Microsoft powerpoint - ei 2011 presentation (27-5-2011).ppt [compatibility mode]
THE ROLE OF STRATEGIC NICHES IN CREATING LARGE- SCALE APPLICATIONS FOR HIGH-TECH PRODUCTS Learning from other industries and previous telecommunication systems how a market can be created J. Roland Ortt Faculty Technology, Policy and Management Delft University of Technology (The Netherlands) 14th International Conference Economics of Infrastructures 27th May 2011 Intro Focus RQ+method Scientific relevance Theory Results Conclusion Focus: Strategic niches
A niche is a combination of a specialized product for a small group of customers.
• A strategic niche is a niche prior to large-scale application of high-tech products.
• Contrast with a niche in mature market.
Example: Contraceptive pill first introduced to treat skin irregularities
Managerial relevance
What to expect when introducing a high-tech product?
(IAMOT 2007 paper; Ortt & Shah, 2007)
For managers it is important to realize that targeting niche applications can be an
important initial step to create a mass market. Niches can form a transition
path to reach a large-scale application (DeBresson, 1995). 14th International Conference Economics of Infrastructures 27th May 2011 Intro Focus RQ+method Scientific relevance Theory Results Conclusion Goal: To explore strategic niches, to explain their emergence and to indicate how to
choose the proper niche strategy by analyzing the market.
Research questions and method:
(1) How often do strategic niches appear?
(2) How often do specific types of strategic niches appear?
(3) Do the number and type of strategic niches depend on the industry?
Historical perspective: analysis 37 cases in 3 industries (quantitative analysis)
(4) What are the main causes that make strategic niches appear (in general)?
(5) What are the factors indicating when to apply a particular niche strategy?
Managerial perspective: case-study, conceptual model (qualitative analysis)
(6) Niche-strategies and implications for telecom (radio) technologies
14th International Conference Economics of Infrastructures 27th May 2011 Intro Focus RQ+method Scientific relevance Theory Results Conclusion Scientific relevance
• Management lit: Different sub-disciplines theoretically describe niches
• Management of sustainable technologies
• Management lit: Case-studies empirically describe niches
• Case-studies give anecdotal evidence about niche applications
• Skewed sample of cases (electronics) in the literature
14th International Conference Economics of Infrastructures 27th May 2011
Intro Theory literature categorization Results Conclusion Author(s) Product Market Applications Literature
Business data processing for limited corporate customerGeneral business application*
Categorization of niches
Replacement tires for mainstream car owners*OEMs market of automobile manufacturers*
Broadcasting industryIndustrial and commercial usersMass consumer electronic market*
Business with low-intensity computing
Designers/artists/musicians that demanded high quality graphics and multimedia)Individual/ordinary users*
14th International Conference Economics of Infrastructures 27th May 2011
Intro Theory Results Sample RQ1-2 RQ3 RQ4 RQ5 RQ6 Conclusion Sample: heterogeneous in time and industry Industry Chemicals, Pharmaceutical & Telecommunication materials & metals healthcare & media 14th International Conference Economics of Infrastructures 27th May 2011
Intro Theory Results Sample RQ1-2 RQ3 RQ4 RQ5 RQ6 Conclusion RQ1a: How often niches?
27 of 37 high-tech products (73%) first introduced in (strategic) niches10 (27%) directly introduced in a mainstream application
RQ1b: How many niches (per case)?
On average 2 niche applications prior to mainstream application.
(we tracked 72 successive niche applications for the 37 cases)
RQ2: How often specific types of niches? 14th International Conference Economics of Infrastructures 27th May 2011
Intro Theory Results Sample RQ1-2 RQ3 RQ4 RQ5 RQ6 Conclusion RQ3: Industry effect? (number and type of niches) Industry Type Chemical, Telecom & media Niche category material & ceuticals & health care Government Business Consumer 72 (100%) Main outcome
Number of niches differs significantly for industries
Type of niches differ significantly for industries•Chemical & materials are introduced in government and business niches•Pharmaceuticals & healthcare are introduced in the consumer niches (if in niches)•Telecom and media are introduced in all three types of niches
14th International Conference Economics of Infrastructures 27th May 2011
Intro Theory Results Sample RQ1-2 RQ3 RQ4 RQ5 RQ6 Conclusion RQ4: What causes the emergence of strategic niches?
Niches appear when large-scale diffusion is blocked somehow.
What are the necessary conditions for large-scale diffusion
(that, if not present, will block large-scale diffusion)?
