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LN05: Technology Life Cycle: EEE 452: Engineering Economics and Management

This document discusses the technology life cycle and provides insights into key concepts like the differences between technology and products, technology diffusion models, factors that influence technology adoption, and perspectives from both consumers and businesses. It summarizes the typical trends in consumer adaptation to new technologies and highlights the importance of understanding different user segments.

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mehedi hasan
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58 views

LN05: Technology Life Cycle: EEE 452: Engineering Economics and Management

This document discusses the technology life cycle and provides insights into key concepts like the differences between technology and products, technology diffusion models, factors that influence technology adoption, and perspectives from both consumers and businesses. It summarizes the typical trends in consumer adaptation to new technologies and highlights the importance of understanding different user segments.

Uploaded by

mehedi hasan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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LN05: Technology Life Cycle

EEE 452: Engineering Economics and


Management
Md. Naqib Imtiaz Hussain

Source: Sandia report: Technology development and Innovation and Wikipedia


Remember this?

Did you ever use it?

What happened to
this technology?
How about .. this?

When was the last


time you used a
CD/DVD to save your
files?
What Replaced CD/DVD?
Any new potential
technology replacing
them?

What are the


vulnerabilities of this
technology?
Outline
• Why study technology life cycle?
– Where is the motivation
• Technology Vs Product
• Technology Diffusion models
• Technology failure point in transition
• Business view
• Hype Cycle
Why Study Tech Life Cycle
• To develop new technology
• To develop new product?
• To realize where to drive product strategy.
What is Technology?
• Defn1
– a: the practical application of knowledge especially in a
particular area
– b: a capability given by the practical application of knowledge
• Defn2
– a manner of accomplishing a task especially using technical
processes, methods, or knowledge
• Defn3
– the specialized aspects of a particular field of endeavor
Where does New Technology Stand
What is a Product / Service?
• Generally marketed or sold as a commodity.
• Products are not equal to technologies.
– A product is based on multiple technologies and a
technology can form the basis for multiple products.
– A technology, on the other hand, is formulated on the
basis of one or more physical principles and
properties, and may build on other technologies as
well
Technology vs Products

Toyota Celica Buick LaCrosse

Same automotive technology but two different products


Technology Development and Risk
What drives technology life cycle?
• one of the most prevalent views of a technology
lifecycle is rooted in economics:
– how quickly and completely new technologies are adopted
within a consumer market
• From a business perspective, then, with an overriding
concern for return on investment, technology
development and deployment strategies focus on
finding a way to enable early, rapid, and complete
penetration of the market.
Typical Trends in Consumer Adaptation

Source: Sandia report: Technology development and Innovation


Step back and think..
If you are planning a new start up what technology you want to base upon?
given the figure below?
Now we are concerned with
how well a particular technology
“lives” in people’s lives.
That’s what drives study of
Technology Diffusion models
Technology Diffusion
• The series of actions through which new
technologies are adopted—or new ideas are
accepted—is generally known as the diffusion
process. This concept is also referred to as the
theory of diffusion of innovations, and was
first studied by the French sociologist Gabriel
Tarde (1890)
Important book: Rogers, Everett M. (1962). Diffusion of Innovations, Glencoe: Free Press.
What insights to gain?
• Diffusion of Innovations offers three valuable
insights into the process of social change:
– What qualities make an innovation spread
successfully.
– The importance of peer-peer conversations and peer
networks
– Understanding the needs of different user segments
What qualities make innovations
spread?
• 1) Relative advantage
• 2) Compatibility with existing values and
practices
• 3) Simplicity and ease of use
• 4) Trialability
• 5) Observable results
How to induce diffusion?
• Reinvention is a key principle in Diffusion of
Innovations.
– The success of an innovation depends on how well it
evolves to meet the needs of more and more
demanding and risk-averse individuals in a population
• Enable peer-peer conversations and peer
networks
– Make innovation sharable by peers to peers
Power of Peer Conversations

Source: University of Notre Dame, USA


https://twut.nd.edu/PDF/Summary_Diffusion_Theory.pdf
Understanding the needs of different
user segments

Innovators: 2.5% Early Adopters: 13.5% Early majority: 34% Late majority 34%
Laggards 16%
Diffusion over Tech Maturity
Technology Failure Point
• For new innovations some times fail while in transition between the
“early adopters and “early majority” consumer groups often corresponds
to failure for high-technology products.
• This failure may be explained on a requirements basis by thinking of the
technology in terms of utility or performance vis-à-vis these different
consumer groups.
• As the customer base grows, customer “requirements” shifts
– Eventually the needs of the dominant customer, the one to please from a
purely economics perspective, will have to take top billing.
– If the stakeholder list and their needs and requirements are not periodically
reviewed, updated, and reflected in technology and product development, the
risk becomes great for falling into the failure or in being displaced by a
disruptive technology.
Technology Performance View
Utility of Technology
Considering a technology in terms of utility or performance
can also be used to transform a technology diffusion model
away from a consumer market share view into more of a
consumer requirements view
Watch out or die
Business view of Technology Life Cycle
• R&D sunk costs
• the timeline of recovering these costs
• the modes to yield a profit proportionate to
– the costs and
– risks involved
Business view of Technology Life Cycle

Source: Sandia report: Technology development and Innovation


Hype Cycle: another Interesting View
• Coined by Gartner Inc
• Measures/assesses
– visibility of Technology and
– its expectations
• in the industry and among public.
Hype Cycle of Tech Maturity

Source: Sandia report: Technology development and Innovation


Summary
• Technology and product are not same but related.
• Technology is driven by economics and “lives” in
people’s lives.
• Diffusion models provides insight and actions to
different stages of technology life cycle
• Business must decide on basis on hard facts and
prospects.
• Techy hype must be handled with business level
dexterity and insight.

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