Chapter 17 - The Design of New Organizational Forms

Chapter 17 discusses how the organizational forms of companies has been changing. These new forms are generally formed around 2 capabilities that are viewed as critical in "environments of discontinuous change." Those capabilities are: 1) an effective balancing of exploration and exploitation, and 2) a recombination of of established competencies. If a firm is very good at the exploitation of its goods and/or services it can appropriate gains based on that exploitation, but if it does not balance that exploitation with exploration, it could lose sight of the market and be quickly over taken by a new discontinuous technology. Similarly, if the firm only looks at the exploration of new technologies it will never recognize long term gains without exploiting those technologies. The author also mentions that different organizational forms are defined by the unique reconfiguration of 6 elements: 1) organizational goals, 2) strategies, 3) authority relations, 4) technologies, 5) markets and 6) processes.

Based on these 6 elements and the reconfigurations that firms can take with them, the author has come up with six relatively different and potentially enduring organizational models:


Virtual Organization - suppliers, employees, and customers are dispersed geographically but are all connected by technology. Dell's connection with customers can be categorized as a virtual organization. Virtual companies have boundless opportunities to connect with customers but the flexibility can also create a new set of challenges such as the lack of face to face time with customers.

Network Organization - set of relationships between autonomous or semi-autonomous work units for delivering products or services to customers. There are both internal and external - external: organization that creates ties among independent entities to combine skills (ie. partnerships, joint ventures). Internal: much like and external but ties together entities on the inside of the organization

Spin-Out - organizations that are developed inside and organization that are unique and different and are then spun out to external entities and are usually partially owned by the parent company.

Ambidextrous Organizations - organizations that continue with their established environment while creating and promoting emerging business environments (sustain and innovate). This gives structure to the new environment while sustaining the current business environment.

Front-Back Organizations - customers are served in the front with the backend of the organization supporting the front end. (Typically in service industries that are customer driven.)

Sense and respond organization - identifying the emerging needs of the customer and responding intensely to those needs. This is important to meet the ever changing demands of the customer which allows the customer to adapt to the changing conditions

The organizational forms given are not hard and fast, many more potentially exist, but these are assumed to be and will be in the future the major forms. Furthermore, organizations can move in and out of these structures based on their needs, business strategy or organizational maturity. for instance, a newer company may need to develop business relationships with customers, suppliers or the distribution channel, for this they may need to choose a Front-Back form. However, as they grow and mature they may need to grow those relationships by moving into a different organizational form, perhaps a sense and respond or even a virtual form to be able to better service their curretn relationships as a small company.

As managers we must watch our organizations and find where we are running into issues, where we are slowing down and adjust our business plans or forms accordingly. Gone are the days when we can chose a hierarchical organizational structure and sit back and watch it grow. Business today is ever changing, expanding, growing and developing and as managers we must maintain the flexibility to adjust to these changes in order to make our firms and or emerging technologies successful.

Chapters 11 - Appropriating the Gains from Innovation

This chapter deals with how to extract profits from emerging technologies, and starts off by providing 3 hurdles that must be met in order to create profit: 1) technology must be successful, 2) it must create value, and 3) appropriating gains. This last one is the main focus of the chapter, how to capture the gains from a technology innovation. There are 4 main mechanisms used today to capture these gains:

1. Patents and related legal protections
2. Secrecy
3. Control of complementary assest
4. Lead time

The first, intellectual property and legal protections, are what many people focus on today. Many people think that if they can get a patent for their innovation they will be able to keep competition out and gain huge profits. Which, in some instances is true, but will rarely serve to build a long term successful business strategy. While patents restrict anyone from using or developing like goods for a 20 year period without permission, they do not restrict from developing "around the patent", developing complementary goods and tend to be extremely expensive to defend. This last factor is very important because the whole point of the patent is to get extremely high profit margins through market dominance, but if much of those profits are spent defending the patent then is it really worth it? Instead the author here suggests to invent a better mouse trap not protect the one you already have. Meaning instead of defending an invention/innovation you have developing, try to develop a "solution" that customers value even more than the product on its own.

