Chapter 11 & 17

Chapter 11 Appropriating the Gains from Innovation

The author of this chapter discusses firm’s approach towards patent protection and also provides factors that are affecting firms to achieve more gains from their innovation. Firms have to pass three hurdles to achieve profits through innovation. They are:

• The technology must be successful.
• Technology must create value i.e., customers should be willing to pay more for the value that a technology provides.
• Value appropriation

Author examines the management challenges to appropriate gains from the technology and indicates factors responsible for that and suggests a framework to explore the issues associated with emerging technologies. Generally, firms pay more attention to intellectual property rights and overemphasis on intellectual property discussions leads to three aspects, it creates an impression that firms should concentrate more on patents of a technology, contributes misallocation of resources and finally leads to mistakes in selecting future projects. Starbucks example in the chapter shows that instead of relying on patents, if firms think ahead of time by leveraging complementary assets then they gain from its innovation.

• Firms overlook other factor or mechanisms that prevent them from gaining maximum profits of a technology. There are four mechanisms of appropriability that a firm has to examine. They are:
• Patents and related legal protection: Though there are many advantages of patent rights, firms should also look into the disadvantages of it. There are certain limitations of patent protection such as legal cost, limited effectiveness in some industries and inventing around.
• Secrecy: Maintaining secrecy about a new product is difficult once the product is released in the market. To gain lead time over the competitors/imitators, firms should maintain secrecy while developing the product. Making products resistant to reverse engineering also gives advantage to the innovative firms.
• Control of complementary assets: Controlling complementary assets not only gives competitive advantage but also helps firm appropriate gains from many innovations.
• Lead time: Firms should take advantage of lead time. Lead time advantage helps firms make profits before competitors enter the market and also helps build complementary assets.

The author says firms with emerging technologies should take into account all the four factors. Author also suggests important aspects firm should consider when dealing factors affecting the appropriability gains from innovation of emerging technologies.

• Identify the uncertainties: This chapter suggests identifying uncertainties surrounding intellectual property, secrecy, complementary assets and lead time. By identifying uncertainties, firm can develop strategies to address at least some of these uncertainties.
• Assess and Reassess the Knowledge Environment:
  To understand their environment and its impact, managers should ask the following questions regarding appropriation of gains from innovation:

1. Who are your competitors?
2. Where are the headwaters of the new knowledge that flow in this field?
3. How fast are the rapids?
4. What are the prospects for strong patents?

In conclusion, author suggests that building and sustaining the dynamic capabilities help firms to keep track of the technological changes related to the business. In case of emerging technologies, developing and sustaining dynamic capabilities is very narrow because of the uncertainties. To manage dynamic capabilities is very complex. Author also suggests that firm should concentrate more on other aspects of appropriation of gains from emerging technologies rather than only on intellectual properties.

Chapter 17 Design of New Organizational Forms

Chapter 17 of Wharton on Managing Emerging Technologies talks about the organizational designs required for the uncertain emerging technologies. The authors provides emerging forms such as virtual organizations, networfirms, spinouts, ambidextrous firms , front back designs and sense- and – response form.
Though most of the management theories focused on the traditional hierarchical structures and its variations, but, in today’s faced paced ever changing environment this traditional approach is becoming obsolete and firms are looking for new organizational forms. Authors suggest that there are two capabilities that are considered as critical success factors in the uncertain and ambiguous environment. The first one is an effective balance and exploration and exploitation and the second is recombination of established competencies.

Organizational forms are based on six elements are Organizational goals, Strategies, Authority, Technologies, Markets, Processes.

Emerging Organizational Forms

Authors suggest six different and potentially enduring organizational models for emerging organizational forms. Though this models are not mutually exclusive and is not well defined, but they are useful to emerging technologies of production, communication and distribution. The six organizational forms for emerging technologies are :

• Virtual Organization: Virtual form is an organization in which employees, suppliers, and customers are geographically dispersed but united by technology. Virtual organization forms works by connecting firms with their scattered customers through network of distributed organizational units. Advantages of virtual forms are that: They minimize asset commitments, results in greater flexibility, lower costs and results in faster growth. Other advantages include virtual organization forms act as a marketing tool for emerging technologies, attracts creative and energetic employees.

