Wharton Chapter 2

Wharton Chapter 2
Chapter 2 in Wharton on Managing Emerging Technologies discusses the four most common mistakes established companies make when embracing and managing emerging technologies. Incumbent companies may have an advantage over smaller companies in some ways, but they are also more susceptible to make the mistakes of delayed participation, sticking with the familiar, failure to fully commit, and lack of persistence. However, not all companies have to make these mistakes; there are guidelines to follow when working with new technologies that can help companies be successful.
The ambiguous nature of emerging technologies explains why most companies would want to embrace a “wait and see” mentality about adopting them. It is hard to determine profitability when there is currently little known. Managers and companies should try to focus on the future of the technology and what it has the potential to become instead of what it is currently.
Companies and managers are averse to risk and the unfamiliar, especially when funding, reputations, and profitability are at stake. With emerging technologies, it is easy to steer towards what is known, even though most emerging technologies involve new technologies, new ideas, and new thought processes. Different designs of an emerging technology may evolve, and companies may be faced with which design to adopt. Blue Ray and HD DVD were an example of this, and companies that decided to back the HD DVD lost out when the standard became Blue Ray.
Even when a company does decide to pursue an emerging technology, they may not adopt it with the commitment level needed to be successful. Many companies make the mistake of being too cautious, and they fail to be successful with the emerging technology. Companies may be afraid that an emerging technology will cause one of their existing products to be obsolete (creative destruction), additional funding may be hard to justify when there are no profits yet, and the company may be too busy satisfying their current customer needs to think of future needs and new markets. It is hard to “think outside the box” while trying to keep up with the everyday demands of running and operating a business. Companies are not dynamic by nature, they have their core competencies aligned with the structure and culture within the company, so when an emerging technology comes in it threatens to disrupt the synergy of the business.
If a company has invested in an emerging technology, and successfully adopted it, they can still make the mistake of lack of persistence. Profits are not always realized right away, so many companies may abandon efforts because there are no gains to show right away. The technology is usually new to the market, so profitability can take longer than expected.
Wharton says when dealing with emerging technologies and the mistakes commonly made, “the best defense may be a good offense.” Widening peripheral vision, creating a learning culture, staying flexible in strategic ways, and providing organizational autonomy can be applied to help companies avoid the common mistakes made.
Companies need to stay current with technological trends, and investigate emerging technologies that align with the company’s core competencies. Company’s need to evaluate their customers’ needs, and identify any possible future needs as well. A company must have effective, collaborative, open communication, where learning is a company-wide initiative. If a company is flexible, it is easier to make initial investments in emerging technologies, easier to adapt the business where needed, and also easier to back out if the technology does not prove to be a good fit for the business. Managing real options and fully committing when the level of uncertainty has gone down can only be achieved in a company that is flexible enough to change and modify when needed. Also, removing the emerging technology from the mainstream business can help to cut down on the business mindsets, controls, and other issues that will negatively impact the adoption of the technology.
Every emerging technology is different, so every solution and successful way to integrate it into a business will be different. The above mistakes and guidelines to avoid making the mistakes are broad concepts that can be applied loosely to every company and every emerging technology, although some may work better than others in given situations.
Wharton mentioned Encyclopedia Britannica as a company that was unwilling (at least at first) to move out of their comfort zone of offering print material and offer CD ROM versions. It wasn’t until 1994 when they finally made the first CD-ROM version of the Encyclopaedia Britannica available. Since then it sounds like they have learned their lesson, they are currently embracing technology and the Internet by offering education and reference programs online (which they periodically review and upgrade), as well as offering other reference, material tailored towards students, and professionals. Their mission is “to be the worldwide leader in reference, education, and learning,” and they can’t accomplish that by not embracing the emerging technologies that directly affect their target market.
Ruby Tuesday is an example of a restaurant that continually invests in and researches emerging technologies. They are constantly looking for ways that technology can improve their kitchen operations, reservation system, and webpage. Three years ago they purchased a new software system that provided step by step food preparation for the cooks. While they had a current program in place this new one was Windows-based, in color, and displayed graphics of all the steps. It would completely replace the old one and make it obsolete. Ruby Tuesday was one of the first restaurant chains to purchase and implement the software.
As a result, it eliminated the need for kitchen managers and saved the company in extra staffing expenses, improved customer service, and cut down the average dining time because the food was prepared much quicker than before. It also eliminated the need to print hard copy instructional cooking posters, and saved the company an estimated $1 million a year. Ruby Tuesday had successfully integrated an emerging technology into their business and saved money internally, while providing a higher level of service than their competitors because of the technology.
Regardless of the business, the target market, or the technology, it pays to be a leader. Some companies will be successful and some won’t, but a company will definitely not be successful in managing emerging technologies if they don’t take a chance, early and often.

References:
Day, George and Schoemaker, Paul. (2000). Wharton on Managing Emerging Technologies. Hoboken, New Jersey: John Wily & Sons, Inc.

Encyclopaedia Britannica. http://corporate.britannica.com/company_info.html

Watson, Brian P. (2007 August). Danger Looms for Late Emerging Tech Adopters. Retrieved February 15 2009 from, http://tech-notes.info/2007/08/21/intelligence-dangers-loom-for-late-emerging-tech-adopters