Chapter 11 – Appropriating the Gains from Innovation
Wharton Chapter 11 discusses one of the most important issues surrounding emerging technologies– how to make profits from the technology and block other from profiting. The chapter discusses three common misunderstandings about intellectual property and profitability, and then presents four ways to secure value from a technology.
Too much emphasis is put on intellectual property law as a way to secure profits from emerging technologies, and this can actually have a negative impact on a company. By assuming that patents and other legal protections are the best way to make money, attention and resources are heavily devoted to securing that legal protection that probably won’t pay off in the long run. Projects and technologies that might be very profitable are often overlooked if legal protection can’t be secured. The book uses Starbucks and their business as an example; they are able to be successful without using legal protection such as patents.
While the chapter first dismisses the myths surrounding intellectual property, patents and other legal protection is listed as a way to appropriate gains from innovation. The chapter cautions that while patents are costly and do not prevent other companies form “inventing around” the product, they have shown to be highly effective in varying industries.
The second way to appropriate gains from innovation is secrecy. Secrecy is the available means to provide protection. Secrecy would appear to be most beneficial in the early stages of development, while maintaining secrecy in later stages may hinder commercialization of the product. Secrecy runs the risk of negatively impacting the flow of communication within a company, hurting future R&D efforts, and stopping the flow of communication coming into a company. Once again I think the effectiveness and practicality would vary by industry and even in regards to processes and products.
Complementary assets are another way to make profits from technology. The book has touched on this in previous chapters, and it is again emphasized that complementary assets can be extremely beneficial to a company. The chapter uses the Biotech industry and IBM to illustrate complementary assets benefiting the companies. Assets such as established marketing and distribution channels, external relationships, R&D, manufacturing processes, etc. can be leveraged to accommodate for not being first to market with a product.
Finally lead time is presented as the most effective way to achieve profits. The more durable a product is, the more valuable having a lead time advantage is. Lead time can provide a company with a unique opportunity to get to further know the customers and develop relationships, while capturing any complementary assets that emerge.
The chapter concludes by saying that there is no one right way to make money from a technology, but by knowing the uncertainties involved and by assessing the business environment and paying close attention to rivals, patents, changes, etc., a company can select the best way to obtain profits from a technology.
Chapter 17 – Design of New Organizational Forms
Chapter 17 discuses how the presence of emerging technologies has caused retooling of the normal organizational forms. The six elements that constitute organizational forms - goal, strategies, authority structure, technologies, markets, and processes - need to be recombined accordingly to meet the changing business environment needs. The chapter discusses six current emerging organization forms.
Virtual Organization
Employees, suppliers, and customers are not physically located together but are connected by technology. This has proven to be very effective because it dramatically lowers overhead costs and creates unique opportunities for customer relationships. This has proven challenging as far as team collaboration and authority and accountability.
Network Organization
Self-governing work groups work together to provide a completed product or service. There can be external networks, which the book refers to “outsourcing in the extreme,” or internal networks. In external network organizations, independent companies work to collectively provide an end product or service. Internal networks functions the same way, but maintained within an organization.
Spin-Out Organization
Parent/child relationship where a new company is created inside a larger company, and then spun out into its own organization. The child company can take advantage of the resources of the parent company, and this a very useful way for a company to develop risky and expensive emerging technologies.
Ambidextrous Organization
Existing businesses and new businesses operate side by side within an organization. Separation is limited so potential issues can be addressed and resolved quickly. Current business can still be maintained while new business is developed.
Front-Back Organization
The customer is the front of the business and the business works to support that customer. There are hybrid variations of this form, where vertical reporting lines can be bypassed if needed. This would apply more in the service industry.
Sense and Respond Organization
Company is designed around meeting the ever-changing customer needs. A company must be able to remain flexible, sense the customer’s needs, and be able to change as needed.
Chapter 17 concludes by saying that as with everything else to do with emerging technologies, there is no one right form for an organization. There are many different variables to take into account, and by using these six organizational forms as starting points, a company can create an organizational form suitable to their nature.
I really enjoyed chapter 11, especially the information about patents. Before this I was under the impression that patents were a sure way to earn profits, but after this chapter and initial research for the chapter presentation, it seems like patents are a better defensive mechanism to prevent a company from being sued. If a company has a patent on a specific process or product, they have some protection against other companies who could potentially sue them. As the chapter stated, patents are not always efficient at stopping competition from inventing around the original product, but they can act as “speed bumps” to delay the competition and allow the company with the patents to secure lead time. It seems to me that there would be differences between patenting processes/business methods and products, and the degrees of security from the patent would vary by industry. The book only really touched on the worth of individual patents, not large corporations and their patent portfolio. One of the articles I read stated that Texas Instruments actually makes more money from their patent royalties than they do from their actual products, but I would imagine they are a minority in that aspect. What I really gathered from both these chapters is that there is no right way to achieve profitability or a right organizational form for a company. By being aware of the different options and picking the characteristics that fit the specific company and circumstance a company will be more likely to be profitable and remain competitive.
Safeguard Scientifics, Inc. and Novell Inc. were both mentioned in Chapter 17, Safeguard being the holding company that provided Novell with enough support to get up and running. Both companies are both in business, and Novell has been credited (or at least, credited itself) with developing the concept and technology of the WAN. Since then they have branched out into a cross-platform company, offering many software platforms from operating systems to email, to consulting and training. They have strategic partnerships with Microsoft, and have branched into security products as well. They really seem to have quite a diverse portfolio, which could be why they have remained in business and competitive for so many years.
http://www.safeguard.com/
http://www.novell.com/news/press/pressroom/history.html
Wednesday, April 29, 2009
Monday, April 20, 2009
Chapter 10 – Scenario Planning for Disruptive Technologies
Chapter 10 uses the challenges faced by the newspaper industry with the growing popularity of the Internet to discuss and demonstrate scenario planning techniques when emerging technologies are involved. As the Internet gains popularity as a source for information distribution, newspapers are faced with preparing for the uncertain future in the rapidly changing business environment. Chapter 10 reviews the various methods of scenario planning when the future is uncertain, and offers solutions for generating possible alternative scenarios and ways to deal with each scenario.
Three major challenges are present when developing scenarios, uncertainty, complexity, and paradigm shift. The ambiguous nature of emerging technologies exacerbates these three areas even more. Scenario planning is different from other methods of planning in that it examines different uncertainties in different ways, explores different outcomes and patterns in relationships, and generates a wide range of alternative scenarios. Scenario planning allows the business to see the relationship between the market and technology that might otherwise be difficult to visualize, especially if the market not does exist in the present. Scenarios can help a business better understand the challenges they face with a technology, and also portray the different technology options a business can choose from.
The chapter presents ten steps in the scenario planning:
1. Identify the main issues that need to be better understood. Identify the scope, timeframe, and different decision variable. Identify and understand any past changes and how they might influence the future.
2. Identify main stakeholders who are affected or have an interest in the issues. Attempt to understand how they will be affected and what influence they may have.
3. Study the future and identify the main forces shaping the future. This is an iterative process that covers social, technological, economic, environmental, and political areas.
4. Identify previously defined elements and trends that will affect the issues identified previously. Understand the relationships between the trends to identify patterns that might have an effect in the future.
5. Identify main uncertainties from the previous list of major issues. Rank the uncertainties on importance and create possible outcomes for each uncertainty. Explain why they matter and how they relate to each other.
6. Select the two most important uncertainties and using a matrix format or other visual representation, examine both uncertainties and their corresponding possible outcomes to create possible scenarios.
7. Evaluate the two scenarios to see if they are plausible and internally consistent. Combinations that are not should be eliminated and new scenarios can be created.
8. Review the revised scenarios and assess how the key stakeholders will react. Through role playing, and discussions with different groups, areas that need more information and research will be identified.