• Network Organization: The network form is based on an organized set of relationships among autonomous or semi-autonomous work units for delivering a complete product or service to a customer. Network forms are present both externally and internally in a company.
  External network form: This can be viewed as outsourcing in the extreme. The firms create a symbiotic relationship among independent entities to collect the necessary skills, assembly and services. This form relies on lateral communication.
  Internal network forms: Internal network form is same as external network form but is applied within the firms. In this form, strategic business units, microenterprises and autonomous work teams are building blocks and they are controlled by the top of the pyramid.
  
  Both external and internal network forms provide greater flexibility with their built-in modularity. Network organizational form is useful industries that are ever changing and rapidly emerging technologies.

• Spin-Out Organization: Spin- out organization forms are built when companies establish fresh entities inside new business concepts and then set them partially on their own. In this type of form, parent companies act as venture capitalist, protective incubator and proud mentor and hold a major stake in the fresh entities. Spin-out organization form helps firms develop and commercialize emerging technologies.

• Ambidextrous Organization: In this form, both established and emerging business flourish side by side, some working on the incremental improvements in technologies and others on breakthroughs. This form is designed to use the skill involved in both continuous and discontinuous innovation. Advantages of ambidextrous organization form are it develops emerging technologies without abandoning old ones.

• Front-Back Organization: This type of form organizes around customers in front and all the company functions are placed at back to support front end. Purpose of this form is to serve customers with fast, customized and responsive solutions. Inverted organization and hybrid model are types of front-back organization form. In inverted organization, all line executives, systems and support staff work for front-line person and front-line person in turn serves the customers with the back-end support. In hybrid model, companies process teams either vertically or horizontally. This type of form works as a centerless corporation, where resources are directed to the most important front-end. Advantage of front-back organization is employees are accountable for their work and helps motivate employees to be competent.

• Sense-and –Respond Organization: This form is focused more on identifying emerging customer needs. In this model, whole organization is involved in meeting the needs of the ever-changing customer needs. Advantages of this form are high adaptability of firms and extremely flexible to meet changing customer needs.

Authors conclude by saying that in this ever-changing competitive environment, organizational forms are increasingly becoming important. Selection of forms depends on company’s goals and nature of emerging technology an organization involved in. Firms should carefully analyze the competitive markets and internal capabilities in selecting the right organizational form.

Analysis

I find both chapters interesting, thinking of chapter 11, to me, it appeared as if author’s approach is more towards management tactics applicable to any kind of businesses and trying to fit emerging technologies in those theories. But, I found chapter 17 extremely engaging and different from what we learnt so far from the previous chapters. This chapter shows new perspective in dealing with emerging technologies. I think ready-made organizational forms approach is very innovative and extremely useful to firms, especially to those firms involved in emerging technologies will definitely benefit from them. With so much of uncertainty and ambiguity surrounding emerging technologies, I think firms can at least minimize some of the risks involved in emerging technologies if they adopt organizational forms. But again as the authors said choosing the right forms depends on what emerging technologies firms are developing and involved with.

Cohen-Bayer

Stanley Cohen an associate professor of medicine at Stanford University and Herbert Boyer, a biochemist and genetic engineer at the University of California. Boyers’ team worked on an enzyme which cuts DNA strings into segments that carry the code for a predetermined protein. Cohen introduced antibiotic carrying plasmids into certain bacteria and as well as a method of isolating and cloning genes carried by the plasmids. They combined their work and showed that Boyer’s enzymes allowed Cohen to introduce specific DNA segments to plasmids, resulting plasmisds as a vehicle for cloning. Four months after that they had a breakthrough, succeeded in cloning predetermined patterns of DNA and a technique of recombinant DNA was born.

