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