The second mechanism, secrecy, is another way to deter competitors from knowing about or competing against your product. While this is a good way to protect intellectual property, internal processes or other such intangible trade secrets, it is very difficult to keep product details secret for very long. Once a product is out in the market, it becomes much more difficult to keep its secret. That is competitors are now able to purchase the product and legally can reverse engineer and produce like products of their own. The author further describes that While secrecy keeps your intellectual capital inside your company it also doesn't allow outside information in and further innovation is stifled.

Complementary assets are those tangible and intangible assets that naturally will sell with your product and sometimes better than your product. Being able to wrap your own product or someone elses product with complementary assets can be one of the biggest ways to appropriate gains from e new technology. Here the author talks about IBM's strong sales force and service/support organization as the key to its dominance during the 50s and 60s. While they didn't necessarily invent the major products that it sold, people had to come to them because of their complementary assets.

Finally, Sidney Winter, talks about lead time as the most important mechanism for the appropriation of gains. The concept of lead time is getting the right product to the market first. This is not the same as getting your product to the market first, it has to have the functions that the majority will want, otherwise you were first to market with another useless product. The author gives an example of Nucor and the compact strip production process in steel making. However, I think an even better example would be from earlier in the book. How Palm won the PDA market, they were not necessarily the first to market with their product and they were definitely not the biggest company at the time. They did, however, take the time to figure out what the consumers wanted in a PDA, then they produced what would then be a game changing technology. Apple on the other hand rushed to the market with a prodcut that wasn't what the consumers wanted and it was a huge flop.

I think the main point that shouldbe taken out of this chapter is that the four of these elements should be considered and used together to appropriate gains from emerging technologies. One underlying fact though, is that having a new technology is not enough on its own. The technology may be gre3at, but even more importatn is the application of the technology and how it will be received by consumers. It has been shown time and time again consumers care more about how the technology is used to help them in their lives than just having the technology for technology sake. Futhermore, rushing out to get a patent on your technology or keeping your technology a secret will do very little if there is no inherent value in the technology to consumers. Patents should be used as ways to protect a products uniqueness, not as a way to make money. I think 2 great examples of this are pharmaceutical companies and the iPod.

Pharmaceutical companies rush out to get patents on their latest and greatest drugs, they then exploit the consumers for up to 20 years (usually less), by charging huge margins on their drug. In the process they upset consumers and don't build any future streams of possible revenue for them. As such they go through times of huge profit and times of huge losses.

The other example, more positive, is Apple's creation of the iPod. While there are some trade secrets, I'm sure, and there are definitely patents on the hardware and interface, these are not what is selling the product or what has made the product so popular and successful. Instead Apple took the time to fully develop a user system for their iPods, and they developed the BEST system for this. People are buying it because they are familiar with iTunes and iPods, they are easy to use and for new comers they are easy to learn. Apple is not trying to restrict any companies from producing MP3 or other types of music players, their patents are restricting other companies from producing the exact same systems.



Corcoran, Elizabeth. "Why Apple Won." Forbes.com. 23 October 2006. . 11 February 2009.
http://www.forbes.com/2006/10/20/ipod-itunes-jobs-tech-media-cz_ec_1023valleyletter.html