Factors based on findings reported in IAMOT 2008 (Ortt & Delgoshaie, 2008)
14th International Conference Economics of Infrastructures 27th May 2011
Intro Theory Results Sample RQ1-2 RQ3 RQ4 RQ5 RQ6 Conclusion RQ4: What causes the emergence of strategic niches? (Cont’d)
Instititional aspects (laws rules standards)
14th International Conference Economics of Infrastructures 27th May 2011
Intro Theory Results Sample RQ1-2 RQ3 RQ4 RQ5 RQ6 Conclusion RQ4: What causes the emergence of strategic niches? (Cont’d)
1. For case where niches appeared we identified the combination of factors
Dyneema (Chemicals, materials & metals) Product was incomplete (Production)
Dyneema, an ultra strong fiber, was first created in 1964. The production was rudimentary
(stirring with a stick in a solution). Knowledge how to produce the fiber on an industrial
scale was lacking until 1976-78. Before that time, the fiber was spun in small quantities in a
Supplier considered product as outside mission
The ultra-strong fiber Dyneema was outside the mission of the Dutch chemical company
DSM. The company was powerful and big but the commercialization of the fiber was delayed
because of a lack of interest of the company. Sources: Mulder (1992); Hongu and Phillips
14th International Conference Economics of Infrastructures 27th May 2011
Intro Theory Results Sample RQ1-2 RQ3 RQ4 RQ5 RQ6 Conclusion RQ4: What causes the emergence of strategic niches? (Cont’d)
2. For each case where large-scale diffusion appeared after first intro we
checked whether all necessary factors were in place
Paracetamol (Pharmaceutical & healthcare) All necessary conditions were in place at time of first market introduction. But,
Accidents during trials because of mistakes rather than inherent unsafety of the medicine, did
cause a blockade in the innovation process for more than half a century (Bertolini et al., 2006)!
Polio medicine (Pharmaceutical & healthcare) All necessary conditions were in place at time of first market introduction. But,
One batch of vaccine (for trial) was produced wrongly, causing the death of several children in the
US (McGrew, 1985; Drutz and Ligon, 2000; Blume, 2005). The powerful organization managed to
have multiple batches of vaccine produced by different factories. Only one batch caused problems
and that observation helped explaining the accident and prevented the blockade of large-scale
Learning points
Accidents or unexpected events have a hardly predictable effect on patterns.
Factors blocking large-scale diffusion can also lead to extension of the
innovation phase and a delay of the first intro in stead of strategic niches. 14th International Conference Economics of Infrastructures 27th May 2011
Intro Theory Results Sample RQ1-2 RQ3 RQ4 RQ5 RQ6 Conclusion RQ5: What are factors indicating when to apply a particular niche strategy?
Necessary conditions for large-scale diffusion do not suffice to
indicate the particular niche strategy that should be adopted!
Product Complementary products and services
Different causes for a lack of customers
environment Reformulated: What are the underlying causes that affect necessary conditions
14th International Conference Economics of Infrastructures 27th May 2011
Intro Theory Results Sample RQ1-2 RQ3 RQ4 RQ5 RQ6 Conclusion RQ5: What are factors indicating when to apply a particular niche strategy? (Cont’d)
What are underlying causes that affect necessary conditions for large-scale diffusion?
3. Socio-cultural aspects (norms and values)
4. Economic aspects, resources and strategic interests of stakeholders
These causes do affect a limited number of necessary conditions
e.g. Lack of knowledge of technology primarily affects the availability of products
Each combination of underlying cause affecting particular necessary condition
can be tackled with a specific niche strategy
e.g. Lack of knowledge of technology primarily affects the availability of
complementary products and services requires a niche strategy in which product is
used in standalone mode without complementary products and services.14
14th International Conference Economics of Infrastructures 27th May 2011
Intro Theory Results Sample RQ1-2 RQ3 RQ4 RQ5 RQ6 Conclusion RQ5: What are factors indicating when to apply a particular niche strategy? What are the underlying causes that affect necessary conditions 14th International Conference Economics of Infrastructures 27th May 2011
Intro Theory Results Sample RQ1-2 RQ3 RQ4 RQ5 RQ6 Conclusion RQ5: What are factors indicating when to apply a particular niche strategy? (Cont’d)
Conditions: knowledge of technology to make industrial product is lacking
1. Apply product to demonstrate the technical principle (as a toy or scientific marvel)
2. Apply incomplete product for high-need niches (e.g. medical app)
Conditions: knowledge of technology to make complementary prod/services is lacking
3. Apply product in stand-alone mode (e.g. telecom)
Conditions: knowledge of application is lacking among (potential) customers
4. Apply product in knowledgeable lead users niche (e.g. scientific community)
Conditions: knowledge of application is lacking among (potential) suppliers
5. Explore alternative niches in a deliberate niche exploration strategy
14th International Conference Economics of Infrastructures 27th May 2011
Intro Theory Results Sample RQ1-2 RQ3 RQ4 RQ5 RQ6 Conclusion RQ6: Typical telecom niche-strategies Stand-alone or local niche strategy Emergency first niche Radio telegraphy (military, police) strategy Demo principle niche strategy Explore the market niche strategy Hobby niche strategy Exploit unexpected niche strategy 14th International Conference Economics of Infrastructures 27th May 2011
Intro Theory Results Conclusions discussion implications future research Limitations: Discussion effect of the sample on results •
Pharmaceuticals & healthcare cases are atypical:
This effect of this industry is (probably) overweighted
actual length of adaptation phase and no of niches is probably larger
14th International Conference Economics of Infrastructures 27th May 2011
Intro Theory Results Conclusions discussion implications future research Scientific and managerial implications:
Niches are an important step towards large-scale production/diffusion (75% cases).
