Information Technology Industry Dynamics

Abstract

This chapter combines disruptive innovation strategy (DIS) theory with the system dynamics (SD) modeling method. It presents a simulation model of the hard-disk (HD) maker population overshoot and collapse dynamics, showing that DIS can crucially affect the dynamics of the IT industry. Data from the HD maker industry help calibrate the parameters of the SD model and replicate the HD makers’ overshoot and collapse dynamics, which DIS allegedly caused from 1973 through 1993. SD model analysis entails articulating exactly how the structure of feedback relations among variables in a system determines its performance through time. The HD maker population model analysis shows that, over five distinct time phases, four different feedback loops might have been most prominent in generating the HD maker population dynamics. The chapter shows the benefits of using SD modeling software, such as iThink®, and SD model analysis software, such as Digest®. The latter helps detect exactly how changes in loop polarity and prominence determine system performance through time. Strategic scenarios computed with the model also show the relevance of using SD for information system management and research in areas where dynamic complexity rules.