9. When additional research is done, the scenarios can be reviewed again for plausibility and consistency. A quantitative model can be applied to represent the new possible environments and help persuade management of the need for change.
10. After all the scenario planning in complete, the uncertainty ranges of the main issues need to be re-examined and defined under the different scenarios.
Chapter 10 goes on to identify the issues facing modern day newspapers, how to embrace new emerging technologies while remaining competitive and not investing in technology that is not going anywhere.
The chapter also discusses common pitfalls to avoid with scenario planning. Not using signposts to track scenarios, not using diverse inputs, not seeking new strategic options, and not securing management support can cause the entire scenario planning efforts to fail.
There is no way to guarantee accuracy about the future of a technology, but by using scenario planning and the techniques listed in Chapter 10, a business can identify possible alternatives for the future and be better prepared for whatever happens.
I found this chapter interesting in that the struggle of the newspaper industry with in the introduction and rise of the Internet is still relevant and continuing today. The Idaho Statesman has been in the news several times recently for decreasing business (caused by the recession and the impact of the Internet on business), and I think we will continue to see this trend in the future. The Idaho Statesman and other newspapers are trying to remain competitive by getting creative – creating partnerships to cut down costs, offering information online, and pursuing other profit opportunities. A lot of the content online is now free to read (www.ktvb.com and www.idahostateman.com for example), so newspapers are struggling to make up that revenue. Some newspapers have chosen to offer a cheaper pay for use online version, such as The Wall Street Journal.
I know personally that I do not have a newspaper subscription and I have not bought one for years. If I need to advertise or sell something I choose a free alternative, such as Craigslist, to do so. The Internet has so much information available; I honestly cannot imagine paying for the news service I can easily get for free, especially as technology gets more advanced and I can subscribe to RSS feeds, email alerts, Twitter updates, and view everything on my cell phone. My parents and grandparents still subscribe to the local newspapers however, so I wonder if it is generational preference? I think as the Internet and surrounding technology gets more advanced, newspapers will have to struggle even more to adapt and remain competitive.
http://www.ktvb.com/news/business/stories/ktvbn-mar1509-newspapers_part_1.3b59a70d.html
http://www.businessweek.com/magazine/content/05_27/b3941024.htm
Three major challenges are present when developing scenarios, uncertainty, complexity, and paradigm shift. The ambiguous nature of emerging technologies exacerbates these three areas even more. Scenario planning is different from other methods of planning in that it examines different uncertainties in different ways, explores different outcomes and patterns in relationships, and generates a wide range of alternative scenarios. Scenario planning allows the business to see the relationship between the market and technology that might otherwise be difficult to visualize, especially if the market not does exist in the present. Scenarios can help a business better understand the challenges they face with a technology, and also portray the different technology options a business can choose from.
The chapter presents ten steps in the scenario planning:
1. Identify the main issues that need to be better understood. Identify the scope, timeframe, and different decision variable. Identify and understand any past changes and how they might influence the future.
2. Identify main stakeholders who are affected or have an interest in the issues. Attempt to understand how they will be affected and what influence they may have.
3. Study the future and identify the main forces shaping the future. This is an iterative process that covers social, technological, economic, environmental, and political areas.
4. Identify previously defined elements and trends that will affect the issues identified previously. Understand the relationships between the trends to identify patterns that might have an effect in the future.
5. Identify main uncertainties from the previous list of major issues. Rank the uncertainties on importance and create possible outcomes for each uncertainty. Explain why they matter and how they relate to each other.
6. Select the two most important uncertainties and using a matrix format or other visual representation, examine both uncertainties and their corresponding possible outcomes to create possible scenarios.
7. Evaluate the two scenarios to see if they are plausible and internally consistent. Combinations that are not should be eliminated and new scenarios can be created.
8. Review the revised scenarios and assess how the key stakeholders will react. Through role playing, and discussions with different groups, areas that need more information and research will be identified.
9. When additional research is done, the scenarios can be reviewed again for plausibility and consistency. A quantitative model can be applied to represent the new possible environments and help persuade management of the need for change.
10. After all the scenario planning in complete, the uncertainty ranges of the main issues need to be re-examined and defined under the different scenarios.
Chapter 10 goes on to identify the issues facing modern day newspapers, how to embrace new emerging technologies while remaining competitive and not investing in technology that is not going anywhere.
The chapter also discusses common pitfalls to avoid with scenario planning. Not using signposts to track scenarios, not using diverse inputs, not seeking new strategic options, and not securing management support can cause the entire scenario planning efforts to fail.
There is no way to guarantee accuracy about the future of a technology, but by using scenario planning and the techniques listed in Chapter 10, a business can identify possible alternatives for the future and be better prepared for whatever happens.
I found this chapter interesting in that the struggle of the newspaper industry with in the introduction and rise of the Internet is still relevant and continuing today. The Idaho Statesman has been in the news several times recently for decreasing business (caused by the recession and the impact of the Internet on business), and I think we will continue to see this trend in the future. The Idaho Statesman and other newspapers are trying to remain competitive by getting creative – creating partnerships to cut down costs, offering information online, and pursuing other profit opportunities. A lot of the content online is now free to read (www.ktvb.com and www.idahostateman.com for example), so newspapers are struggling to make up that revenue. Some newspapers have chosen to offer a cheaper pay for use online version, such as The Wall Street Journal.
I know personally that I do not have a newspaper subscription and I have not bought one for years. If I need to advertise or sell something I choose a free alternative, such as Craigslist, to do so. The Internet has so much information available; I honestly cannot imagine paying for the news service I can easily get for free, especially as technology gets more advanced and I can subscribe to RSS feeds, email alerts, Twitter updates, and view everything on my cell phone. My parents and grandparents still subscribe to the local newspapers however, so I wonder if it is generational preference? I think as the Internet and surrounding technology gets more advanced, newspapers will have to struggle even more to adapt and remain competitive.
http://www.ktvb.com/news/business/stories/ktvbn-mar1509-newspapers_part_1.3b59a70d.html
http://www.businessweek.com/magazine/content/05_27/b3941024.htm
Tuesday, April 14, 2009
Chapter 8 and 9
Chapter 8 – Commercializing Emerging Technologies Through Complementary Assets
Chapter 8 uses the firm Mergenthaler Linotype as a successful incumbent company that managed to stay in business throughout the years by successfully commercializing emerging technologies. Success does not necessarily come from mastering the technology; the longevity and profitability of a company depends on adapting and building complementary assets, addressing customer’s changing needs and changing market segments, and identifying and understanding new competition.
Emerging technologies have the potential to change and create market landscapes. In addition to changing the skills needed, they can also impact complementary assets, customers, and competition. Incumbent firms, while they have the resources to successfully develop and commercialize an emerging technology, may focus too much on mastering the technology and overlook the other areas affected.
Complementary Assets
Incumbent firms have the distinct advantage over new entrants of established distribution channels, service capability, infrastructure, supplier relationships, and complementary products. Incumbent firms can use these assets to aid in bringing the innovation to market easier, more efficiently, and possibility even faster than new entrants. As with Mergenthaler, the new technological advances in the typesetter industry still relied on an underlying asset than Mergenthaler was able to master, proprietary typefaces. While new entrants were able to produce higher quality products, they lacked the underlying font library. Mergenthaler was able to stay competitive by leveraging that asset above other competition. Standards that an incumbent firm establish may be used in newer product versions and be an asset throughout the product lifecycle to the company that developed them.
Emerging technologies may also render a company’s complementary assets useless, so companies must always assess which complementary assets are likely to remain important and which ones might be important later on. Investing in assets that a firm believes will continue to be important will help the company stay profitable even as the underlying technology changes.
Customers
Carefully examining an emerging technology’s impact on customers and potential customers is another part to developing a successful commercialization strategy. As discussed in the previous chapter, emerging technologies have the potential to extend market barriers and create new market segments, so companies have to focus not only on their existing customers but also possibilities for new customers. Firms need to invest in understanding how the technology will affect their customers and develop the best strategy for getting the customer to use the new technology.
