The growth phase when technology is widely
   accepted and gain is growing at exponential rate.
(d)     The maturity phase when gain is high and stable
   but going into saturation, and
(e)     The decline (or decay phase), signified by reducing
   fortunes and utility of the technology.
The 5 Phases
Technology Performance
                                Foster S-curves


                                                        New technology
                         Old technology




                                          Resources used in R&D
             Dominant Design
• The point at which the technology performance suddenly
  starts to increase rapidly generally coincides with the
  emergence of the dominant design. The dominant
  design is defined as that product or combination of
  components making up a product, which is accepted into
  the market place as meeting most of the users' needs.
  Before the emergence of the dominant design, a lot of
  effort is spent in developing a variety of new product
  designs that may not gain wide acceptance in the
  marketplace. It is only when a dominant design emerges
  that efforts are focused on improving the performance
  and price of the technology.
   Industry and Organisational
Dynamics as Technologies Evolve
   An S-curve for DRAM
Microprocessors (1982-1992)
Life is a Series of S-Curves
  Innovation attributes affecting diffusion
• The most important attribute of an innovation affecting diffusion is
  the relative advantage the innovation has over competing or
  substitute technologies. This is the degree the product is perceived
  to be better than competing or substitute technologies. Relative
  advantage has two components: performance and price. Both of
  these tend to change over the lifecycle of the technology with the
  performance increasing and the price decreasing. Long term
  diffusion predictions must take forecasts of these changes into
  account. In general, relative advantage is positively correlated with
  diffusion. Had the cost of pocket calculators remained high, it is
  unlikely that calculators would have diffused beyond the limited
  market for scientific users. Calculators have now become so cheap
  that they have diffused to the point of becoming ubiquitous.
 Innovation attributes affecting diffusion
• Sometimes status plays a role in determining relative
  advantage. In this case relative advantage may be
  negatively correlated with diffusion. For example a
  designer clothes label may enhance diffusion in certain
  communities, or might be regarded as snobbish in other
  communities and retard diffusion.
• Another attribute affecting the diffusion of an innovation
  is the degree that the innovation is compatible with the
  values, norms, and experience of the users. Innovations
  that are compatible with the values and norms of the
  community have a far better chance of diffusion in that
  community. Innovations that are linked to other
  innovations already accepted in the marketplace also
  have a better chance of diffusing.
 Innovation attributes affecting diffusion

• Care must be taken when branding and positioning
  exercises for new innovations are undertaken, as these
  might introduce connotations that are not compatible
  with existing values or norms.
• The third attribute affecting diffusion is complexity.
  Complexity is the degree the product is perceived to be
  difficult to use or understand. Complexity generally
  retards diffusion. The diffusion of personal computers
  has been enhanced by innovations such as "plug and
  play" and graphic user interfaces, all of which reduce the
  complexity to the user.
 Innovation attributes affecting diffusion

• The fourth attribute affecting diffusion of an
  innovation is the trialability of the innovation.
  Trialability is the extent that the innovation can
  be tried out in a low risk situation as elaborated
  in Example 5. In general, trialability is positively
  correlated with diffusion. Trialability is more
  important for early adopters as they are not
  generally able to observe others using the
  product. Late adopters are less likely to want to
  try out an innovation, as they will use the
  experience of early adopters as a surrogate for
  their own trials.
 Innovation attributes affecting diffusion

• The last attribute affecting diffusion of an
  innovation is the observability of the
  innovation. Observability is the degree
  that the results of the innovation are visible
  to others. In general, observability is
  positively correlated with diffusion
 Other factors affecting diffusion
• Besides the attributes of the product itself there are also
  other factors that influence the diffusion of innovations.
  The first of these is the nature of the implementation
  decision. Decisions that are made centrally by a person
  or body in authority tend to diffuse the fastest. Thus a
  decision made by local government to fluorinate drinking
  water will be implemented almost immediately. In this
  way the innovation will quickly diffuse across a whole
  region. When decisions regarding the implementation of
  innovation are made by committees or jointly by groups
  of people, these innovations tend to diffuse the slowest
  as consultation and consensus seeking are slow
  processes. When decisions made individually, such as
  when parents decide to give their children fluoride tablets,
  diffusion rates tend to be somewhere between these two
  extremes.
 Other factors affecting diffusion
• The next factor that influences the diffusion of an innovation is
  the communication channel used. Where mass
  communication media are used, the rate of diffusion tends to
  be higher than when interpersonal communication is used.
  The diffusion of innovations in birth control was hampered by
  societal taboos that prevented mass promotion in certain
  countries.
• Another factor that influences the diffusion of an innovation is
  the inter-connectivity of the social system. Innovations tend to
  diffuse faster through an interconnected social system.
  Despite the distances involved, farmers have established a
  highly inter-connected social system, including co-operatives,
  extension officers, specialist magazines, marketing boards,
  agricultural shows etc. that enable innovations such as new
  seed strains to diffuse very rapidly throughout the industry.
• Lastly the diffusion of an innovation is influenced by the extent
  of the change agent's promotion. The higher the level of the
  change agent’s efforts is, the greater the rate at which
  diffusion will take place.
Overlapping of life cycles

								
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