BU111 Lecture Notes - Lecture 19: Network Effect, Sildenafil, Risk Aversion
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Important technology concepts: complementary goods- needed for value; creates vicious or virtuous cycle, technology standards- requires compatibility of complementary goods. Installed base- # of users: network effects- value depends on users, solutions- compatibility, alliances/incentives with complementary goods suppliers, build base base. Less appeallling: lock-in size of investment complementary. Sustaining technology: presents improvements to existing products in expected ways, provides mainstream, high- margin customers with enhancements in product functionality, existing firms normally win. Khan academy- disrupting education: disrupting education, humble beginnings videos for his cousins, growth through youtube views, funding from google and gates foundation, expansion to college prep courses, humanities and the sciences. How different types of innovation impact existing firms: challenge value of existing capabilities and/or structure. Innovation (e. g. desktop computers compared to ibm mainframes) Innovation (e. g. digital camera compared to film camera) Innovation (e. g. image stabilizing feature added to digital cameras)