Competition
New technologies and new customers will also result in new competition. Companies need to be conscious of the threat of their existing competition and also be prepared for new competition. This may result in changes in the way the company competes. Getting involved in emerging social networks in the new technology field can help a company stay up to date on the competition.
Developing and embracing emerging technologies is very important for companies to stay profitable in business, but if a company cannot successfully commercialize a new technology they cannot remain competitive. Successful commercialization will be different with every technology, but by focusing on more than just the technology itself and investing in other areas such as complementary assets, customers, and competition, companies can remain competitive in the changing business world today.
Chapter 9 – Disciplined Imagination: Strategy Making in Uncertain Environments
Chapter 9 discusses about the challenges of developing a strategy in the very dynamic, fast paced world of emerging technologies. Previous strategy planning techniques are no longer relevant, and chapter 9 gives the term “disciplined imagination” to the new type of strategy planning needed. While uncertainty is always a factor in strategy planning, the need to adjust a strategy quickly, and the lack of historical data available requires discipline and imagination when strategically planning with emerging technologies in the picture.
Discipline means consistently applying a set of constraints to evaluate a set of alternatives. A set of alternatives must be known, so when looking at an emerging technology this may prove to be a problem. Consistent evaluation tends to weed out “avoidable errors,” so there are many benefits to this approach. No matter what level of uncertainty a company is facing, systematically evaluating options can yield better decision making. By employing a strategy process with discipline, a company can retain control over the process.
A discipline process also has many limitations. The process does not lend itself to creative and innovative thinking; strategy is not created, but just systematically evaluated pre-defined alternatives. Historical data and biases are usually taken into account, which in regards to emerging technologies can be misleading. A discipline approach relies heavily on gathered information, which once again in regards to emerging technologies can pose a problem since there may not be much information available.
Imagination encourages creative thinking in generating varied and different alternatives. The problem can be varied as well, and multiple view points are encouraged. Conventional thinking is discarded, and often times younger employees who aren’t immersed in the company’s culture provide the most value insights. The idea is to get multiple views on the problems and possible solutions.
An imagination process also has many limitations. The process can get flooded with ideas, not all of them good or even achievable. Someone has to be tasked with weeding through them all and determining which ones are good or not. Focusing too much time and efforts on future strategy takes away time and effort from focusing on the present situation and issues, and along those lines the company may focus too much effort on the future and not take into account lessons learned in the past. Group-think may hinder individual creativity, and the more people involved into the process could mean that it takes more time to create a good strategy.
A company can take into account the advantages and disadvantages of these two strategies by adapting a disciplined imagination strategy. Rather than emphasizing one strategy over the other, integrating the two together can create a strategy process that results in creative alternatives and establishes a process for methodically evaluating those options. Developing and commercializing emerging technologies requires a strategy that is innovative, tolerable to change, and well defined and though out. By using disciplined and imagination techniques a company can develop a strategy that can enable a company to become and remain successful even as technology transforms.
I found both of these chapters very interesting. I think Chapter 8 discussed some very key points to being successful with emerging technologies. Even after a company has developed an emerging technology and found a use for it, if they can’t successfully market it there is no point in spending time and resources to develop it. I liked Chapter 9 because it held true to the ambiguous nature of emerging technologies discussed in this book – there is no one right way or set of rules to follow to be successful. Every situation is different and by developing a strategy that is flexible and subject to quick and considerable change, a company can be more successful in dealing with emerging technologies. Doing so does not guarantee success though, which is another theme of emerging technologies that is prevalent in the book.
PECO Energy
In 2000 PECO Energy and Unicom merged forming Exelon Corporation. PECO Energy still operates as a child company of Exelon. Since 2000 they have won numerous awards for advances in green technology. http://www.exeloncorp.com/ourcompanies/peco/
Woodgrain Millwork is a locally owned, private manufacturing company that operates out of Fruitland, Idaho. They manufacture windows, doors, and mouldings and are an excellent example of a company that leverages its complementary assets to stay in business. They have been around for 50 years and even though they may not be the most innovative incumbent company, they still manage to maintain their position as a market leader. Their supply chain is completely internal, meaning they own everything from the plantation where their wood comes from to the distribution centers the final products are sold out of. There are no third parties involved at any stages in the supply chain so that allows them to produce products and have complete visibility at all stages of the supply chain. This asset has allowed them to maintain their competiveness even when they may lag behind in adopting new manufacturing technologies and processes. www.woodgrain.com
Chapter 8 uses the firm Mergenthaler Linotype as a successful incumbent company that managed to stay in business throughout the years by successfully commercializing emerging technologies. Success does not necessarily come from mastering the technology; the longevity and profitability of a company depends on adapting and building complementary assets, addressing customer’s changing needs and changing market segments, and identifying and understanding new competition.
Emerging technologies have the potential to change and create market landscapes. In addition to changing the skills needed, they can also impact complementary assets, customers, and competition. Incumbent firms, while they have the resources to successfully develop and commercialize an emerging technology, may focus too much on mastering the technology and overlook the other areas affected.
Complementary Assets
Incumbent firms have the distinct advantage over new entrants of established distribution channels, service capability, infrastructure, supplier relationships, and complementary products. Incumbent firms can use these assets to aid in bringing the innovation to market easier, more efficiently, and possibility even faster than new entrants. As with Mergenthaler, the new technological advances in the typesetter industry still relied on an underlying asset than Mergenthaler was able to master, proprietary typefaces. While new entrants were able to produce higher quality products, they lacked the underlying font library. Mergenthaler was able to stay competitive by leveraging that asset above other competition. Standards that an incumbent firm establish may be used in newer product versions and be an asset throughout the product lifecycle to the company that developed them.
Emerging technologies may also render a company’s complementary assets useless, so companies must always assess which complementary assets are likely to remain important and which ones might be important later on. Investing in assets that a firm believes will continue to be important will help the company stay profitable even as the underlying technology changes.
Customers
Carefully examining an emerging technology’s impact on customers and potential customers is another part to developing a successful commercialization strategy. As discussed in the previous chapter, emerging technologies have the potential to extend market barriers and create new market segments, so companies have to focus not only on their existing customers but also possibilities for new customers. Firms need to invest in understanding how the technology will affect their customers and develop the best strategy for getting the customer to use the new technology.
Competition
New technologies and new customers will also result in new competition. Companies need to be conscious of the threat of their existing competition and also be prepared for new competition. This may result in changes in the way the company competes. Getting involved in emerging social networks in the new technology field can help a company stay up to date on the competition.
Developing and embracing emerging technologies is very important for companies to stay profitable in business, but if a company cannot successfully commercialize a new technology they cannot remain competitive. Successful commercialization will be different with every technology, but by focusing on more than just the technology itself and investing in other areas such as complementary assets, customers, and competition, companies can remain competitive in the changing business world today.
Chapter 9 – Disciplined Imagination: Strategy Making in Uncertain Environments
Chapter 9 discusses about the challenges of developing a strategy in the very dynamic, fast paced world of emerging technologies. Previous strategy planning techniques are no longer relevant, and chapter 9 gives the term “disciplined imagination” to the new type of strategy planning needed. While uncertainty is always a factor in strategy planning, the need to adjust a strategy quickly, and the lack of historical data available requires discipline and imagination when strategically planning with emerging technologies in the picture.
Discipline means consistently applying a set of constraints to evaluate a set of alternatives. A set of alternatives must be known, so when looking at an emerging technology this may prove to be a problem. Consistent evaluation tends to weed out “avoidable errors,” so there are many benefits to this approach. No matter what level of uncertainty a company is facing, systematically evaluating options can yield better decision making. By employing a strategy process with discipline, a company can retain control over the process.