Chapter 10 - Scenario Planning for Disruptive Technologies

Chapter 10 uses examples from the newpaper industry to show the importance of and the steps behind scenario planning. in the 1980s, Knight Ridder, along with other major newspaper publishers rushed to embrace videotext as the new technology of the future that would revolutionize the way business was done in their industry. By 1986 Knight-Ridder had invested over $50M in the technology and was ready to walk away. Fast-forward to 1995, once again the newspaper industry was facing a potential game changing technology, the Internet, however, this time companies were more cautious to embrace the technology. Would the Internet be the future of publishing or the next "videotext" sinkhole? Managers would need to do careful analysis to determine whether to invest or not. If they invested and the Internet didn't take off they could face more huge losses. However, if the Internet did take off, like the experts expected it to, and they weren't in front of it they could lose huge market share and revenue just as Encyclopedia Britannica did when CD-ROM technology was introduced. Therefore, the question becomes how can we plan for a future riddled with uncertainty? Schoemaker and Mavaddat argue that instead of making definitive statements about the future, experts may be better served to come up with multiple possible scenarios for the future use of emerging technologies. The goal is to roughly sketch visions of multiple futures and then develop a strategy to best prepare for the portfolio of futures and over time adjust these strategies as the future becomes clearer. When done properly, scenario planning, can help prepare managers and executives for possible futures that they are unable to picture or imagine today.

Scenario planning was designed to address complex and unceratin challenges facing companies in the face of emerging technologies. It has proved to be a powerful tool to change people's thinking, as well as that of entire organizations. There are 3 challenges, inherent in emerging technoliges, that scenarios address better than other planning or stategy methods, scenario planning:

1) Uncertainty - uses uncertainty as the central element in its process
2) Complexity - explore how diverse sets of forces combine, intermingle and influence eachother
3) Paradigm Shift - aim to challenge prevailing mindset, surface core assumptions and create intellectual turmoil to find new possibilities

There is a good analogy, the authors give, comparing scenario planning to corporate planning. If we were going to climb a mountain, corporate planning of the past would provide a detailed map, describing the predetermined and constant elements of the terrain. However, a map is two-dimensional and the earth's surface is not, nor are the elements constant, they are ever changing. Therefore, by using scenario planning we could look at the different elements, formulate multiple possible scenarios and plan our trip accordingly.

There are 10 basic steps in the scenario planning process:

1. Define the issues you wish to understand better in terms of time frame, scope and decision variables (make sure the scope if broader than the industry, product segments, customer groups and technologies that currently define your business)
2. Identify the major stakeholders (those that could be affected by it or influence it)
3. Identify and study the main forces that shape the future within the scope from step 1
4. Identify trends or predetermined elements that will affect the issues of interest from list of main forces, step 3
5. Identify key uncertainties from the list of main forces (uncertainties not trends)
6. Select the 2 most important key uncertainties and deelop a 2x2 matrix
7. Assess the internal consistency and plausibility of the initial learning scenarios. Test for internal consistancy in 3 ways: 1) Are all future trends mutually consistant with eachother? 2) Can the outcomes postulated for key uncertainties all co-exist? 3) Are the presumed actions of stakeholders compatible with their interests?
8. Assess the revised scenarios in terms of how key stakeholders might behave in them
9. After completing additional research, reexamine the internal consistencies of the learning scenarios and assess whether some of the more complex interactions should be formalized via a quantitative model
10. When initial scenarios work is done, reassess uncertainties and how each looks under different scenarios

Finally, the chapter looks at 4 traps associated with scenario planning.

• Failing to gain top management support early on - even the most innovative and accurate scenarios will be dismissed if the top management isn't on board prior
• Lack of diverse inputs - lack of diversity could lead to group think and no innovative ideas or thoughts for the scenarios
• Failure to stimulate new strategic options - using traditional methods to develop strategic options off of scenarios could leave you in the same place as not having scenarios at all; use innovative ways to come up with strategic options that will go in line with the scenarios
• Not tracking the scenarios via signposts - day to day performance indicators are needed to track the progress through the scenario and strategy

I thought this was a very useful chapter and gave the insight, explanation and assistance I thought should have been provided in chapters 8 and 9. While the steps in this chapter are not crystal clear, with some further analysis and practice, one could simplify the steps into a one page sheet that could be used as a manager when assessing the future of a company facing an emerging technology. Chapter 10 almost portrays scenario planning as a catchall to help companies hedge against emerging technologies.

Could the newspaper companies saved money and heartache had they used scenario planning before investing in videotext?

