rahul kapoor, management department emerging technologies: “nokia” problem anticipating the...

Emerging Technology Strategies

Rahul Kapoor, Management Department

Managing Emerging Technologies: “Xerox” Problem

Rahul Kapoor, Emerging Technologies

Managing Emerging Technologies: “Nokia” ProblemAnticipating the emergence of smartphones in 1990s, Nokia outspent rivals on R&D and created a series of innovations

R&D Expenses and Key Innovations (US$ Bn)

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1.0

2.0

3.0

4.0

5.0

6.0

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8.0

'96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07

Nokia

Apple

Google

Nov 2005Nokia launched first internet tablet N770

Nov 2004Launched Nokia 7710, first smartphone with touch screen device

Aug 2007Nokia launched its mobile internet platform Ovi

2000Symbian became the first modern smartphone OS with launch ofEricsson R380

1996Nokia introducedits first smartphone, Nokia 9000Communicator


Nokia – Fall of the Emperor

0

5

10

15

20

25

30

35

'06 '07 '08 '09 '10 '11 '12 '13

13.0% 17.6% 12.2% 5.9% 5.4% 1.8% -8.0%EBITMargin

Dark Age (2008 ~ Current)

Golden Age ( ~ 2008)

Share Price (€)


Research on Emerging Technologies


Solar Powerw/ Nathan Furr (SMJ 2015, SMJ 2017)

Smartphonew/ Shiva Agarwal (Org Sc. 2017, WP 2017)

Pharmaceuticalw/ Thomas Klueter (AMJ 2015, Nat. Bio. 2017)

Lithography w/ Ron Adner (SMJ 2010, SMJ 2016)

Semiconductorw/ Ron Adner (Org Sc. 2012) (Org Sc. 2013, ASM 2013)

Healthcarew/ Joon Lee (SMJ 2013, Org Sc. 2017)

Organizational Inertia in Established Firms

Leadership & Strategy

Structure &Process

Incentives

Culture & Mental Models

Individuals becomeInvested in old approachesStrategic/competitive position provides an excuse for inertia

Existing incentives often work against significant change, and new incentives take time and work. Who benefits from the new technology?

Wholescale changes to structure and process arevery disruptive: Two years of lost time? To Whom?

Strong cultures & deeplyrooted mental models areextraordinarily resistant to change


Useful representation when innovation is isolated within the firm and/or the user

This assumption is becoming increasingly problematic as firms are becoming more specialized and the value proposition for innovations becoming more complex

User- Needs- Preferences

Firm- Assets- Capabilities

Innovation Market

Context for Innovation (Traditional)


Innovation

User

S1

S2

S3

S1

S2 S3

C1

C2

C2C1

Innovation

Market

Firm

Components(Suppliers)

Complements(Complementors)

≈

(Intermediaries)

Context for Innovation (Today) Ecosystem


Emerging Technologies in Pharmaceutical Industry: The Case of Gene Therapy & Monoclonal Antibodies

Joint-research with Thomas Klueter (Wharton PhD)

Rahul Kapoor, Thomas Klueter, James M. Wilson (2017), “Challenges in the Gene Therapy Commercial Ecosystem,” Nature Biotechnology, 35(9): 813-815.

Rahul Kapoor and Thomas Klueter (2017), “Organizing for New Technologies,” MIT Sloan Management Review, 58(2): 85-86.

Rahul Kapoor and Thomas Klueter (2015), “Decoding the Adaptability-Rigidity Puzzle: Evidence from Pharmaceutical Incumbents’ Pursuit of Gene Therapy and Monoclonal Antibodies,” Academy of Management Journal, 58(4): 1180-1207.


Two Technologies Emerging at the Same Time

Funding Activity Development Activity

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1989 1992 1995 1998 2001 2004 2007

Fund

ing

Roun

ds

Gene TherapyMonoclonal Antibodies

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1989 1992 1995 1998 2001 2004 2007Pr

eclin

ical

Tria

ls In

itiat

edGene TherapyMonoclonal Antibodies


Fit with Assets & Capabilities

(Chemical-based)

Fit with Business Model(Prescription-based)

No Yes

No

Yes

Gene Therapy (GT)

Monoclonal Antibodies (mAbs)

Impact on Pharmaceutical Incumbents


Established Firms Pursued mAbs and GT via Four Different Modes

Start-up/ University

Corporate Office

Acquired Start-up

In-house R&D Sales Mfg.

