Wharton Chapter 7

Chapter 7 focuses on the marriage of technology and market segmentation. Technology markets are defined as “lumpy”, in that they can be fickle in determining what certain market segments want today and what they will want in the future. Using a very low-level example using laptop computers and two-dimensional variables, they create an envelope defining the technology associated with the two variables. They then create a market segment diagram using three market segments’ utility for the two valuables. It was fascinating to see the result when they overlapped the two envelopes to create an estimate for where they were, and where they may want to be. This could be a determinate as to what technology they may want to improve upon to reach a more diverse market, i.e. multiple market segments. They can also use this information to determine if investments in certain technologies will help them advance their market share.
Everything in this chapter focused on the idea of attributes. Attributes are the differentiating factor between the good of one company to a similar good of another company. These attributes require heavy analysis which can be broken into three components: Basic (expected feature), Discriminators (distinguish between providers), and Energizing features (discriminators that draw a sharp distinction). The authors then explore options to infiltrating these lumpy markets through clever use of a market niche either by combining two niches of two different markets (Fusion), or by advancing their technology barrier to a place where they can offer a superior product to a competitor in a single niche (Single Niche Domination). Or, they can take the most difficult road and create a new technology envelope by essentially revolutionizing the entire attribute set for a technology. An easy way to think about the value of attributes is to think of the history of the automobile. I think of the new Smart Fortwo car as an example of technology and market working together to establish a niche. If Smart had put out the car before a certain market segment was ready for it, it most probably would have failed. On that same premise, had there been a market segment for a car that got 33/41 2008 EPA miles per gallon and was only 8.8 feet long, but Smart did not have the technology investments in the right area, they may have failed to make it to market and attract this niche customer at an attractive price.

Wharton - Chapter 6

Traditional market research will not cut it in emerging technology. That is the general idea surrounding chapter six in the Wharton book on emerging technologies. This chapter explores the uncertainty and unknown that comes with putting out a technology to market that does not exist. It is not prudent to use the standard focus group or an assumed market to test your product, as these may lead to incorrect or uncompleted information, as well as possibly uncommitted or uninformed testers. The worst thing a company can do is to use a close-minded approach to market research that attempts to direct their product to a specific market or to the market they think they are addressing. They are best to embrace a wide range of possibilities and use a "Triangulation of Insights" and use multiple methods such as using lead users or learning about latent needs or anticipating inflections. Adoption of a product takes the shape of a bell curve, and the forefront of that adoption is the lead users. They are not picky or high-maintenance, just adoptive of the technology as-is and can provide valuable insight into what processes the technology can be valuable for or the needs or requirements the technology may need to further develop. Latent needs are needs that the customer does not even know they have, such as the example that Kimberly-Clark noticed that parents do not want diapers to be waste collectors, but rather "clothing" for their children. And the anticipation of inflection if the high point of the aforementioned bell-curve, which assess the areas of opportunity within a technology where people can evaluate what they may want in a more "futuristic" environment that this technology may address. As Clayton Christensen states in his book "The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail" (Page 50), once a technology is past its point of inflection, and its technology is decreasing at a decreasing rate (I would call this diminishing returns to technology. That's my new term) then a new technology is ready to emerge to supplant that existing one. Anticipation of that point of inflection on the technology S-curve is where the company can gain a comparative advantage ahead of their competition.

Wharton Chapter 5

This chapter focuses on the role of government and its relationship to emerging technologies. The whole chapter used the history of the Internet and the communications industry as the basis to exemplify ten important lessons. Sometimes the government has a very satisfactory role in emerging technologies, as described by their development of the ARPANet and the privatization of the Internet backbone network from the National Science Foundation. But sometimes the government can take on a non-satisfactory role for a company with additional regulations or the provisioning of a universal service obligation. The idea of a monopoly and how these work was brought up many times in the chapter, including the role for government to regulate natural monopolies where a current market has only room for one competitor and to prevent a company from getting monopoly by stifling competition like Microsoft has been accused of doing, and treating their customers poorly or overcharging can also bring about governmental regulations. Whether a company expects supportive, adversarial, or no governmental effect at all, they should be prepared to deal and adapt to all scenarios with their emerging technologies. With this chapters’ focus on the Internet and its global outreach, very good examples were made of the challenges a company will have with overlapping jurisdictions of federal, state, and local laws, as well as global regulation. The idea of a conduit and content and vertical integration are very important, as to avoid a “closed” architecture that does not allow other companies to compete, the government may become involved to resolve this bottleneck to competition, and thus stifle the company’s ability to vertically integrate. It was interesting to read that most of the lessons (two, three, five, nine and ten) either directly or indirectly point to lobbying for favorable positions for the company’s perspective. Lobbying can be a very effective and powerful negotiator that can lead to substantial success for a company. Would Enron have become the powerhouse it was had it not contributed $572,350 to the campaign of George W. Bush and gotten Kenneth Lay to spend an evening in the White House with Mr. Bush? Even before Mr. Bush came to power, throughout the nineties “…Enron needed help in Washington, and it got it in a series of actions by Congress and the Federal Energy Regulatory Commission (FERC) that undermined the traditional monopoly of utility companies over power plants and transmission lines.” (“Campaign Gifts, Lobbying Built Enron’s Power in Washington”, Washington Post, December 25, 2001). Sometimes Lobbying can give a company the influence it needs to succeed…and beyond.

Wharton Chapter 4

Chapter four centers it's message around the story of AquaPharm Technologies Corporation, and the different components involved in assessing emerging technologies. Assessing emerging technologies involves four components: Scoping, Searching, Evaluating, and Committing. In scoping the company aligns their strategic intent and their capabilities with the technology they wish to explore. There are many considerations to explore when in the scoping stage, including the target market, financing, R & D options, and organizational culture. Searching includes exploring the different avenues of how and what technologies a company is going to pursue. The company will explore various obvious literature and public information, as well as even private and borderline un-ethical avenues to create a pool of candidate technologies. From the pool of candidate technologies, and select few are chosen for what I perceive to be the most important assessment step: Evaluation. Time or specifications spared at this step could lead to expensive and unnecessary failures of the technology if it goes to market. At this step, the company assesses the various risks involved with the technology. The newer the technology, the more risky it becomes. Once a technology is ultimately decided on, the final step, Commitment, takes place. This is the step where the company chooses a path it will use to introduce the product to market using a variety of strategic intents including: Wait and Watch (not actively develop the product, but actively keep an eye on the technology and/or market), Position and Learn (keeping an option open to develop the technology, and further pursue learning about it), Sense and Follow (active commercialization, but not be first-to-market), and Believe and Lead (full commitment and no fear being first-to-market). Throughout the chapter the different stages are exampled by the story of AquaPharm and their decisions at each step of the assessing process. In their efforts to consistently secure investment capital, they took on more than they could handle, and learned some expensive lessons for their lack of completion of thorough evaluation of technologies. The company ultimately failed and the end of the chapter revealed they may have been a success if they had assessed their technology and their market (their core market, had they focused on it, ultimately became successful) the company would most likely be alive and successfully operating today.