Reference :

http://www.ias.ac.in/currsci/mar252009/760.pdf

Virtualization

History of virtualization:

Virtualization was started way back in 1960's by IBM as an architechture for then emerging time share system concepts. The main machine was an IBM 7044 (M44) and each virtual machine was an image of the main machine (44X).

Definition:

Virtualization is loosely defined as a framework or methodology of dividing the resources of a computer into multiple execution environments, by applying one or more concepts or technologies such as hardware and software partitioning, time-sharing, partial or complete machine simulation, emulation, quality of service, and many others.

Server Virtualization

Enterprises require more number of servers when they implement new applications or enhance the existing applications. To maintain cost and to maximize the utilization of servers, enterprises can make their servers virtual. Server virtualization is the practice of dividing one physical server into many isolated virtual environments.

Uses of server virtualization:

• Consolidation of servers: As the number of applications increases, number of servers also increases and this results in more utilization of physical space. Server virtualization reduces the physical space through consolidation of several machines into one server.
• Redundancy without additional investment: Without investing in additional hardware, with server virtualization companies can run same application on different physical servers. This redundancy practice will minimize service interruption.
• To test applications: With server virtualization, programmers can test new application or operating systems without affecting the performance of other applications.
• Hardware virtualization: Server hardware has a short life span and becomes obsolete relatively quickly. Another advantage of virtualization is that it facilitates the movement of older hardware to newer hardware.
• Migration: With virtualization it is possible to move virtual servers from one machine to another. This is called migration and it is possible if processors on both the machines are from the same manufacturers.
  

Reference:

http://communication.howstuffworks.com/server-virtualization.htm/printable

http://www.kernelthread.com/publications/virtualization/

Scenario Planning for Disruptive Technologies

Chapter 10 discusses the importance of scenario planning for emerging technologies. This chapter also discusses the steps necessary to develop scenario planning for emerging technologies and how Knight-Ridder, a newspaper publishing company, developed scenario planning to meet the challenges of complex and uncertain emerging technology. Scenario planning uses variety of information, which influences a situation, in a systematic way to make better decisions. Scenario planning helps firms explore possible futures of a new technology. Scenario planning is different from other planning techniques in that it takes into account three challenges firms face - uncertainty, complexity and paradigm shift.

Constructing scenarios

Scenario planning involves 10 basic steps.

1. Defining the issues: First step in scenario planning is defining issues that need to be understood in broader scope.
2. Identifying the major stakeholders: Identifying the internal and external stakeholders and their roles, interests and position in the organization.
3. Identifying the forces that influence future: In this step, firms, with the help of internal and external sources, should identify and gather information about the important forces that cover social, technological, economic, environmental and political domains.
4. Identifying tends or predetermined elements: With the help of surveys or workshops or diagrams, firms should identify elements that affect the important forces identified in step
5. Identifying key uncertainties: By conducting surveys or taking the views of senior officials, firms need to identify key uncertainties in the main forces.
6. Two important key uncertainties: In this step, in the list of key uncertainties, two most important uncertainties has to be selected.
7. Assessing the consistencies and plausibility of initial scenarios: In this step, internal consistencies can be tested by finding answers to the following questions:
   Are the main future trends all mutually consistent with each other?
   Can the outcomes postulated for the various key uncertainties all co-exist?
   Are the presumed actions of stakeholders compatible with their interests?
8. Assessing the revised scenarios: Finding the behavior of stakeholders in the revised scenarios through role-playing or consulting outsiders. This brings deeper strategic insight to the organizations.
9. Further assessment to analyze complex interactions: In this step, organizations should develop a each scenario’s logic through influence diagram and system dynamic modeling. The purpose behind this is to imagine the mental maps of managers’.
10. Reassessing the key uncertainties: In this step, it is important to know how each uncertainties influence different scenarios and to find if any changes are needed.