A discipline process also has many limitations. The process does not lend itself to creative and innovative thinking; strategy is not created, but just systematically evaluated pre-defined alternatives. Historical data and biases are usually taken into account, which in regards to emerging technologies can be misleading. A discipline approach relies heavily on gathered information, which once again in regards to emerging technologies can pose a problem since there may not be much information available.
Imagination encourages creative thinking in generating varied and different alternatives. The problem can be varied as well, and multiple view points are encouraged. Conventional thinking is discarded, and often times younger employees who aren’t immersed in the company’s culture provide the most value insights. The idea is to get multiple views on the problems and possible solutions.
An imagination process also has many limitations. The process can get flooded with ideas, not all of them good or even achievable. Someone has to be tasked with weeding through them all and determining which ones are good or not. Focusing too much time and efforts on future strategy takes away time and effort from focusing on the present situation and issues, and along those lines the company may focus too much effort on the future and not take into account lessons learned in the past. Group-think may hinder individual creativity, and the more people involved into the process could mean that it takes more time to create a good strategy.
A company can take into account the advantages and disadvantages of these two strategies by adapting a disciplined imagination strategy. Rather than emphasizing one strategy over the other, integrating the two together can create a strategy process that results in creative alternatives and establishes a process for methodically evaluating those options. Developing and commercializing emerging technologies requires a strategy that is innovative, tolerable to change, and well defined and though out. By using disciplined and imagination techniques a company can develop a strategy that can enable a company to become and remain successful even as technology transforms.
I found both of these chapters very interesting. I think Chapter 8 discussed some very key points to being successful with emerging technologies. Even after a company has developed an emerging technology and found a use for it, if they can’t successfully market it there is no point in spending time and resources to develop it. I liked Chapter 9 because it held true to the ambiguous nature of emerging technologies discussed in this book – there is no one right way or set of rules to follow to be successful. Every situation is different and by developing a strategy that is flexible and subject to quick and considerable change, a company can be more successful in dealing with emerging technologies. Doing so does not guarantee success though, which is another theme of emerging technologies that is prevalent in the book.
PECO Energy
In 2000 PECO Energy and Unicom merged forming Exelon Corporation. PECO Energy still operates as a child company of Exelon. Since 2000 they have won numerous awards for advances in green technology. http://www.exeloncorp.com/ourcompanies/peco/
Woodgrain Millwork is a locally owned, private manufacturing company that operates out of Fruitland, Idaho. They manufacture windows, doors, and mouldings and are an excellent example of a company that leverages its complementary assets to stay in business. They have been around for 50 years and even though they may not be the most innovative incumbent company, they still manage to maintain their position as a market leader. Their supply chain is completely internal, meaning they own everything from the plantation where their wood comes from to the distribution centers the final products are sold out of. There are no third parties involved at any stages in the supply chain so that allows them to produce products and have complete visibility at all stages of the supply chain. This asset has allowed them to maintain their competiveness even when they may lag behind in adopting new manufacturing technologies and processes. www.woodgrain.com
Monday, April 6, 2009
Chapter 7 – Technology Strategy in Lumpy Market Landscapes
Chapter 7 discusses the “lumpy” aspect of emerging technology markets and ways to analyze and expand into other markets. A technology or product exists in a set of technology barriers, so finding ways to push the barriers can increase a company’s market share. Customers also value different attributes of the product higher than others, so understanding what attributes are important to customers and then exploiting that preference increases market share as well. Emerging technology markets are especially hard to predict because in this lumpy, changing, market scenery it must be decided what market and what attributes will derive the most benefit from the technology. Success with an emerging technology comes when the technology facilitates an improvement in the most favored set of attributes by the market. Companies need to understand the market and the lumpiness they are dealing with and strive to extend the barriers, either by looking for a technology to do so, or looking for a market to introduce a technology into.
Pushing Technology Barriers
Understanding the intersection between market segments and barriers created by the current technology, companies can use an emerging technology to expand the barriers and reach more customers. By expanding or eliminating barriers, companies can access markets that were previously out of reach and may still be out of reach by competitors. Also, when emerging technologies can create demand for new attribute sets, new customers can be acquired as well.
Identifying Valuable Technologies
To understand what technologies would be profitable for a market, the lumpiness of the market must be identified and understood. Attributes, most favored and valuation impact and technology barriers impact on market segments and attributes must be known. There are three different customer responses to attributes – basic, discriminators, and energize features, and by identifying a company’s current attributes, they can be categorized into valued attributes and ones that could be adjusted using emerging technology to provide more value and gain more customers. Once the attributes are scoped out, a company can look at what technology constraints are currently stopping the company from delivering the attributes. Companies can also look at what barriers might be present in the future. Understanding the current and future barriers makes it easier to identify or look for technology that will facilitate expanding the barrier to reach more customers. Market lumpiness is not static due to customer’s changing needs and wants, so by making small investments and employing options reasoning, a company can account for the changing atmosphere. Companies can position options – identify ways to extend barriers by looking for a technology to do so, or scout options – identify ways a technology will create attributes of value.
Identifying Positioning Options to Exploit Lumpy Markets
A company who wants to use technology to expand its barriers and enter new markets has three options to do so.
Single Niche Domination – A company extends a barrier and is now able to market a better product to a single market segment. This should be used when competition cannot provide better attributes because of technology barriers. The first company to use and emerging technology to provide a better product and extend that barrier will capture and control that niche.
Niche Fusion – A company identifies a technology that will change the current technology barriers and allow for the fusion of multiple market segments. That company will then dominate and capture those market segments. This should be used when the rate of performance improvement is sharp compared to alternatives.
Creating a New Technology Envelope – A company changes the attribute sets, usually by introducing an emerging technology. This radical change forces the competition to quickly adjust or go out of business, since the customers have transferred over to the new attributes and may not be interested in the old product or technology.
Identifying Scouting Options for Applying New Technologies
To be successful with this approach, companies must find attributes that can be created and improved by the emerging technology. The company then needs to determine what market segments would value the new or improved attributes the most. The attributes have to be measurable and dimensional, so by researching what dimensions the emerging technology will have an impact on will help determine what segment to market. Understanding what attributes the emerging technology will change and understanding how the customers view the attribute and their reaction to any changes will help a company choose the right market segment.
The lumpy market is just another facet in the complex and ambiguous nature of emerging technologies. Disrupting a technology barrier by introducing a new technology can provide huge benefits to a company, but can only be done when the lumpiness of the market and different customer segments is understood. Learning about the different segments and attributes that each segment values the most is key to being able to exploit the barriers and create improved attributes. A company can either look for a technology to facilitate expanding the barrier, or look for a market where their technology will expand the barrier. If done successfully, either option will yield more customers and increased profitability.
The book says in relation to creating a new technology envelope, “the Internet is putting conventional telephone network operators on edge.” I would have to disagree with that now, while VoIP has taken off in the business world (and decreased the use of PBX systems); it has not really become popular in the residential world (at least yet). Cell phones however, are displacing regular “land lines” and taking business away from the “telephone network operators.” The technology of cellular communication, not requiring a land line, has taken significant market share away from the conventional telephone companies.
Netbooks are a good example of the concepts presented in this chapter. By creating a very portable and very inexpensive laptop, companies are now able to reach a new market segment that previously did not own a laptop due to price. Customers who were not willing to pay a lot for a computer and do not have high computing demands can use a netbook. This customer segment in the past probably either owned a desktop (due to price) or no computer at all (due to low computing needs and price). By introducing the netbook into these segments, the main attribute of price can be decreased enough that this customer segment is now willing to purchase a computer/laptop.
Pushing Technology Barriers
Understanding the intersection between market segments and barriers created by the current technology, companies can use an emerging technology to expand the barriers and reach more customers. By expanding or eliminating barriers, companies can access markets that were previously out of reach and may still be out of reach by competitors. Also, when emerging technologies can create demand for new attribute sets, new customers can be acquired as well.