On average 2-3 niches are explored in the market prior to large-scale prod/dif
Type and number of niches are highly industry-specific.
Strategic niches emerge when one or more of five necessary conditions are not met.
The type of niche strategy that should be adopted to create a large scale market depends
on the combination of five underlying causes and their effect on the necessary factors
Several niche strategies can be distinguished, each of which is appropriate in specific
conditions (i.e. particular underlying cause has an effect on particular necessary factor)
Telecom is one of the most difficult industries to introduce an innovation! 14th International Conference Economics of Infrastructures 27th May 2011
Intro Theory Results Conclusions discussion implications future research Future research:
1. More cases (49, including electronics)
2. Quantitative models relating the characteristics of the market to
3. Qualitative assessment of the different niche-strategies
14th International Conference Economics of Infrastructures 27th May 2011 Thank you! 14th International Conference Economics of Infrastructures 27th May 2011
FEMALE MEDICAL AND FERTILITY HISTORY Date of Appointment: ________ Last Name: ______________ First Name: ____________ DOB: ________ How did you hear about our office? _____________________________________________________ What is the reason for your appointment today? ___________________________________________ What was the first day of your last menstrual flow? __________ Your age of your
LUND & STRACHAN DETAILED HISTORY QUESTIONAIRE Case Name and Number:________________________________________Your Present Name:_______________________________________________Your Age:_____________ Date of Birth:_____________________________Your Place of Birth:_______________________________________________Your Religion:____________________________________________________Your Home Address
THE ROLE OF STRATEGIC NICHES IN CREATING LARGE-
Intro Focus RQ+method Scientific relevance Theory Results Conclusion
Intro Focus RQ+method Scientific relevance Theory Results Conclusion
Intro Focus RQ+method Scientific relevance Theory Results Conclusion
Intro Theory literature categorization Results Conclusion
Intro Theory Results Sample RQ1-2 RQ3 RQ4 RQ5 RQ6 Conclusion
Intro Theory Results Sample RQ1-2 RQ3 RQ4 RQ5 RQ6 Conclusion
Intro Theory Results Sample RQ1-2 RQ3 RQ4 RQ5 RQ6 Conclusion
Intro Theory Results Sample RQ1-2 RQ3 RQ4 RQ5 RQ6 Conclusion
Intro Theory Results Sample RQ1-2 RQ3 RQ4 RQ5 RQ6 Conclusion
Intro Theory Results Sample RQ1-2 RQ3 RQ4 RQ5 RQ6 Conclusion
Intro Theory Results Sample RQ1-2 RQ3 RQ4 RQ5 RQ6 Conclusion
Intro Theory Results Sample RQ1-2 RQ3 RQ4 RQ5 RQ6 Conclusion
Intro Theory Results Sample RQ1-2 RQ3 RQ4 RQ5 RQ6 Conclusion
Intro Theory Results Sample RQ1-2 RQ3 RQ4 RQ5 RQ6 Conclusion
Intro Theory Results Sample RQ1-2 RQ3 RQ4 RQ5 RQ6 Conclusion
Intro Theory Results Sample RQ1-2 RQ3 RQ4 RQ5 RQ6 Conclusion
Intro Theory Results Conclusions discussion implications future research
Intro Theory Results Conclusions discussion implications future research
Intro Theory Results Conclusions discussion implications future research
Thank you!