Traps to Avoid

Authors also discuss scenario planning pitfalls or traps to avoid. There are many traps that has to be taken care of when developing scenario planning. As scenario planning helps to make decisions for the uncertain technologies, it is difficult to find traps. Some of the potential pitfalls are:

• Failing to gain support from top management early on.
• Lack of diverse inputs Failure to stimulate new strategic options
• Not tracking scenarios via signposts

Benefits of Scenario planning for emerging technologies

• It is a good tool to analyze the possible multiple futures of emerging technologies.
• Helps to examine the interaction between the technology and the market that shapes emerging technologies.
• Helps to visually analyze the impact of technology on the business model.
• Enhances budgeting and resource allocation.
• Allows organization to understand in which technologies it should invest to gain competitive advantage.

The chapter concludes by saying that scenario planning as creating surrogate crisis. Imagination of crisis provides firms to analyze the potential challenges of emerging technologies. Though companies might face resistance to new ideas, authors suggest that scenario planning could be considered as a learning opportunity. Scenario planning provides a framework to deal with uncertain situations. Scenario planning would be a powerful tool for firms and managers to analyze ambiguous situations that surrounds emerging technologies.

Reasearch

World Economic Forum (WEF)

Apart from providing their partners to enhance their strategic decision making, scenario planning at WEF helps to develop a common language among different stakeholders who has diverse and conflicting worldviews, thereby providing a shared vision and creating a desirable situation for the future participants.

At WEF, scenarios are developed by gathering information from different sources such as businesses, society, government and academic groups. Information for scenarios is gathered through discussions, conducting open-ended interviews and conducting workshops. Scenario building is a joint effort of those who took part in the developing the scenarios and also the views and assumptions of individuals or interest groups. With scenarios WEF could integrate different views of the stakeholders and also provides neutral space for the multi-stakeholder dialogue.

Reference:

http://www.weforum.org/en/initiatives/Scenarios/index.htm

Chapter 8 & Chapter 9

Chapter 8- Commercializing Emerging Technologies

Chapter 8 of Wharton on emerging technologies discusses the advantages of developing and maintaining complementary assets by firms. In general, many firms believe that successful commercialization of any emerging technology can be achieved only by overcoming the technological challenges associated with the technology. Many firms ignore the importance and benefits of factors or challenges such as developing complimentary assets, understanding new market needs and meeting the new challenges of rivals. These challenges can be analyzed by using a framework suggested by the author.
In this chapter author gives the example of Mergenthaler Linotype- a typesetter company, how they overcame the technological challenges and remained market leader for more than a century. Mergenthaler's proprietary complementary assets and their customer relationship played a huge role for their success in emerging technology. Companies need to identify their complementary assets and their relationships to overcome the commercialization challenges.

Three challenges of commercialization
Survival of established companies in emerging markets depends not only on the technological skills but also on areas such as complementary assets, competitors and customer needs. Established firms overlook these areas and concentrate on the enhancing their technology skills.

Change in Complementary Assets
Additional assets help firm benefit from the commercialization of the new technology. These assets include resources such as access to distribution, service capability, customer relationships, supplier relationships and complementary products. In the case of Mergenthaler, their complementary assets were their proprietary typefaces. Mergenthaler invested in developing a font library with 2,000 faces. For any new company, to use these fonts in their new technology either had to license, design or copy new typefaces.
Companies need to identify the complementary assets that are important and proactively develop those assets in order to gain commercial benefit of the new technology. Another example of a company with strong complementary assets is the Postscript standards owned by Adobe system.

Change in Customers
Firms should watch the changing customer needs and see how new technology is affecting the customers’ needs. As discussed in chapter 7 firms should identify the lumpy markets and remove any kind of barriers. Companies can keep their existing customers by building bridges from old technology and new.

Changes in Competition
New technology attracts lot of competition. Firms should identify and track the activities of potential rivals. Managers need to find what makes them successful, how the potential competitors differ from the existing competitors and what changes that the firms need to compete with their potential rivals.

Firms face mainly three hurdles in developing emerging technologies such as decision to invest in the new technology, challenges within the organization and commercialization of the technology. Many firms stop when they encounter first hurdle, because of fear of cannibalization of their current market share. Few companies overcome first hurdle but end their trials when they encounter second hurdle, because of the organizational procedures that prevent them to develop new technology. But some clear the first two hurdles and has to deal with the last hurdle, and this can be successfully overcome by applying the framework presented in this chapter.