Could Polaroid and Kodak, from chapter 8, have avoided being displaced in the digital imaging space if they had used scenario planning? Would scenario planning have even shown the companies the technology that was on the horizon or would you have to know about the technology prior?

How often would a manager need to perform this exercise? Everytime a new possible technology was emerging? Or, just when the technology starts to get traction in the market place?

Chapter 8 & 9

Chapter 8 - Commercializing Emerging Technologies Through Complementary Assets

Chapter 8 takes us through the process taking an emerging technology to market and some of the challenges that managers face and must work through in order to break into the new market or stay competitive in their industry. While Mary Tripsas focuses mainly on what incumbant companies must do to stay competitive when facing an emerging technology that threatens its core business, I believe that her methods can be applied to new companies as well. In fact, a new company would be well advised to look into the "three challenges of commercialization" that Mary writes about in chapter 8. No matter if they work for an established company or a new start up company, managers must take into consideration assets that are complementary to their new technology, how the new technology can change the customer base that uses the technology and what new competitors are in the market.

Complementary assets include resources such as access to distribution routes, service capabilities, customer relationships, supplier relationships, as well as complementary products. Many of these assets greatly favor incumbents because of their nature, but if a new company recognizes the need to utilize and make complementary assets work for them they can gain back some of that advantage. Furthermore, if a start up company can create a dramatic need for new complementary products, then they really have a chance to change the game and capture a lot of market share away from the incumbents. In the book, Tripsas, gives the example of Mergenthaler Linotyope, who owned the largest library of proprietary typefaces. The company experienced over 100 years of strength and market dominance because it had the largest library and it was difficult for customers to switch to a product that couldn't use all of these typefaces. Further, because of the high cost of producing these typefaces, it was impossible for new entrants that came with each new technology over that 100 years to catch up in the typeface race. that was until the mid-1990s when desktop publishing and Adobe came around and made this older technology absolete, because of Adobe's Postscript format, companies lost proprietary control of their typeface libraries and their competitive advantage.

The last 2 challenges, change in customers and change in competitors, can be mutually exclusive, however, at times one can lead to the other. In the case of Mergenthaler, when the technology changed to analog phototypesetting a new customer market was introduced, the "office" or in-house publishing segment, along with this new market came new competitors and new distribution routes. Another example is the the digital camera; before going digital the major players in the market Canon, Polaroid and Kodak, to name a few. They had the best lense and optic technologies as well as chemical-based film technology that accompanied traditional cameras. When digital imaging started coming around, all of the sudden these complementary assets were not as important and new competitors such as Sony could enter the market. Traditionally a consumer electronics company Sony was able to utilize their electronics knowledge to develop digital this new digital technology, with software that could interface with home computers and home printers.



Chapter 9 - Disciplined Imagination: Strategy Making in Uncertain Environments

In chapter 9 the idea of "Digital Strategy" and "Disciplined Imagination" is discussed in the light of strategic planning in fast paced industries, where change occurs at an increasing rate. Strategy planning techniques that were once the norm, where teams would meet to develop a business strategy for 3 years, 5 years or even further in the future, are out of date and useless when dealing with fast-paced emerging markets and tehcnologies. If these old way s were to be used today in emerging markets, by the time the strategy was constructed and put in place it would be already out dated and a new one would be needed. Digital strategy and disciplined imagination refer to the idea of matking strategy planning an evolutionary process, that is your business strategy would be changing as the market changed, needs changed or technology changed. As information that was once unknown becomes clear, the strategy would adapt to this new information.

There has been pendulum effect between discipline and imagination for several decades in strategy research and practice. The discipline concept of strategy planning is pretty intuatitive, that is, planning is done through a disciplined process, taking into account each step in the process and carefully performing the due diligence at each step. It provides a set of controls for managers through-out the process and allows them to be more judicious in their decision making. On the other hand, imagination generates and evaluates more options and appears to be related to a higher chance of success. Unlike the disciplined approach to strategy making, imagination encourages less structure and more out-of-the-box thinking. Finding new ways, new alternatives and new options for the company to pursue. While both of these have there distinct advantages, each come with limitations and neither is really good enough on its own.