Identifying Valuable Technologies
To understand what technologies would be profitable for a market, the lumpiness of the market must be identified and understood. Attributes, most favored and valuation impact and technology barriers impact on market segments and attributes must be known. There are three different customer responses to attributes – basic, discriminators, and energize features, and by identifying a company’s current attributes, they can be categorized into valued attributes and ones that could be adjusted using emerging technology to provide more value and gain more customers. Once the attributes are scoped out, a company can look at what technology constraints are currently stopping the company from delivering the attributes. Companies can also look at what barriers might be present in the future. Understanding the current and future barriers makes it easier to identify or look for technology that will facilitate expanding the barrier to reach more customers. Market lumpiness is not static due to customer’s changing needs and wants, so by making small investments and employing options reasoning, a company can account for the changing atmosphere. Companies can position options – identify ways to extend barriers by looking for a technology to do so, or scout options – identify ways a technology will create attributes of value.
Identifying Positioning Options to Exploit Lumpy Markets
A company who wants to use technology to expand its barriers and enter new markets has three options to do so.
Single Niche Domination – A company extends a barrier and is now able to market a better product to a single market segment. This should be used when competition cannot provide better attributes because of technology barriers. The first company to use and emerging technology to provide a better product and extend that barrier will capture and control that niche.
Niche Fusion – A company identifies a technology that will change the current technology barriers and allow for the fusion of multiple market segments. That company will then dominate and capture those market segments. This should be used when the rate of performance improvement is sharp compared to alternatives.
Creating a New Technology Envelope – A company changes the attribute sets, usually by introducing an emerging technology. This radical change forces the competition to quickly adjust or go out of business, since the customers have transferred over to the new attributes and may not be interested in the old product or technology.
Identifying Scouting Options for Applying New Technologies
To be successful with this approach, companies must find attributes that can be created and improved by the emerging technology. The company then needs to determine what market segments would value the new or improved attributes the most. The attributes have to be measurable and dimensional, so by researching what dimensions the emerging technology will have an impact on will help determine what segment to market. Understanding what attributes the emerging technology will change and understanding how the customers view the attribute and their reaction to any changes will help a company choose the right market segment.
The lumpy market is just another facet in the complex and ambiguous nature of emerging technologies. Disrupting a technology barrier by introducing a new technology can provide huge benefits to a company, but can only be done when the lumpiness of the market and different customer segments is understood. Learning about the different segments and attributes that each segment values the most is key to being able to exploit the barriers and create improved attributes. A company can either look for a technology to facilitate expanding the barrier, or look for a market where their technology will expand the barrier. If done successfully, either option will yield more customers and increased profitability.
The book says in relation to creating a new technology envelope, “the Internet is putting conventional telephone network operators on edge.” I would have to disagree with that now, while VoIP has taken off in the business world (and decreased the use of PBX systems); it has not really become popular in the residential world (at least yet). Cell phones however, are displacing regular “land lines” and taking business away from the “telephone network operators.” The technology of cellular communication, not requiring a land line, has taken significant market share away from the conventional telephone companies.
Netbooks are a good example of the concepts presented in this chapter. By creating a very portable and very inexpensive laptop, companies are now able to reach a new market segment that previously did not own a laptop due to price. Customers who were not willing to pay a lot for a computer and do not have high computing demands can use a netbook. This customer segment in the past probably either owned a desktop (due to price) or no computer at all (due to low computing needs and price). By introducing the netbook into these segments, the main attribute of price can be decreased enough that this customer segment is now willing to purchase a computer/laptop.
Sunday, March 29, 2009
Wharton Chapter 6 – Assessing Future Markets of New Technologies
Chapter 6 examines yet another unique problem to emerging technologies – assessment of future markets. When a technology is still emerging there might not be a market for it, and potential customers may not know about it. There is uncertainty too if the technology will be successful in any market, and there is no historical data on the technology or the market to help make decisions. Chapter 6 discusses approaches, best practices, and methodologies that can be used to decipher potential market for emerging technologies.
There are three main principles that guide successful assessments of future markets.
Diffusion and adoption
Each technology follows its own unique path and timeframe to adoption. This is because the rate to adoption is heavily influenced by the perceived advantage over existing products or alternatives, the risk of buying the new technology, different barriers to adoption, and customer awareness of the product. The diffusion process is dynamic, affected by competition and prices, innovation and development of the technology, and investments in marketing and customer awareness. The number of customers who adopt the technology and product determines the diffusion speed. Understanding the five different customer groups (innovators, early adopters, early majority, and laggards) also impacts the diffusion rate. Successfully marketing the technology differently depending on the different customer segments and different customer needs will increase the rate of mainstream adoption.
Exploration and learning
Successful companies make informed decisions through learning about potential markets ahead of their competitors. By using market probing techniques and refining the product and learning from every result, they can make quicker, more informed decisions. A probe and learn, or iterative sequence will further expand knowledge of potential markets by learning from past results and allowing to integrate them into the future. A market inquiry is the beginning of a very active and dynamic process of collecting information on potential customers and needs, making decisions and applying constraints, and experimenting with beta products. In the early stages, alternatives can be evaluated, and different standards can be evaluated. Once substantial information has been gathered, it needs to be evaluated before a decision to act can be reached. Barriers to acquiring information, disseminated information, and using information have to be overcome to be successful.
Triangulation for insights
Exploring all possibilities using different research methods, using different data, and looking for a convergence of conclusions is needed when the customers and markets are still unknown. Emerging technologies, especially disruptive ones, cannot be evaluated using the standard methods used in other areas of business. There is not one method to use, but a collaboration of methods and results will yield the most informed results. Customers may have a hard time grasping the concept of a new technology, so gathering information about customer needs and usage will be more rewarding than studying customer’s reaction to a new prototype. Studying lead users can help identify needs that a new product may satisfy. Lead users understand the problem they are facing, and may have an idea of a technology or product that can fix it. They may have experimented with a solution already, they may be working with similar products already, and they can be involved with areas of the problem. They can be a great tool for understating the “pain” and helping develop a viable solution. Emerging technologies can solve problems customers do not know they have, so problem identification, story-telling, and observation of customers and markets can yield potential markets for a technology. By studying the inflections of the adoption of the technology and anticipating them, companies can gain the competitive advantage over their competitors. While there is no way to be exact, methodical guesswork, tracking leading indicators, information acceleration, and diffusion modeling can provide information on the rate of diffusion on a technology.
Emerging technologies are ambiguous and disruptive, so they require a unique approach to anticipate future markets. Intense information is needed to assess customer needs, customer problems, and possible rate of adoption of a technology. There is no single strategy that will yield results on its own, so by using a combination of tools and methods, a company can gain competitive advantage by having the best information into potential markets and anticipating critical inflection points.
Looking outside the box and focusing on the potential of the technology in different markets with different customers and needs is critical to success. Chapter 6 offered some general methods to do so, but with the ambiguous nature of emerging technologies it would still be extremely difficult to predict. I think that this is where one of the core concepts of emerging technologies comes into play – staying flexible in strategic ways. Not only does a company need to stay flexible with the initial development of a technology, but expanding into future markets and researching future needs of customers and uses of the technology would also require a flexible but strategic company.
RFID tags are an example of an emerging technology that has evolved through many different markets. Initially, they were used for inventory purposes (made popular by Walmart), and even thought to be potentially disruptive to barcode technology. Now RFID is moving away from inventory into different markets, such as human and animal tracking. State and Federal Correction departments are starting to use the technology because it automates processes and eliminates human errors. RFID tags are also being used on endangered species and other animals to help gain knowledge and better understand their behavior. RFID tags may not have been extremely successful in the early markets of inventory, but they are certainly becoming more widespread in different markets and will continue to grow into other uses.
