PERF RMANCE 04 - The Performance Portal - Ernst & Young

On which level to innovate?
We identified three key levels of technology
innovation: platform, design or component
(Figure 3).
• A platform innovation is an underlying
technological level that relies on a
unique scientific principle, distinctly
different from other principles, to
achieve some function. For example,
in the display monitor category, we
identified four different technologies:
CRT, LCD, plasma, and OLED. Each of
these uses a distinct scientific principle
for forming an image on a screen. For
any technology, firms can use a variety
of design innovations.
• A design innovation is a layout or linkage
of parts to achieve some function. For
example, a flash drive stores data as a
charge in a capacitor to compact its size
relative to a hard drive, though both
are based on the principle of magnetic
memory. At the same time, a variety of
component innovations may be used on
any platform or design.
• A component innovation is one that
uses new parts or materials to achieve
some function. For example, a fuel cell
could use hydrogen or methanol to
generate electricity.
“ Companies
have a tough
time keeping up
with technological
change and
selecting the right
technologies for
their products.”
Innovation occurs almost constantly at the
level of designs and components. Indeed,
day-to-day competition often occurs at
these two levels. Platform innovations are
less frequent, but when they do occur,
they have the potential to transform
markets and cause upheaval among
firms. The great danger to firms is to be
so immersed in design and component
innovation as to miss the change in a
technological platform. For example, Sony’s
pre-occupation with improving its CRT
television sets with Trinitron technology
perhaps led it to miss the oncoming
revolution in flat screen LCD televisions.
Samsung invested heavily in the latter
technology so that Sony had to license
technology from Samsung and enter into
an alliance in order not to miss out on the
new generation televisions.
This discussion suggests that companies
have a tough time keeping up with
technological change and selecting the
right technologies for their products. That
is one reason we have used our data to
develop a more systematic framework of
analysis for these decisions. Our framework
has the advantage of not using after-thefact
definitions of technologies based on
their effects, as do the terms radical or
disruptive technologies.
Figure 3. Three key levels of technology innovations
Level of technology
innovation
Definition
Examples in display monitor
technologies
Platform Unique scientific principle CRT, LCD, plasma, OLED
Design
Linkage or layout within 5”, 25”, 45” size in LCDs
same scientific principle
Component
Material or content within
same scientific principle
Glass, plastic in LCDs