Chapter 9 - Disciplined Imagination

Chapter 9 of Wharton on emerging technologies discusses the strengths and limitations of both creating a new strategy and imagination. Authors suggest that the strategy making requires both discipline and imagination. Standard strategy making does not work when dealing with uncertain emerging technologies. Companies need to change their strategies continuous and quickly to keep up with ambiguity of new technology.

The authors discuss the art of strategy making and states that strategy making can be thought of as an organizational capability, where different approaches are generated and considered and where past successful approaches are just an option for the future among many. Strategy making requires disciplined imagination and the quality of strategy process depends on the degree to which it exhibits disciplined imagination.

Benefits and limitations of Discipline and Imagination
Authors suggest that the discipline and imagination are essential for strategy making. Discipline is the consistent application of rules to evaluate a set of alternatives. Disciplined strategy making has many benefits such as managers’ consensus, better decision making and helps avoid errors. There are certain limitations to disciplined planning. Disciplined planning assesses situations in a structured manner and curtails creative thinking and imagination.

Imagination process is associated with concepts of synthesis, vision; foresight etc., when a strategic planning takes into account the diversified situations then the planning is done with some sort of imagination. PECO's energy is a good example provided in the chapter that shows involving employees can generate imagination and thereby companies can explore variety of approaches to deal with uncertain emerging technologies. Imagination too has some limitations. As imagination includes diversity it creates lot of confusion. Other limitations include losing touch with reality, undervaluing the past, dilute individual creativity and slow the process.

Companies can develop strategic planning by considering both benefits and limitations of discipline and imagination. The authors suggest that strategic planning should be combined with both discipline and imagination rather than considering either one of the processes. Imagination considers diverse situations and encourages creativity whereas discipline ensures that the processes are evaluated and systematically developed. Disciplined imagination helps in generating imaginative options, evaluate the options consistently. The authors conclude by saying that firms in ever changing environment need to develop capabilities for both discipline and imagination and may not be deployed simultaneously, but for a particular challenge they may require to deploy both.

Analysis

I find chapter 8 very interesting and insightful. The example of Mergenthaler linotype shows that predicting future value of the technology is very important especially when the technology is emerging. This chapter demonstrated how we can add value in the longer term with innovative asset creation. Many firms are adding a lot of performance incentive for employees for creating or suggesting such complementary assets. This chapter also highlighted how other departments/functions of a company (like marketing, infrastructure support etc) are critical for commercial success of an emerging technology.

Few random thoughts –

1. Companies can create and provide complimentary assets to support innovations of other companies – forming a synergy – which benefits both the parties involved. This way it is much less riskier for the company who is providing the complimentary assets and also assuring maximum leverage for their existing assets.
2. Individuals – highly motivated ones- can create complimentary assets to support innovation in their companies. It will be very tough for individuals to develop a whole new emerging technology – but they should be capable of developing and/or conceiving complimentary assets.
   
3. Companies can create and market complimentary assets and showcase the success (if any) to their stakeholders to win funding for future emerging technology projects.

In chapter 9, author's discussion on imagination and discipline is very true. Though this chapter discuss in a business perspective but I think imagination and discipline are the basic human qualities. Author has made a very good point that sometimes businesses do require these basic qualities to prosper and predict the future potential of new technologies rather than invest in complex techniques.

PECO energy was discussed as an example for their imagination process that involved their employees. PECO energy is now a subsidiary of Exelon and have1.6 million electricity customers and 485,000 natural gas customers.They own 21,000 circuit miles of regulated power transmission and distribution lines.The company also has about 6,500 miles of underground gas mains and service pipes.