References
http://www.computerworld.com/action/article.do?command=viewArticleBasic&articleId=9024960
http://www.discoverrfid.org/how-it-works/facts-and-figures.html
There are three main principles that guide successful assessments of future markets.
Diffusion and adoption
Each technology follows its own unique path and timeframe to adoption. This is because the rate to adoption is heavily influenced by the perceived advantage over existing products or alternatives, the risk of buying the new technology, different barriers to adoption, and customer awareness of the product. The diffusion process is dynamic, affected by competition and prices, innovation and development of the technology, and investments in marketing and customer awareness. The number of customers who adopt the technology and product determines the diffusion speed. Understanding the five different customer groups (innovators, early adopters, early majority, and laggards) also impacts the diffusion rate. Successfully marketing the technology differently depending on the different customer segments and different customer needs will increase the rate of mainstream adoption.
Exploration and learning
Successful companies make informed decisions through learning about potential markets ahead of their competitors. By using market probing techniques and refining the product and learning from every result, they can make quicker, more informed decisions. A probe and learn, or iterative sequence will further expand knowledge of potential markets by learning from past results and allowing to integrate them into the future. A market inquiry is the beginning of a very active and dynamic process of collecting information on potential customers and needs, making decisions and applying constraints, and experimenting with beta products. In the early stages, alternatives can be evaluated, and different standards can be evaluated. Once substantial information has been gathered, it needs to be evaluated before a decision to act can be reached. Barriers to acquiring information, disseminated information, and using information have to be overcome to be successful.
Triangulation for insights
Exploring all possibilities using different research methods, using different data, and looking for a convergence of conclusions is needed when the customers and markets are still unknown. Emerging technologies, especially disruptive ones, cannot be evaluated using the standard methods used in other areas of business. There is not one method to use, but a collaboration of methods and results will yield the most informed results. Customers may have a hard time grasping the concept of a new technology, so gathering information about customer needs and usage will be more rewarding than studying customer’s reaction to a new prototype. Studying lead users can help identify needs that a new product may satisfy. Lead users understand the problem they are facing, and may have an idea of a technology or product that can fix it. They may have experimented with a solution already, they may be working with similar products already, and they can be involved with areas of the problem. They can be a great tool for understating the “pain” and helping develop a viable solution. Emerging technologies can solve problems customers do not know they have, so problem identification, story-telling, and observation of customers and markets can yield potential markets for a technology. By studying the inflections of the adoption of the technology and anticipating them, companies can gain the competitive advantage over their competitors. While there is no way to be exact, methodical guesswork, tracking leading indicators, information acceleration, and diffusion modeling can provide information on the rate of diffusion on a technology.
Emerging technologies are ambiguous and disruptive, so they require a unique approach to anticipate future markets. Intense information is needed to assess customer needs, customer problems, and possible rate of adoption of a technology. There is no single strategy that will yield results on its own, so by using a combination of tools and methods, a company can gain competitive advantage by having the best information into potential markets and anticipating critical inflection points.
Looking outside the box and focusing on the potential of the technology in different markets with different customers and needs is critical to success. Chapter 6 offered some general methods to do so, but with the ambiguous nature of emerging technologies it would still be extremely difficult to predict. I think that this is where one of the core concepts of emerging technologies comes into play – staying flexible in strategic ways. Not only does a company need to stay flexible with the initial development of a technology, but expanding into future markets and researching future needs of customers and uses of the technology would also require a flexible but strategic company.
RFID tags are an example of an emerging technology that has evolved through many different markets. Initially, they were used for inventory purposes (made popular by Walmart), and even thought to be potentially disruptive to barcode technology. Now RFID is moving away from inventory into different markets, such as human and animal tracking. State and Federal Correction departments are starting to use the technology because it automates processes and eliminates human errors. RFID tags are also being used on endangered species and other animals to help gain knowledge and better understand their behavior. RFID tags may not have been extremely successful in the early markets of inventory, but they are certainly becoming more widespread in different markets and will continue to grow into other uses.
References
http://www.computerworld.com/action/article.do?command=viewArticleBasic&articleId=9024960
http://www.discoverrfid.org/how-it-works/facts-and-figures.html
Tuesday, March 3, 2009
Wharton Chapter 5
Wharton Chapter 5 discusses the government's role in emerging technologies. Despite the negative image of government restricting innovation and hindering the emerging technology process, government can play a very monumental and beneficial role, as illustrated by the development of the Internet. Wharton identifies seven general ways the government can impact an emerging technology:
Military Technology – Encourages new technologies that the government and military can benefit from.
-Research Infrastructure – Government invests in general research and encourages the findings to be shared
-Institutional Infrastructure – Government provides public and legal institutions to foster or prohibit emerging technologies
-Standard setting – Although standards are usually set by the market, the Government can step in and establish a technology standard.
-Government Regulation – This is especially influential in the medical field with the regulation by The Food and Drug Administration.
-Government Directives – the Government does not fund any technologies, but takes a direct role in influencing the commercialization efforts
-Government Subsidies – Government directly support different firms and technologies.
Wharton continues the chapter with 10 different lessons for managers regarding government interaction with emerging technologies.
-Government can help shape a new technology in the beginning – look outside the box and focus on future application of the technology
-If the Government withdraws research support, beneficiaries of the support will resist – managers can either push for continued support, or position themselves to somehow benefit from the Government withdrawal
-Government can help transition from public to private “ownership” of a technology b- transition periods are great opportunities to gain a competitive advantage
-New technologies can cause social concerns – companies must be prepared to defend their stance and technology, and political demands can turn into profit opportunities
-Disruptions caused by the technology will be met with legal and political reactions – managers must look at the broad spectrum for any possible implications caused by the new technology
-A high demand technology will create demands for government-regulated universal service – this can translate into protection from market competition
-Quality of service should be regulated by the market, but dominant firms sometimes make the mistake of providing poor customer service – managers need to recognize the importance of customer service and customer satisfaction, no matter what market position the firm is in
-The power of individual firms may need to a monopoly, in which case the government may step in and try to regulate – companies need to encourage fair competition or they might face regulation from the government
-Bottleneck markets may result in the government stepping in to address the issue of the vertical integration of conduit and content – companies must once again need to encourage fair competition across the entire market or risk facing regulation from the government
-Government regulation can have unintended side efforts and possibly even negatively impact the commercialization of the technology – companies should strive for minimal regulation, if any.
The Government has the ability to affect an emerging technology in every stage of development.
Managers and companies must be aware of the potential impact from the government, and stay proactive by operating fairly and competitively in the market. By anticipating possible regulation earlier on in the technology development, a company will be more prepared to respond quickly. Companies can benefit from the interaction of government and a technology, they just need to be prepared and proactive in the process.
GPS (Global Positioning System) is an example of a technology that was evolved from the original technology and been used in many different markets. In 1993, the U.S. Air Force launched the first network of 24 satellites, known as GPS. The GPS technology was created from a combination of engineering and scientific advances, specifically the atomic clock. The technical evolution of the atomic clock and the GPS follows the speciation patterns of emerging technologies, but the Government influence and regulation also played a huge part in the GPS product we use today.
GPS was originally designed by the Department of Defense strictly for military use. The companies that helped create the GPS technology recognized the huge potential in the commercial market, and finally the Pentagon allowed use of the technology in the commercial market. Use was allowed under a policy called “selective availability,” which meant that the military and other authorized users would be given the most accurate broadcast signals. The Pentagon also reserved the ability to interfere with any civilian signals if they so chose to.
In 1996 however, the White House decided to open up the higher level of GPS accuracy to everyone. The federal government also communicated their commitment to “providing GPS services for peaceful civil, commercial, and scientific use on a worldwide basis and free of charge.”
