L04 A: Adner: Innovation ecosystems and the pace of substitution: Re-examining technology S-curves

Question 1

Technology adoption and substitution are intimately linked; how?

Answer 1

A user’s decision to adopt new technology is, implicitly, a decision not to adopt the incumbent technology.

Question 2

Implication for firms:

Answer 2

(1)
Rather than viewing technology substitution as the race between focal technologies, view them as the race between technology ecosystems. Informs way in which firm choose to allocate R&D resources according to likely benefits of investing early into new technology or continuing to focus on old technology.

(2)
Explicit consideration of technological interdependencies and asymmetries in the rate of advance among different ecosystem elements can help consider various modes of coordination ranging from vertical integration to collaborative alliances.

(3)
Helps firms in resource allocation choices between technology development initiatives, investment in ecosystem complements, and investments in complementary assets such as those in manufacturing, marketing, sales and distribution.

Question 3

ecosystem extension opportunity:

Answer 3

The extent to which improvements elsewhere in the system enhance the realized performance attainable with the old technology system

Question 4

Ecosystem emergence challenge:

Answer 4

The extent to which technology bottlenecks elsewhere in the system constrain the new technology’s realized performance from matching its potential performance.

Question 5

Figure 1. A framework for analyzing technology substitution

Answer 5

Dimensions:
Ecosystem Extension Opportunity (Old Technology) (X-axis)
Ecosystem Emergence Challenge (New Technology) (Y-axis)

Q1: Low / Low
Baseline pace of substitution

Q2: High / Low
Intermediate pace of substitution

Q3: Low / High
Intermediate pace of substitution

Q4: High / High
Highest pace of Substitution

Question 6

What do the different quadrants mean for organizations?

Answer 6

Q1: aggresively invest into new technology

Q2: Firms with established positions in old technologies can afford to maintain investment focus on the old technology longer, knowing that technologies will coexist for extended period

Q3: allocate greater proportion of resources towards development of complementary assets than those in development of either old or new technology.

or

create additional incentives and mechanisms through which emergence challenges with new technology can be overcome in a timely manner, in addition a robust technology policy may also consider alternative new technologies that may be more likely to overcome emergence challenges.

Q4: Invest in ecosystem complements that enhance performance of old technology or offer advantage in unleashing potential of new technology.