Academic journal article Journal of Global Business and Technology

High Technology Product Success: The Critical Mass Dependency

Academic journal article Journal of Global Business and Technology

High Technology Product Success: The Critical Mass Dependency

Article excerpt

ABSTRACT

High technology firms sense pressure to constantly innovate and deliver goods and services to the marketplace. Most product introductions do not deliver long-term growing revenue streams or contribute to overall profitability. This study aids in understanding the importance of a new high-technology product, in the B2B sector, attaining a critical mass of customers (industry-wide) by modeling the influences driving technology adoption and development (inflow and outflow models). The paper presents a framework explaining the forces that create a critical mass of customers and the benefits flowing from critical mass in the high-technology arena. The paper's models aid by providing an understanding of delivered product technology marketplace success: short-term vs. long-term. The paper focuses on how firms should scan to determine viability of long-term success and how to invest in products accordingly. Implications to managerial decisions regarding new product launches are provided.

INTRODUCTION

High technology firms sense pressure to constantly innovate and deliver new products and services to the marketplace. This pressure derives from several factors. Firms hear their customers calling for the latest possible technology so that they may better compete in their own markets. Firms sense pressure from competitors who deliver new products to the market, and also fear that competitors will beat them to the market with products yet to be offered. Likewise, firms feel pressure from general industry hype about new technologies that industry analysts believe should become successful products in the market. Finally, firms create their own pressure from a desire to increase revenues and to present an innovative face to customers.

Unfortunately, most new products have only short-term success and never deliver long-term revenues and profits. This paper shows why some products have short-term success and how achieving a critical mass of customers is crucial to long-term product success. The paper provides a model that explains the forces that contribute to obtaining a critical mass (The Inflow Model) and a model that describes how reaching such a mass point enables product success (The Outflow Model). Although critical mass has been applied to topics from nuclear detonation to women on company boards of directors (Jansen & Brown, 2006), the underlying concept of critical mass is that a self-sustaining amount of whatever is discussed has been attained so that the process will continue. Within the scope of this paper, a critical mass means there are enough customers who have purchased the product, where the product is self-sustaining in terms of future sales, service and ancillary purchases. This concept has been missed in academic discourse regarding the success of innovation and it is a critical issue that needs to be understood by new product departments.

Although defining success for new product introduction has been greatly debated (Griffin & Page, 1996; Ayers, Gorden & Schoenbachler, 2001; Powell & Buede, 2006; Laníos, 2006), and research has yet to develop a model of why some products succeed and others fail (Henard & Szymanski, 2001), a recognition has been shown of the difference between long-term and short-term success (Hultnik & Robben, 1995). What is lacking is an understanding of why products become a long-term success. While it is vaguely understood that at some point a threshold may be crossed wherein a product changes from a short-run success to a long-term mainstay product that will be purchased by customers for years, this threshold needs examination. It is in crossing this threshold that a product can be said to be successful for the long-term. This is not a point when the industry recognizes the value of the technology delivered in product form. Rather, it is a point where enough customers have purchased the productized technology to enable a sustained growth. …

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