Now we can find some sort of GPS unit in a wide variety of devices – cell phones, wireless cards, car navigation systems, etc. One of the news articles we talked about was the Google Latitude system, which is a GPS application for your mobile phone or PC that shows your “friends” positions. This has caused concern over privacy issues, so I can't help but wonder if the government may step in again with some sort of privacy regulation or legislation?
http://www.beyonddiscovery.org/content/view.article.asp?a=458
www.google.com/latitude
Military Technology – Encourages new technologies that the government and military can benefit from.
-Research Infrastructure – Government invests in general research and encourages the findings to be shared
-Institutional Infrastructure – Government provides public and legal institutions to foster or prohibit emerging technologies
-Standard setting – Although standards are usually set by the market, the Government can step in and establish a technology standard.
-Government Regulation – This is especially influential in the medical field with the regulation by The Food and Drug Administration.
-Government Directives – the Government does not fund any technologies, but takes a direct role in influencing the commercialization efforts
-Government Subsidies – Government directly support different firms and technologies.
Wharton continues the chapter with 10 different lessons for managers regarding government interaction with emerging technologies.
-Government can help shape a new technology in the beginning – look outside the box and focus on future application of the technology
-If the Government withdraws research support, beneficiaries of the support will resist – managers can either push for continued support, or position themselves to somehow benefit from the Government withdrawal
-Government can help transition from public to private “ownership” of a technology b- transition periods are great opportunities to gain a competitive advantage
-New technologies can cause social concerns – companies must be prepared to defend their stance and technology, and political demands can turn into profit opportunities
-Disruptions caused by the technology will be met with legal and political reactions – managers must look at the broad spectrum for any possible implications caused by the new technology
-A high demand technology will create demands for government-regulated universal service – this can translate into protection from market competition
-Quality of service should be regulated by the market, but dominant firms sometimes make the mistake of providing poor customer service – managers need to recognize the importance of customer service and customer satisfaction, no matter what market position the firm is in
-The power of individual firms may need to a monopoly, in which case the government may step in and try to regulate – companies need to encourage fair competition or they might face regulation from the government
-Bottleneck markets may result in the government stepping in to address the issue of the vertical integration of conduit and content – companies must once again need to encourage fair competition across the entire market or risk facing regulation from the government
-Government regulation can have unintended side efforts and possibly even negatively impact the commercialization of the technology – companies should strive for minimal regulation, if any.
The Government has the ability to affect an emerging technology in every stage of development.
Managers and companies must be aware of the potential impact from the government, and stay proactive by operating fairly and competitively in the market. By anticipating possible regulation earlier on in the technology development, a company will be more prepared to respond quickly. Companies can benefit from the interaction of government and a technology, they just need to be prepared and proactive in the process.
GPS (Global Positioning System) is an example of a technology that was evolved from the original technology and been used in many different markets. In 1993, the U.S. Air Force launched the first network of 24 satellites, known as GPS. The GPS technology was created from a combination of engineering and scientific advances, specifically the atomic clock. The technical evolution of the atomic clock and the GPS follows the speciation patterns of emerging technologies, but the Government influence and regulation also played a huge part in the GPS product we use today.
GPS was originally designed by the Department of Defense strictly for military use. The companies that helped create the GPS technology recognized the huge potential in the commercial market, and finally the Pentagon allowed use of the technology in the commercial market. Use was allowed under a policy called “selective availability,” which meant that the military and other authorized users would be given the most accurate broadcast signals. The Pentagon also reserved the ability to interfere with any civilian signals if they so chose to.
In 1996 however, the White House decided to open up the higher level of GPS accuracy to everyone. The federal government also communicated their commitment to “providing GPS services for peaceful civil, commercial, and scientific use on a worldwide basis and free of charge.”
Now we can find some sort of GPS unit in a wide variety of devices – cell phones, wireless cards, car navigation systems, etc. One of the news articles we talked about was the Google Latitude system, which is a GPS application for your mobile phone or PC that shows your “friends” positions. This has caused concern over privacy issues, so I can't help but wonder if the government may step in again with some sort of privacy regulation or legislation?
http://www.beyonddiscovery.org/content/view.article.asp?a=458
www.google.com/latitude
Saturday, February 21, 2009
Wharton Chapters 3 and 4
Wharton Chapter 3
In Wharton on Managing Emerging Technologies Chapter 3, the evolution of technologies is given the name “technology speciation.” Existing technologies are shifted to a new domain of application, where the technology evolves to become dominant and accepted in a manner different than the original application. The underlying technology may stay the same and only the application from the original is different. Not all emerging technologies follow this pattern, but for the ones that do (the Internet is the example Wharton uses) there are different paths a technology can follow.
An emerging technology can derive from the original technology, where the technology is changed to adapt to the new niche market. The new technology fills a distinct need present in the market and the high demand fuels a high supply of resources that support the development of the new technology. Emerging technologies can also have a slower path to mainstream acceptance, with gradual evolution and replacement (creative destruction) of the existing product. Finally, emerging technologies can be the result of convergence (two existing technologies combined to form a new product and applied in the current domain) or fusion (two existing technologies combined to form a new product and applied in a new domain). Whatever path an emerging technology follows, the domain it is initially applied in is usually a small, specialized niche, and then moves into larger, broader niches as it becomes more popular.
Wharton offers some suggestions on how managers can use the technological speciation process to their advantage by actively moving it forward instead of waiting for it to happen naturally. They include evaluating a technology in possible markets and in possible applications, focusing on the best market for the product (as opposed to a product for a specific market), understanding consumer habits in different markets, creating more variety in selection criteria, studying requirements of high-end users, evaluating the sources of feedback, engage in market learning, look for convergence or fusion opportunities, and accelerating the evolution process of the technology when applicable.
The Internet was enhanced with a user-friendly HTML interface by Netscape, and while the basic technology didn’t change much, the interface enabled the technology to move into the commercial market where it became enormously successful. So, when working with emerging technologies, managers need to evaluate implementing a current technology, with or without changes, in a different area. Technologies experience evolution and transformation, so introducing the technology into a different arena may be all it needs to make it successful.
Wharton Chapter 4
The ambiguous nature, rapid rate of change, and high risk associated with emerging technologies requires a more flexible technology assessment technique than most traditional models today. Wharton on Managing Emerging Technologies Chapter Four discusses four steps, scoping, searching, evaluating, and committing, that a technology assessment should involve when pertaining to emerging technologies.
Scoping involves limiting the extent of the technology assessment to only include technologies that fit within the context of the company’s strategic plan and goals. The company’s resources, core competencies, and willingness to change will also help define the scope of the assessment. While the scope may be larger than what the company can currently handle, potential markets and customers will be identified and evaluated. The scope statement will be updated and changed as the evaluation process continues.
Once a company has defined the scope, it can begin evaluating where and how to look for new technologies. Internal discoveries, public sources of information, and technology literature are all good sources to help a company determine what new technologies are available. With the large quantities of new technology ideas and products today, it is important to examine the signals surrounding the technologies. This includes patent information, competitor’s actions and information about a technology, informal network information, and convergence and multiple discoveries. When a company has defined the scope and identified what technologies to investigate, each of the technologies needs to be evaluated against the company’s strategy. Each possible technology must be evaluated in terms of the possible market and needs, and the company’s ability to leverage the technology. The market risk, organizational risk, and technology risk must also be assessed. Also the financial, organizational, and competitive impact of adopting the technology needs to be addressed as well.
After all the options have been carefully evaluated, there are four general commitment strategies a company can follow when adopting an emerging technology. The first one is a more conservative, watch and wait strategy to use when the risk of the technology is too high to immediately pursue or when the company can become a fast follower if the technology succeeds. The second strategy is when the risk and uncertainty are a little less and the company wants to be in a position to develop the technology when more information is gathered. The third strategy is for a company that has decided to invest in an emerging technology but decides to follow instead of lead the commercialization of the technology. The last strategy is for a company that is confident enough with an emerging technology to fully commit resources and actively lead the technology to commercialization.
