In Pursuit of Dominant Design
Date: Wednesday , February 28, 2007
Can you imagine a car without a steering wheel and wiper blades, a Personal Computer without a keyboard, monitor, Operating System, and disk drive or a networking protocol besides Ethernet in the Local Area Network equipment? Of course not, because these technical features or attributes have come to define or describe their respective products. Underlying this simple observation is the powerful concept of dominant design. Simply put, dominant design is a single architecture that establishes dominance in a product class. It is the architecture that once established, competitors and innovators must adhere to if they want to command significant market following.
Dominant design is usually established after a period of market shake out of alternative technologies or architectures. Prior to the establishment of dominant design, competing product architectures vie for adoption by consumers in the marketplace, and dominant design is the one that wins its allegiance. Normally, it takes the form of a new product or set of features synthesized from individual technological innovations introduced independently in prior designs or in prior product variances.
Why is the dominant design concept so important? It turns out that broad adoption of a new product by the market at-large increases rapidly after the emergence of the dominant design.
Unit volumes and profitability for the dominant architecture peaks as alternative architectures drop off and the cost of sales for the dominant architecture drops significantly.
Consider the case of digital music download industry. Apple was neither the first one to introduce the MP3 player (that distinction goes to Eiger labs, I believe) nor the one to introduce the concept of music download or sharing (that distinction, I feel goes to Napster). Apple's contribution was in creating the dominant architecture for downloading music, which happens to include a very elegantly designed MP3 player, clever and simple to use iTunes software and a very robust music download service. The rest is history, as witnessed by the Apple's resurgence as a dominant force in consumer electronics.
The key then to successful innovation in a new or emerging market is to establish your product as the dominant design. In order to do so you must understand the various factors that aid in the establishment of the dominant design.
Several factors are involved in creation of the dominant design. Chief among them:
At the outset of a new industry or product category several architectures are vying for acceptance. It is extremely important that a company is organized such that there is very close communication between technology suppliers and technology users at this stage. The innovator must use technologies that allow them to iterate rapidly on various product concepts in order to hit upon the ultimate architecture. If you are a hardware company this means using rapid prototyping techniques (for e.g. FPGA's or structured ASIC's) for architecture validation or utilizing customer feedback at various points in the software development process. The emergence of the web has made this relatively easy.
Technological superiority / elegance – It all starts with a great product! I don’t think Apple would have been so successful in music download if the iPod looked like a toaster. So the intelligence and knack of creating a superior product goes a long way, as one would expect.
Importance of collateral or complementary assets related to the dominant design – timely existence or evolution of other enabling technologies is critical. YouTube, the popular video sharing site would not be as popular 5 years ago when broadband coverage even in the continental US was sparse. Broadband coverage along with video cameras on every cell phone is very complementary to YouTube's technology and aids in its establishment of dominant design for video sharing. I do believe though that dominant design in the field is still in progress.
Firm level strategy: Obviously the organizational choices a firm makes such as level of vertical integration, partnership / alliance strategy, choice of an open or closed architecture have a huge bearing on the formation of dominant design. This factor depends a lot on the actual circumstances. Some examples are:
a. An open WINTEL architecture worked better than APPLE in PC.
b. APPLE’s closed architecture seems to be working well in digital music.
c. In the video cassette recorder (VCR) market JVC's VHS technology won out over Sony's Betamax because JVC had had a stronger model of forging industry alliances vis-à-vis Sony.
First mover advantage, network externality, and customer switching cost: Some products exhibit strong positive externalities. In these cases the value of a product increases proportionally or even exponentially as the total number of users goes up. Ebay, YouTube, and other community based websites exhibit this phenomenon. As the number of subscribers to a given network goes up it is more likely that subsequent users will want to join that "rich" network. I do want to add that just because they are web based, not all markets have first mover advantage or positive externalities. This will not come as much consolation to companies such as eToys and furniture.com.
Dominant Design is an important concept related to innovation and one must constantly think of ways to distinguish their architecture in its pursuit. Dominant design does not mean "bleeding edge" technology or the highest performing product in the market. In fact it represents a happy balance of a lot of different product attributes such as performance, ease of use, reliability, ease of integration, ability to customize the solution, and cost. A dominant design is seldom located at the frontier of technical performance because backing off from the extreme specifications permits more stable and reliable relationships with suppliers, complementors, and customers. Go find you dominant design!
The author is a visiting lecturer at University of Illinois. Urbana-Champaign. He can be reached at firstname.lastname@example.org