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.