Technology Strategy in Lumpy Market Landscapes

Chapter 7 focuses on the “lumpy” markets- markets that are unevenly distributed because of different customer preferences.The author presents a framework that can be used to study lumpy markets and to recognize opportunities to implement emerging technologies across these markets. Customer’s preferences or attributes are restricted by certain key technology barriers and these technology barriers are based on the firm’s capabilities to produce new products with limited resources. Value for new technology arises when it satisfies the customer needs. With ever changing customer preferences, it is difficult for companies to anticipate and analyze market preferences and the benefits of the emerging technologies. As the customer preferences for the new technologies are lumpy, it is difficult for the companies to understand the technological needs of the market.

Pushing technology barriers in lumpy markets
Managers’ deal with lumpy markets by understanding the interaction between market segments and the technology barriers as this helps companies to deploy emerging technologies.

Identifying valuable technologies
Understanding the lumpy markets help companies identify valuable technologies for the market. To understand market lumpiness, technology strategists need to set three conditions:
· Differentiating meaningful attributes
· Understanding how different attributes appeal to different market segment
· Influence of technology barriers on market segments and the attributes.

Lumpy markets can be identified by using attribute matrix tool. Based on the customer reactions and intensity of the reactions, attributes are organized on the matrix and customer responses are categorized into basic, discriminators and energizing features. Once current and future attributes valued by the customer segments are identified, next step is to identify what are the technology barriers that are preventing to develop these attributes. Technology barriers can be identified by creating a barrier register, this helps find specific technology barriers that are restricting firm’s ability to enhance the attribute. With level of uncertainty associated with the attributes and the technology barriers, deploying emerging technologies in the lumpy markets needs to be guided by options reasoning and making small investments. Managers can use position and scouting option to assess the ways to identify deploying emerging technologies.

Identifying positioning options to exploit lumpy markets
There are number of ways companies can use to implement technology development into the markets. Authors suggest three strategies to choose depending upon the extent of lumpiness, the number of barriers and the firm’s level of inclination for change. These three strategies are

Single niche domination: In this strategy one firm moves a technology barrier in such a way that allows it to offer a superior product in a specific niche. This strategy is appropriated for firms with limited investments in technologies.
Niche fusion: This strategy is used to pursue technology that will precipitate the fusion and domination of one or more segments through disrupting one or more technology barriers. This strategy is useful to combine two or more niches together and suitable for technologies which need performance improvement.
Creating a new technology envelope: The most challenging strategy for firm occurs when introducing an entirely new technology. New technology shifts the customer preferences resulting in the death of the incumbent companies.

Identifying Scouting options for applying new technologies
When market and technology applications are uncertain, biggest challenges for the firm is to identify key applications of the emerging technologies. By using dimensional search tool, firms can look for potential attributes that can be developed by the emerging technology and identify the market needs for those attributes.

Conclusion
The chapter concludes by saying that the future of firm is linked to the evolution of attribute available to the customer segments and deployment of emerging technologies can be done by intimately understanding the relationship between the technology trajectories and barriers and the opportunities generated due to the lumpiness of markets.

This chapter was very interesting and gripping for many reasons. This is by far the most interesting chapter of the book. Not sure if it’s the most important one – but definitely most interesting.

Firstly, it showed how much we can dissect and analyze the various forces affecting a trend or a phenomenon (here the lumpiness in the market). The chapter demonstrated how many different ways we can pit the factors against each other to predict a trend.

It also has a shade of what is popularly called “analysis paralysis”. There was probably too much analysis involved to reach a decision. And in the end author puts out a disclaimer that markets will still be very unpredictable no matter how much analysis you might put in your strategic decisions.

Emerging technologies have themselves to blame for such “lumpiness” in the markets. Consumers are kind of spoilt by all the “latest technologies” that they can never get satisfied with any one feature and always want more. Also, there are so many “new” things all the time that consumers are also very confused and sometimes wary of these latest technologies. Many users will buy gadgets or electronics with features they might never use. So it makes it even more difficult to predict what the trend is going to be.

My takeaway from this chapter would definitely be the tools author has used to analyze a trend by pitting the various dynamic factors against each other. These could be applied to many business or strategic decisions.