These limitations are:

Discipline

• Analysis rather than synthesis - discipline works a strategy, the best it can, around what is already known, we are not looking beyond what is know to what could be
• Selection at the expense of generation - little idea generation goes on in decision theory, so there are few alternatives given
• Extrapolation from the past - discipline is a historical looking approach, where managers try to create future strategies based on historical information and try to apply this information to future strategies. This approach clearly doesn't take into account current market forces or direction.
• Overconfidence in the power of analysis - analysis is predicted on available information and information is often too limited for meaningful analysis

Imagination

• Chaos - multiple people involved in the idea generating process; however who ends up making final decision? If imagination is unchecked it could get out of control.
• Losing touch with reality - too much forward, imaginative thinking may lead manageres to lose touch with what has to be done today.
• Undervaluing the past - future looking is great, but if the past isn't taken into consideration a firm may end up repeating mistakes of their past.
• Diluting individual creativity - involving moe people does not always necessarily generate more creative ideas, often times it creates group think.
• Slowing the process - more people also means taking more time in creating a strategy.

These were both very interesting chapters and discussed very important issues. However, I feel that they were very high level and filled with fluff. By that I mean, the authors do a great job of explaining their topics and give some examples , however I feel they do not do a good job in advising managers how to perform strategic planning better or in a way that combines both discipline and imagination. They explain to managers the changes to look out for and what to be aware of when trying to commercialize, however, don't give steps to detemine on our own. I would like to have seen clearer ways we could implement their steps to create plans for commercialization and strategy making on our own for any product or company we look at.

Chapter 7 - Technology Strategy in Lumpy Market Landscapes

Chapter 7 focuses on the technological constraints faced by firms when trying to provide customers with all of the product features they want. The authors, Ian MacMillan and Rita McGrath, use an extremely appropriate example throughout this chapter, laptops. They detail the complex balancing matrix a manufacturer of laptops must deal with in order to make decisions on whether to make their product ultra-light or ultra-rugged, or some combination on a spectrum between the two. Companies face this dilemma all while keeping an eye on what the market is doing, what their competitors are doing and in the face of technology barriers that constrain their options.

The authors use the term "lumpy" when describing the markets as a way to convey that market segments often become tightly grouped around characteristics they value, "dimensions of merit". In the laptop market, for instance, some users need a more ruggedized system, while others need a more portable, small, light-weight model, then yet a third group may want a combination of the 2. Each of these groups would classify as a "lump", because of the distinct set of needs each makes purchasing decisions on. Each group would be willing to make tradeoffs between ruggedness and portability depending on available alternatives and price. The key as a manufacturer is to try to capture as many of these "lumps" as possible. In the books example, a company may be able to capture a good portion of 2 of the 3 groups, however, capturing that 3rd group would require a dramatic shift in technology. In other words the company would need to break the current technology barriers. If laptop manufacturer could manufacture a system that provided the portability the traveling executives require and still be rugged enough for the sales reps, they could capture both those segments. However, until they pushed the technology barrier back to the point where they could make the same small portable system rugged enough for the service technicians they could never break into that market segment. Once they are able to push that barrier, they would be able to capture all 3 market segments.

In order to take full advantage of capturing lumps, managers must perform assessments on current and future segments and the needs of each as well as segment sizes and their elasitcity of demand. That is, managers must determine what needs they can fulfill in the future with technology investments that will provide the biggest return on investment. Managers must also make strategic decisions as to how they can use technology development to move into new markets, their strategic alternatives are:

1. Single niche domination - dominating one "lump"
2. Niche fusion - capturing business from multiple "lumps"
3. Creating a new technology envelope - development of new a new technology that will displace the current market

While this concept is by no means new, the way the authors describe it and the methods used to assess the markets they refer to provide a new, fresh outlook on the subject of strategic product management. The basic premise being, as a company, we need to find out what we are doing, what our competition is doing, where the differences are, what differences the customers value & to what extent and what new features do customers want in the products they purchase.

