PERF RMANCE 04 - The Performance Portal - Ernst & Young

digital watches and other portable display
applications before being considered for
notebook and desktop computer monitors.
Yet today, the demand for LCD monitors
outstrips the demand for CRT monitors.
Hence, the incumbent technology can
be taken by surprise as the competitive
technology improves at a faster rate than
the incumbent technology and enters
new markets.
The three critical issues for managers to
keep in mind are that a) new dimensions
are constantly emerging, b) their
importance is in a state of constant
flux, and c) this state is driven primarily
by technological evolution not innate
consumer tastes. To understand the nature
of competition on these dimensions,
managers need to analyze the range of
current and potential platforms, on current
and emerging dimensions, over time,
along the lines shown in Figure 1. They
also need to monitor related markets
that use the new technologies to identify
progress and opportunities posed by the
new technologies.
Which technology should a
company back?
This discussion brings us back to the
key question that managers face. Which
technology to back? In GM’s case, it turned
out to be a billion-dollar question. How can
our framework help managers to identify
the most promising technology to back? We
argue that the multidimensional analysis of
multi-technology dynamics provides a rich
and insightful picture of a firm’s options.
An example of how to use the
new framework
Let’s consider the automobile battery
market shown in Figure 6. In this
market, we can identify three platform
technologies: galvanic cells, fuel cells
and flow cells. An important dimension
to evaluate the choice of a technology
is its effectiveness in miles per kilowatt.
Figure 6a shows the evolution of these
Figure 6. An example of using the new framework
technologies on this dimension. Within
each of these platform technologies, there
are numerous design and component
technologies that were commercialized
in the auto-battery market. For example,
within galvanic cells, lead-acid, nickelmetal-hydride
(NiMH) and lithium-ion
technologies are all alternate component
technologies. Similarly, the proton
exchange membrane fuel cell (PEMFC)
and zinc-air are alternate component
technologies based on fuel cell and flow cell
platforms respectively.
Zinc-air was better in performance
prior to 2005 and the other technologies
had comparable performance to each
other. Lithium-ion began showing a
sharp increase in effectiveness soon after
its introduction in 1997 (see Figure 6b).
By 1999, lithium-ion crossed fuels cells
and NiMH. In 2006, it crossed lead-acid
and zinc-air as well. It has stayed on top
ever since.
6a. Evolution of platform innovations in the auto-battery market
Efficiency (miles/kW)
Year
Flow cell
Galvanic cell
Fuel cell