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.
No comments:
Post a Comment