Chapter 6 - Assessing Future Markets for New Technologies

In chapter 6, George Day, delves into how to assess markets for emerging technologies and the challenges companies face in doing these market assessments. The question companies must address is, how do we determine the size and demands of a market that does not yet exist for a product that nobody knows about? Traditional market assessment methods and tools are designed to assess developed markets, to receive and interpret consumer feedback for products that are developed and have established purposes. This process becomes much more difficult when there is no market, the technology is not fully developed and its applications are not absolutely clear. There are 3 usefull assessment approaches for future markets and emgerging technologies:

1. Diffusion and Adoption
2. Exploration and Learning
3. Triangulation for Insights

Diffusion and Adoption

The author here explains how prducts diffuse themselves throught the market and rate of adoption by the different customer sets. How quickly and successfully products diffuse themselves through the market can be largely explained by the following characteristics:

• Perceived Advantages - the advantages of the new product compared to best available alternative
• Risk - risk buyers perceive because of their uncertainty about the new product (performance, changing standards or possible economic loss
• Barriers to Adoption - barriers that hinder the consumers from adopting sooner, such as investments in current or prior generation products, regulatory restrictions, etc.
• Opportunities to Learn and Try - the product must be readily available for trial, purchase and servicing, the consumers must also be informed about the benefits of the product

While all of these characteristics are important to the diffusion of new technologies into the market, perceived advantages are the main driver, because without a substantial advantage over current technologies most consumers will be hesitant to invest in new technology just to have new technology. There must be a significant enough advantage to justify the investment, both monetary investment as well as any learning investment that may be needed. In order to stimulate the diffusion of technologies into the market, firms must make investments in innovation, which stimulates market growth, which encourages competitive activity, which causes further innovation to increase relative advantages, which starts the entire process over again and causes further diffusion of the new technology and market growth.

This diffusion occurs in stages across different customer groups, all of which have different rates of adoption tolerences for new technologies. Some of these consumers are quick to adopt, others will not adopt the new technology until there is no choice but to make the change (similar to the digital conversion of television going on today). These different consumer group are labeled by a popular adoption bell shaped curve with the innovators and early adopters on the left tail of the curve where the early stages of diffusion would be, then the early majority and late majority are where the largest percentage of diffusion occurs, then the laggards adopt when there is no other alternative. The first few groups provide valuable insights into the market for firms as they progress their product through the market. The Innovators adopt new technology as quickly as possible, they take the time needed to master the technology. They help to prove the new product and provide endorsements to the follow-on groups. Early adopters, visionaries, see potnential to change the rules in their own competitive market with the use of the new technology. This group really helps to bring the capabilities and potential out in the new technology because of their extensive requirements. Once proven by the early adopters, the pragmatic early majority will start to adopt once the benefits are well proven. This part of the chapter was discussed by John Hanousek in our last class and more in depth in the book he recommended, "Crossing the Chasm".

Exploration and Learning

This is the process of creating a technology out of market inquiries, successive approximations and accumulating learning. Questions to ask at the beginning of this process would be:

• What are we trying to learn about?
• What decisions have to be made and what alternatives should be considered?

These questions must be asked and answered mutiple times and mutiple way sprior to the establishment of the dominant design of the new product. A great example here is the early PDA market, where many companies tried to rush to the market with solutions they thought consumers would want. However, Palm waited back, assesed market needs, released early versions of their product to innovators, took feedback from those early releases and eventually launched a product that became the industry standard. This information gathering and beta testing stage is crucial to this approach; good customer feedback will be used to develop a product that meets broader market needs. The information gathered will then be interpreted by organizations. These organizations must be careful to look past their initial assumptions of the market as well as specific customer feedback. Instead they need to interpret this feedback and draw from it information about latent needs, persistant problems and/or trends in requirements.