Chapter 6 -Assessing Future Markets for New Technologies

In Chapter 6 of Wharton on Emerging Technologies, George Day discusses the challenges faced by the organizations in assessing the future markets for new technologies. With uncertainties and ambiguity associated to the emerging technologies, it is difficult to assess the future of new technologies. Few challenges firms encounter when assessing the future markets for new technologies include:

· Lack of sales history or precedents for the new technology.
· Not certain as whom the potential customers are.
· Interaction between technological development and rate of market acceptance.
· Difficult to understand whether the market is big enough for a development project.
· As the technology progresses, many questions crop up that requires precise answers.

In this chapter, Day provides certain frameworks, methods and best practices that help solve these issues. This chapter provides three approaches which can be used to assess future markets for emerging technologies. They are:


Diffusion and adoption:

Each new technology follows a different time patterns to diffuse and adopt in the market. Some technologies will take long time to penetrate into the market, while some take very less time. This difference in adoption rate can be due to:
· Perceived advantage of the new product over the best available alternative.
· Risk associated with the new technology.
· Barriers to adoption
· New product details should be readily available.

Videoconferencing example provided in the book shows the importance of perceived advantage of new product. When videoconferencing was introduced, the developers thought it would be a substitute for travel. But the high set-up costs were perceived as disadvantage over the benefits. Moreover, the potential users thought that electronic meetings are not as effective as face-to-face meetings.

Models such as Moore’s law, helps assess the rate of performance of improvement of new technology, but it is difficult to assess the stimulative effects of diffusion such as price cutting and investments by competitors. Firms should look for stimulants such as innovation, price and collective investments in education and access.

Rate of adoption is also influenced by the innovators (technology enthusiasts), early adopters (visionaries), early majority (pragmatists), late majority (conservatives), and laggards (tradition bound).

Exploration and learning:

Continuous learning and exploring the market brings competitive advantage to the firms. Learning about the markets for emerging technologies include framing the inquiry, collecting market information through probing and experimenting, disseminating the information to the management team, interpreting the data, using the market information to make decisions and evaluating the outcomes.

Triangulation for insights

Methods and best practices adopted for established markets are not suitable when applied to emerging markets. Though, assessing future market for a new technology is mostly done by probing and learning experiments, the four specific methods- learning from lead users, learning about latent needs and anticipating inflections -help understand these results.

Lead user analysis can help under the need of new technology. Lead users develop new technologies in order to find solutions to their needs. Studying lead users is far more valuable than collecting random information of potential customers.

Sometimes new technologies address the latent needs of customers which customers themselves are not aware. Methods such as problem identification, story-telling and observation, helps firms identify the latent needs of the customers and emerging technology that satisfies those latent needs.

In the uncertain emerging technology markets, anticipating inflections brings competitive advantage over rivals. Inflection points can be identified by combination of methodical guesswork, tracking of leading indicators, diffusion modeling and Information acceleration.

With methodical guesswork and tracking of indicators firms can anticipate market demand for the new products or technologies. Diffusion modeling predicts the period of growth for emerging technologies.Information acceleration simulates future environment in an interactive multimedia workstation where consumers can experience new products and services.

The chapter concludes by saying that it not possible to predict all the uncertainties of emerging technologies. The best approach when assessing the future market of emerging technologies would be to know whether the future market is big enough to warrant a development project. To have competitive advantage, firms should continuously monitor the markets with probing techniques and learn from lead users. The author says that actual learning comes when firms interpret the information in the right sense and resolve some uncertainties.

Research:
Moore' law was introduced by Intel's co-founder Gordon Moore in 1965. Moore's law states that the number of transistors on a chip will double about every two years. According to the Intel website, Intel has kept the pace of doubling chips every two years for almost 40 years. Intel is continuously moving ahead by delivering products such as 32 nm silicon technologym 2-billion trasistor microprocessors and revolutionary technologies in the field of nanotechnology.

Reference: http://www.intel.com/technology/mooreslaw/

Chapter 5: Emerging Technologies and Public Policy

Chapter 5 of Wharton on Emerging technologies discusses government’s role and its impact on emerging technologies. Though many new technologies are funded by government, many are skeptical about the role of government. Author says that government policy plays an important role in development and growth of the new technologies.

