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