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Wednesday, January 22, 2014

The Growth and Decline of Companies and Products


Products and businesses move through the very same cycles and growth and decline. To help businesses rejuvenate their market relevancy often requires the revamping of both their products and operations. A paper by Cao and Zhao (2010) describes how internal components like IT and technology products need to be revamped to maintain market profitability. The paper describes the stages of growth and decline that help organizations formulate the process of improvement. 

The concept of product life cycle was originally proposed by Raymond in 1966 and has since been expanded to include other areas of production as well as technology products. The researchers William Abernathy and James Utterback went on further to discuss the concept of “patterns of industrial innovation”. Each of the products, services, and companies have patterns when developing, growing and declining. 

The argument fits into Schumpeter’s explanation of the long tail that has been later dubbed the S curve. Breakthroughs are often followed up by rapid productivity and research the leads to increased profits and ends in a market decline. These phases can be seen prototype, emerging, maturing, established and outmoded stages (Baker 1989).  New technology is capitalized on and then starts moving toward decline where new technologies must take up the vanguard of growth. 


New technologies are not hiding from competitors for long. Other companies will adopt and adapt the technology to also receive financial benefits. This transference serves a purpose in the development in society as each company and person applies their own knowledge to the product create greater variability and market application. To stay competitive, companies must continually develop, adapt, and create to maintain market position.  One can think of how the technology from the electronic transistor eventually made its way into television, compact discs and notebooks through the adaptations of many companies. 

The author’s used the example of Motorola’s IP Management of the mobile (GSM) system. Eventually this system was adopted, adapted, and used in other places. New systems developed that were more effective. The process of development is continual and companies will constantly seek to learn from each other and put new developments into the market. Patents can slow and protect products for a short time but the process of information diffusion will continue regardless of a company’s best efforts. 

Comment: Companies that seek to maintain a high position in the market will need to continually develop new products and then capitalize on those new products to create financial revenue streams. Companies develop, grow, and decline in the same way as technology products hit the market but eventually loose steam. Those companies that desire to maintain their market relevance will need to continually rejuvenate themselves. Companies within a hub learn and copy from each other as information and employees interact among semi-permeable borders. 

Baker, H. (1989). The technology life cycle. Best’s Review, 90. 66-72

Cao, Y. & Zhao, L. (2010). Intellectual property management model in enterprises: a technology life cycle perspective. International Journal of Innovation and Technology Management, 8 (2).

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