Triangulation for Insights

As previously stated because there is a lack of information about the future market and little to no knowledge about the emerging technology, using any single current market assessment method will not produce accurate information. However, by using different methods and gathering information in different ways one can make market assessments that are directionally similar. That is we cannot gain the exact information that we could in existing markets from a focus group, for instance, we can predict a general direction or general needs that a product should take or solve.

Taken together these 3 approaches can help solve the difficult issue that companies producing emering technologies face. They find ways to collect useful market information that critical decisions about new products can be made. As an extension to this chapter, Geoffrey Moore's book, "crossing the Chasm" provides more in depth analysis about the Adoption Curve and the groups that make that curve up. The book details the importance of maintaining momentum to cross the "chasm" where many technologies and companies die.

Moore, Geoffrey A., "Crossing the Chasm". New York: Collins Business Essentials, 2002.

Chapter 5 - Emerging Technologies and Public Policy: Lessons from the Internet

In chapter 5 Gerald Faulhaber takes us through what role government can play in spread and adoption of emerging technologies. While many people feel that government intervention has negative effects, which at times it does, Faulhaber shows the good that it can play in the development and integration of these technologies.

There are 7 ways, given in chapter 5, that government can incorporate itself into the development of emerging technologies (in order from least to most intervention by the government):

Institutional Infrastructure – public and legal institutions that encourage or discourage innovation (universities)
Research Infrastructure – government laboratories for basic research in physics, electronics, microbiology, software and other fundamental disciplines that few firms invest in because of their non-appropriable nature
Military Technology – direct government funded technology research for military use
Government Directives – programs and initiatives set by the government to encourage or protect the commercial exploitation of technologies
Standard Setting – typically standards for technology are set by the market; however at times the government has to step in to set standards to ensure technology definitions are uniform, such as for HD TV
Government Regulation – government organizations such as the FDA must approve products
Government Subsidies – when the government subsidize a “winner” in the competitive emerging technology market

The author follows the Internet from the creation and early years from 1969-1993, to the high growth years of 1994-present to possible future deployment of broadband networks. However, the lessons from the creation, spread and eventual privatization of the Internet are where we, as managers, can learn from past experiences. These lessons help clarify what the government can do, how it can do it, what effects these actions have and what we can do, as managers of technology, to position our firms the best we can. The following 10 lessons are given in chapter 5 and implications for managers to go along with each:

1) Government can play a powerful role in shaping the development of a new technology in its earliest research stage
Implication. Managers should monitor research in their respective fields by reading trade journals and watching innovations coming out of research labs and universities, etc.
2) As a government withdraws its support, those that have been benefiting from the support meet the withdrawal with strong resistance (eg. Shifting of the Internet to a for-profit model, met with resistance from those early users that used it for free)
Implication. Managers benefiting from government support should lobby hard for continued subsidies. If you are not receiving benefits from the government support, you should position your firm as a safe haven for those that are about to lose their government support
3) Government as coordinator can help manage the transition from public to private.
Implication. Lobby hard and smart to put you and your firm in a position of lasting competitive advantage
4) Public concern about the affect of new technologies on social mores may lead to demands for political solutions to limit these impacts (eg. Sexually explicit or hate group materials that are accessible to children on the Internet)
Implication. Look at possible externalities of emerging technologies and see where, when and how you can act either offensively or defensively to capitalize on the implications early
5) Emerging technologies have legal and political repercussions that emerge from disruptions created by the way business is done with the new technology (eg. Copyright issues, security issues and even national security issues and the Internet)
Implication. Managers need to anticipate disruptions in how corporations and markets do business with the emerging technology and find ways to influence any political responses taken as well as any opportunities that may present themselves
6) A new technology which is highly valued by all may lead to demands for “universal service”, which would likely result in some form of government intervention (eg. Telephone and cable services and the infrastructure that goes with them)
Implication. Demands for “universal service” can lead to the creation of a monopoly by the government, especially for technologies that require expensive infrastructure
7) Dominant firms can often make the mistake of treating customer poorly, which can lead to a political demand for intervention by regulators (eg. Government regulated/created monopolies, Bell System before deregulation, Williamson’s cable franchising case)
Implication. Managers of leading and possible new competing companies must monitor what customers are saying. What their concerns and satisfaction levels are, the one to address these issues and concerns will likely win the business
8) If a new technology threatens to lead to a single firm gaining a dominant market position, government may intervene to control this “natural monopoly,” either through regulation or antitrust (eg. Power companies, when the price of building the infrastructure may prevent competitors from being able to enter the market)
Implication. If managing a monopoly or a firm with much market power, managers must be careful on how the firm acts in the market. They cannot be viewed as using their market power to inflate prices, stifle competition and/or innovation
9) If the technology leads to firm dominance in a bottleneck market, there will be a political demand for government to limit the dominant firm’s ability to vertically integrate (eg. Computer companies bundling hardware and software
Implication. Managers of firms that must compete with bottleneck firms should lobby hard to keep them from vertically integrating. If you are that firm, you could come under scrutiny if you exhibit ultra-competitive behavior
10) Regulations that appear to promote competition or policy objectives for emerging technologies can have unintended side effects or even the opposite effect
Implication. As a manager it is often in your best interest to lobby for “minimalist” regulation and let the market set the competition and price levels

