Innovation and Innovation Management are pressing topics in the current era of digitization. In this time of new digital products and services also new dominant designs are emerging. Here, design does not mean an IP right but technological features which become de facto standards. If a company is able to protect their dominant design with IP rights, they get a very valuable market position. Which and how IP may be used in innovation can be learned in the Certificate course on “Integrated IP and Innovation Management” at CEIPI. The next course starts on 15.09.2020.
Dominant design is a technology management concept introduced by Utterback and Abernathy in 1975, identifying key technological features that become a de facto standard. A dominant design is the one that wins the allegiance of the marketplace, the one to which competitors and innovators must adhere if they hope to command significant market following.
The emergence of a dominant design in an industry is an important event, which directly affects the technology life cycle and indirectly affects the strategies and performance of firms in that industry. The traditional perception of the interrelationship of standardization and innovation is that standardization hinders innovative performance. A common definition of innovative performance has been frequently discussed in innovation management research. Innovative performance can be defined in the context of an output factor as the cumulated results of innovative activities in an industry or product category. Nevertheless, standardization is also found to promote innovation if certain framework conditions are considered. Standards can explain technological specifics and therefore diffuse state of the art solutions.
The firm that has brought up a dominant design shapes future generations of products, resulting in what is called an “architectural franchise” – a type of monopoly power which might lock out competition for a while and consequently increase innovative and firm performance. This kind of product architecture is a corner stone of an innovation orientated IP strategy. From a patent perspective, different functions like protection, blocking, reserve and licensing can be used. From a trademark perspective the association of a dominant design with a certain brand is quite valuable and can ultimately lead to brand loyalty and licensing income (e.g. IBM PC, Intel Inside etc.). A dominant design can be used in a hub-monopoly. More about the Hub-monopoly can be learned in the Certified University Course on IP Strategy Development.
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