On page 101, Gerald.R.Faulhaber provides a list which shows government intervention (in increasing order) in new technologies:

· Institutional infrastructure: Providing legal and public institutions that encourage and discourage innovation.
· Research infrastructure: Research benefits in the field of physics, electronics, microbiology etc are non-appropriable and not many firms would be willing to invest in such fields, hence governments support research infrastructure.
· Military technology: In order to strengthen the national military capabilities, governments fund technologies related to defense.
· Government directives: Government’s direct role in encouraging or protecting the commercial exploitation of well-understood technologies.
· Standard setting: Standards set by the government rather than by a dominant firm or a patent holder in emerging industries.
· Government regulation: Innovation can be affected by government regulations; especially research related to food and drug.
· Government subsidies: This is the most interventionist method government adopted by government in supporting firms in emerging technologies.

In this chapter the author discusses how Internet has emerged and the role of government during the different phases of growth of Internet. Author suggests few lessons a manager can learn, such as government policies, in creation, development and privatization of new technologies.

Author also suggests that based on the government’s involvement in the new technologies, managers can make decisions as to what best suits their firms. Lessons provided in the chapter are as follows:

1. Government can play powerful role in the early stages of a new technology-careful monitoring of government labs and universities may give firms a head start in developing and commercializing a new technology.
2. Government withdrawal support from research is resisted by many beneficiaries- if a firm is a government beneficiary then it should lobby hard for continued subsidies.
3. If government helps in transitioning a technology from public to private, everyone will complain- transition periods are great opportunities to lobby hard and to gain competitive advantage.
4. Effect of new technologies on society may cause public concern – companies should be prepared for both positive and negative effect of public concern.
5. Legal and political reactions may arise due to the disruptions caused by new technology- managers should anticipate the disruptions that might evolve and be prepared to take advantage of the profitable opportunities that result.
6. A high-value technology may be demanded for universal service- demands for universal service can be translated into protection from competitive market.
7. If dominant firms treat their customers poorly then regulators will demand political intervention- Firms should carefully monitor customer satisfaction.
8. If a new technology is gaining significant market position and leading to monopoly then government must intervene to control monopoly through regulators or antitrust- companies should avoid situations that may cause concern among the customers and competitors.
9. If the technology leads to dominance in bottle neck market then political demand will rise to limit the firm’s ability to vertically integrate- if a firm enters a bottle neck market, it should lobby hard to keep the bottle neck firms out of its market. If a firm is bottle neck firm, then it should not invite public scrutiny.
10. Government policies and regulation may have unintended side effect or sometimes negatively impact the firm- Companies should lobby for minimalist regulation and make use of the market forces.

I think that the government spending for emerging technologies is a tricky topic. First and foremost government has the money to do it (obviously!!!) and would be the ideal one to do it as it will spur technological innovation. And if businesses succeed, government also benefits in the way of taxes and export dollars. Good ROI for the government.

For the private sector, investing in emerging technologies involves huge risk. In many cases companies will cease to exist if their investment in an emerging technology fails. Governments are unlikely to be hugely impacted if their investment in an emerging technology fails.

In developing countries the governments are cash strapped and the best thing they can do is keep out of it - rather than interfering and/or regulating sectors which spur innovation and lead to the birth of emerging technologies. They can at most offer tax breaks for technological research.

In developed countries it’s a different story (at least in the pre-recession days). I think government can fund emerging technologies that help in the field of medicine, social welfare (for example ultra-affordable hand-held computers for rural communities) and military. If the emerging technologies do not belong to the aforementioned fields it will be difficult to get tax dollars to fund these projects. As the saying goes there is a fine line between genius and insanity. Same applies to emerging technologies. Some might view it as very wise investment and some might view it money thrown away. Emerging technologies are inherently risky projects and many tax payers might oppose funding to these projects as wasteful government spending - now more than ever before.