As I was reading through this chapter I started thinking about what possible technologies increased broadband availability or even increased bandwidth could bring. Expanding the reach and affordability (universal service) of broadband would open e-Commerce and information transfer to rural and low-income populations. However, what really got me excited was the thought of what increased bandwidth might do. One possibility that I thought of and did a little research on was 3-D holographic television. Per the CNN article (link below) this technology has been under way for almost 20 years now and recently they have made some big strides. The bandwidth needed to take this from the labs to reality could also be right around the corner as well, however, both technologies have a lot of work to do on cost before this can become reality. Infiniband technology has been around for a while now, but it is expensive to implement and, at present, there are few advantages for companies to take the first step in implementing.


http://www.cnn.com/2008/TECH/science/10/06/holographic.television/index.html
http://www.tvpredictions.com/hologramtv041807.htm
http://www.youtube.com/watch?v=thOxW19vsTg
http://www.popsci.com/digital-micromirror-device/article/2005-05/holographic-television
http://www.infinibandta.org/itinfo/


The author presents us with 10 "lessons" learned from the development and spread of the Internet that can be applied to instances where government is or may be involved. Many of them are very good and I think relevant across different emerging technologies, such as numbers 1, 3, 4 and 6, which deal with that pure busness as usual cannot handle; From the government shaping and investing in the development of new technologies, to coordinating the transition from public to private or private to public, to legalities and public policy of the new technology. However, near the end of the chapter Faulhaber starts getting into issues of market power, "natural monopolies and government regulations, which I think need to be addressed on a case by case basis as opposed to addessed generally as done in this instance. The author questions the need to regulate the dissemination of broadband and whether a "natural monopoly" would be acceptable. However, he fails to touch on the cost to companies of laying the technology infrastructure for the ability to provide "universal service", and whether the general public would benefit or enjoy having the choice of multiple cable providers. Does a "natural monopoly" in the instance of expensive and difficult infrastructure make sense? Does it better serve the consumers? Do any of the lessons learned fromthe expansion of the Internet apply if the government isn't directly involved? How?


http://books.google.com/books?id=MUPVLuiy9uQC&pg=PA326&lpg=PA326&dq=Franchise+bidding+for+natural+monopolies&source=bl&ots=Q76yaD8EVB&sig=Q9wCRE3Dmul-JcOxvNWhN1hTo3c&hl=en&ei=WGOtScbrHYG0sAOVtNnFBA&sa=X&oi=book_result&resnum=6&ct=result
http://tutor2u.net/economics/content/topics/monopoly/natural_monopoly.htm
http://www.voxeu.org/index.php?q=node/2715
http://www.telecommunityalliance.org/issues/broadbanduniservice.html