The Abernathy – Utterback Model

Most of the previous models were static in nature (an exception can be made to the S-Curve framework), meaning they considered the factors affecting innovation under a fixed perspective. There were no transitions or dynamicity whatsoever. Abernathy and Utterback tried to break with this standard by creating a model where product innovation, process innovation, competitive environment and organizational structure were all interacting and closely linked together (Abernathy, W.J. and Utterback, J.M. – Patterns of Innovation in Technology, Technology Review 1978). The development of the whole system will pass through three main phases, each of them impacting differently on single companies, on the market and on the capabilities and resources required to develop the innovation.

The Abernathy – Utterback Model

Fluid Phase – the first phase they called fluid phase, where technological and market uncertainties prevail, a great deal of changes take place conteporaneously and outcomes may vary significantly. It is almost a large experimentation game in the market place. The manufacturing process relies on high-skilled labour and general purpose equipment, there is almost no process innovation and the many, small firms competing will base their advantage on differentiated product features. Competition will not be as fierce as in later phases because companies have no clear idea on potential applications for the innovation, nor on what direction the market might grow. There is low bargaining power from suppliers since no specialised materials are used in the production. The major threats come from the old technology itself and from the entrance of new entrants if the innovation was radical and competence-destroying.

In this phase a company can follow two strategies. Firstly it can try outmaneuvre the competitors and establish its product as the “dominant design”(explained in the next phase). This strategy will involve agreements with distributors and marketing investments to affect customers’ perceptions. Alternatively the company can try to take control of complementary assets and wait for the appearence of the dominate design; then once the standard becomes clear it will try to secure most of the profits basing its competitive advantage on the distribution channels, supplier contracts, complementary technologies, value-added services, and others.

Variable Fluid Phase
Innovation Product changes/radical innovations
Product Many different designs, customization
Competitors Many small firms, no direct competition
Organization Entrepreneurial, organic structure
Threats Old technology, new entrants
Process Flexible and inefficient


Transitional Phase – as producers start to learn more about the technology application and about customer’s needs some standardization will emerge. Usually by this time the acceptance of the innovation starts to increase and the market starts growing, signals that we are entering into what the authors called the transitional phase. The convergence pattern in this phase will lead to the appearance of a “dominant design”, which is a product degisn whose main components and underlying core characteristcs do not vary from one model to another, it often comes out as a new product syntethised from individual innovations introduced independtly in previous product variations. In Utterback words “the dominant design product has features that competitors and innovators must adhere if they hope to command significant market share following” (Utterback, J. M. – Mastering the Dynamics of Innovation, Harvard Business School 1994) .

Winning the battle for the dominant design is desirable because it will enable the firm to collect monopoly rents (given imitability is not so high or Intelectual Property Rights can be applied). Even is the standard is “open” the developer can build complementary products or enhanced versions faster, possibly establishing a new standard in the future. Microsoft managed to establish Windows as the dominant design for graphical operating systems also thanks to its previous dominant position with the MS-DOS operating system. The threat of new entrants on the transitional phase is linked to the technology involved in the innovation, if it is proprietary incumbents are favoured. Firms in this phase will use strategies to consolidate their product positioning and start increasing production capacity and process innovation in order to face the next phase, the specif phase.

Variable Transitional Phase
Innovation Major process changes, architectural innovations
Product Less differentiation due to mass production
Competitors Many, but declining after the emergence of a dominant design
Organization More formal structure with task groups
Threats Imitators and successful product breakthroughs
Process More rigid, changes occur in large steps


Specific Phase – after the appearance of the dominant design competition will shift from differentiation to product performance and costs. Companies now have a clear picture of market segments and will therefore concentrate on serving specific customers. Manufacturing will use highly specialised equipment and employing high-skilled labour become less important since there is a commoditisation taking place, which in turn means that bargaining power of both suppliers and customers will increase.

Competition becomes more intense and the market moves towards an oligopoly. As a consequence incumbets are able to secure their position through supplier relations, distributtion channels and other complementary assets that will create entry barriers to new entrants.

Variable Specific Phase
Innovation Incremental innovations, improvements in quality
Product Heavy standardization in product designs
Competitors Few, classic oligopoly
Organization Traditional hierarchical organization
Threats New technologies and firms bringing disrupting innovations
Process Efficient, capital intensive and rigid


Summing up, the Abernathy – Utterback is one of the most complete and solid models we have covered so far. The analysis they carried was very broad, ranging from technological impact upon products and processes to market dynamics and competition to organizational structure and strategic decisions within companies.

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