The nature of emerging technologies not only requires them to be managed differently; it requires the different technology options to be assessed differently as well. Emerging technologies require a dynamic, iterative process involving constant improvement and self-correction. There will always be a higher level of uncertainty and risk, but by adapting the technology assessment to reflect the unique nature of emerging technologies, companies can be more successful in picking the right technology to pursue.
Emerging technologies that are successful have wide-spread effects, not only in the anticipated markets but also in far reaching, seemingly unrelated markets. An emerging technology can enhance a current product’s functionality, or it can change it so it meets another market’s needs. Even if a technology is not successful or adopted when expected, there are still future possibilities in markets that haven’t been created yet.
Monsanto is still around and successful in the business of seeds, biotechnology trait products, and herbicides. One of their major products is “Roundup.” Even though they have been met with criticism over pesticide issues, bio-engineered corn (“frankenfood”), and growth hormones, the move to the biotech industry has suited them well. Their websites states that they “apply innovation and technology to help farmers around the world produce more while conserving more.”
An example of a product/technology that has followed the technology speciation and undergone several iterations and enhancements as new technologies are created is the air bag. It was first created in 1953 when a need to keep people from ejecting from their car in an accident was identified. Shortly after that the major automotive businesses (Ford and General Motors) started looking at adopting the design and concept for their products. The design predominant design that resulted was better than nothing, but it still lacked the ability to sense a collision and deploy quickly. In the 1969 a federal law requiring 'automatic occupant protection systems’ prompted the invention of the first electromechanical automotive airbag system. Since the emergence and adoption of nanotechnology and microelectromechanical system technologies, the airbag has gained even more popularity and continues to benefit from the fusion of new emerging technologies.
References
Day, George and Schoemaker, Paul. (2000). Wharton on Managing Emerging Technologies. Hoboken, New Jersey: John Wily & Sons, Inc.
McCormick, Lisa. (2006 September). A Short History of the Airbag. Retrieved February 21, 2009 from http://www.consumeraffairs.com/news04/2006/airbags/airbags_invented.html
Monsanto. www.Monsanto.com
In Wharton on Managing Emerging Technologies Chapter 3, the evolution of technologies is given the name “technology speciation.” Existing technologies are shifted to a new domain of application, where the technology evolves to become dominant and accepted in a manner different than the original application. The underlying technology may stay the same and only the application from the original is different. Not all emerging technologies follow this pattern, but for the ones that do (the Internet is the example Wharton uses) there are different paths a technology can follow.
An emerging technology can derive from the original technology, where the technology is changed to adapt to the new niche market. The new technology fills a distinct need present in the market and the high demand fuels a high supply of resources that support the development of the new technology. Emerging technologies can also have a slower path to mainstream acceptance, with gradual evolution and replacement (creative destruction) of the existing product. Finally, emerging technologies can be the result of convergence (two existing technologies combined to form a new product and applied in the current domain) or fusion (two existing technologies combined to form a new product and applied in a new domain). Whatever path an emerging technology follows, the domain it is initially applied in is usually a small, specialized niche, and then moves into larger, broader niches as it becomes more popular.
Wharton offers some suggestions on how managers can use the technological speciation process to their advantage by actively moving it forward instead of waiting for it to happen naturally. They include evaluating a technology in possible markets and in possible applications, focusing on the best market for the product (as opposed to a product for a specific market), understanding consumer habits in different markets, creating more variety in selection criteria, studying requirements of high-end users, evaluating the sources of feedback, engage in market learning, look for convergence or fusion opportunities, and accelerating the evolution process of the technology when applicable.
The Internet was enhanced with a user-friendly HTML interface by Netscape, and while the basic technology didn’t change much, the interface enabled the technology to move into the commercial market where it became enormously successful. So, when working with emerging technologies, managers need to evaluate implementing a current technology, with or without changes, in a different area. Technologies experience evolution and transformation, so introducing the technology into a different arena may be all it needs to make it successful.
Wharton Chapter 4
The ambiguous nature, rapid rate of change, and high risk associated with emerging technologies requires a more flexible technology assessment technique than most traditional models today. Wharton on Managing Emerging Technologies Chapter Four discusses four steps, scoping, searching, evaluating, and committing, that a technology assessment should involve when pertaining to emerging technologies.
Scoping involves limiting the extent of the technology assessment to only include technologies that fit within the context of the company’s strategic plan and goals. The company’s resources, core competencies, and willingness to change will also help define the scope of the assessment. While the scope may be larger than what the company can currently handle, potential markets and customers will be identified and evaluated. The scope statement will be updated and changed as the evaluation process continues.
Once a company has defined the scope, it can begin evaluating where and how to look for new technologies. Internal discoveries, public sources of information, and technology literature are all good sources to help a company determine what new technologies are available. With the large quantities of new technology ideas and products today, it is important to examine the signals surrounding the technologies. This includes patent information, competitor’s actions and information about a technology, informal network information, and convergence and multiple discoveries. When a company has defined the scope and identified what technologies to investigate, each of the technologies needs to be evaluated against the company’s strategy. Each possible technology must be evaluated in terms of the possible market and needs, and the company’s ability to leverage the technology. The market risk, organizational risk, and technology risk must also be assessed. Also the financial, organizational, and competitive impact of adopting the technology needs to be addressed as well.
After all the options have been carefully evaluated, there are four general commitment strategies a company can follow when adopting an emerging technology. The first one is a more conservative, watch and wait strategy to use when the risk of the technology is too high to immediately pursue or when the company can become a fast follower if the technology succeeds. The second strategy is when the risk and uncertainty are a little less and the company wants to be in a position to develop the technology when more information is gathered. The third strategy is for a company that has decided to invest in an emerging technology but decides to follow instead of lead the commercialization of the technology. The last strategy is for a company that is confident enough with an emerging technology to fully commit resources and actively lead the technology to commercialization.
The nature of emerging technologies not only requires them to be managed differently; it requires the different technology options to be assessed differently as well. Emerging technologies require a dynamic, iterative process involving constant improvement and self-correction. There will always be a higher level of uncertainty and risk, but by adapting the technology assessment to reflect the unique nature of emerging technologies, companies can be more successful in picking the right technology to pursue.
Emerging technologies that are successful have wide-spread effects, not only in the anticipated markets but also in far reaching, seemingly unrelated markets. An emerging technology can enhance a current product’s functionality, or it can change it so it meets another market’s needs. Even if a technology is not successful or adopted when expected, there are still future possibilities in markets that haven’t been created yet.
Monsanto is still around and successful in the business of seeds, biotechnology trait products, and herbicides. One of their major products is “Roundup.” Even though they have been met with criticism over pesticide issues, bio-engineered corn (“frankenfood”), and growth hormones, the move to the biotech industry has suited them well. Their websites states that they “apply innovation and technology to help farmers around the world produce more while conserving more.”
An example of a product/technology that has followed the technology speciation and undergone several iterations and enhancements as new technologies are created is the air bag. It was first created in 1953 when a need to keep people from ejecting from their car in an accident was identified. Shortly after that the major automotive businesses (Ford and General Motors) started looking at adopting the design and concept for their products. The design predominant design that resulted was better than nothing, but it still lacked the ability to sense a collision and deploy quickly. In the 1969 a federal law requiring 'automatic occupant protection systems’ prompted the invention of the first electromechanical automotive airbag system. Since the emergence and adoption of nanotechnology and microelectromechanical system technologies, the airbag has gained even more popularity and continues to benefit from the fusion of new emerging technologies.
References
Day, George and Schoemaker, Paul. (2000). Wharton on Managing Emerging Technologies. Hoboken, New Jersey: John Wily & Sons, Inc.
McCormick, Lisa. (2006 September). A Short History of the Airbag. Retrieved February 21, 2009 from http://www.consumeraffairs.com/news04/2006/airbags/airbags_invented.html
Monsanto. www.Monsanto.com
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