Contract Alliance

Each mode represents a unique combination of:• Who does the research (invention)• Who is involved in the decision for subsequent commercialization

(innovation)

1

3 4

2


Organizing for Emerging TechnologiesOrganizational Mode

Locus of Invention Locus of Innovation

In-house Research

Established Firm Established Firm

Contract Research

Startup/Research Organization

Established Firm

Alliance Established Firm-Startup Partnership

Established Firm-Startup Partnership

Acquisitions Start-up Startup (Structural Autonomy) or Established Firm (Structural Integration)


In-house and Contract Research

Development and Commercialization

ResearchInvestment

Organizational Inertia

Gene Therapy

“Compared to mAbs…gene therapy is driven by personal health and niche applications…for a small set of patients, you will command a very high price…the business case [for GT] is hard to establish.”

While mAbs have been validated by Wall Street, understanding the business case for Gene Therapy has been something that’s been a moving target. And I admit the marketplace does not exactly know what it needs"

Development and Commercialization

ResearchInvestmentmAbs


Overcoming Inertia through Strategic Alliances and Acquisitions


Reason - structural separation between management of existing business and pursuit of emerging technologies, and involving “outsiders” in decision-making

Partnering with or acquiring start-ups (as autonomous units) was more likely to result in downstream commercialization than in-house and contract research

Emerging Technologies in Semiconductor Industry: The Case of Lithography Generations

Joint-research with Ron Adner (Dartmouth College)

Ron Adner and Rahul Kapoor (2016), “Right Tech, Wrong Time: How to Make Sure That Your Ecosystem is Ready for the Newest Technologies,” Harvard Business Review, November: 60-67.

Ron Adner and Rahul Kapoor (2016), “Innovation Ecosystems and the Pace of Substitution: Re-examining Technology S-curves,” Strategic Management Journal, 37(4): 625-648.


Lithography Generations

1962Contact Printer7μmPrice approx $15k

2005DUV 193 immersion0.065μmPrice approx $20m

1972 Proximity1974 Projection1976 E-beam1978 X-Ray1978 G-Line1985 I-Line1988 DUV 2481996 DUV 1931998 DUV 1572005 DUV 193i

Each new generation was commercialized at a higher performance level than the previous generation


0%

20%

40%

60%

80%

100%

2000 2002 2004 2006 2008 2010

Mar

ket S

hare

DUV 193 DUV 193 immersion

Fast Substitution by New Generation


0%

20%

40%

60%

80%

100%

1984 1986 1988 1990 1992 1994

Mar

ket S

hare

G-Line I-Line

Slow Substitution by New Generation


0%

20%

40%

60%

80%

100%

1975 1980 1985 1990 1995

Mar

ket S

hare

X-ray

No Substitution by New Generation


Technology Generation Introduction Years To Market

DominanceProximity 1972 2

Projection 1973 2

E-beam 1976 Never

G-Line 1978 5

X-ray 1978 Never

I-Line 1985 7

DUV 248nm 1988 11

DUV 193nm 1996 11

DUV 157nm 1998 Never

DUV 193nm immersion 2005 4

Pace of Substitution


Explaining Substitution: Old & New Tech. Ecosystems

Lens(e.g., Zeiss)

Energy Source(e.g., Cymer)

Resist(e.g., Shipley)

LithographyTool (e.g., ASML)

SemiconductorManufacturer (e.g. Intel)

Mask(e.g., Photronics)


DUV 193 Immersion:Low Ecosystem Emergence Challenge

Lens(e.g., Zeiss,Nikon)


Resist(e.g., Dupont)





Lens(e.g., Zeiss,Nikon)


Resist(e.g., Dupont)




DUV 248:High Ecosystem Emergence Challenge


DUV 193:Low Ecosystem Extension Opportunity

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1701994 1996 1998 2000 2002 2004 2006 2008 2010

Reso

lutio

n ca

pabi

lity

(nan

omet

ers)

DUV193 DUV193 immersion

Extension


I-line:High Ecosystem Extension Opportunity

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510

610

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9101980 1985 1990 1995 2000 2005 2010

Reso

lutio

n ca

pabi

lity

(nan

omet

ers)

I-Line DUV248

Extension


Framework for Pace of Technology Substitution:Balance of Ecosystem Extension and Ecosystem Emergence

Ron Adner and Rahul Kapoor (2016), “Right Tech, Wrong Time: How to Make Sure That Your Ecosystem is Ready for the Newest Technologies,” Harvard Business Review, November: 60-67.


Managing Emerging Technologies

Mitigating Organizational Inertia Around Business Models- Organizational design

- Incentive structure

Considering Ecosystem Interdependencies- Bottlenecks in new technologies

- Extensions in old technologies


Bedtime Readings!• Right Tech, Wrong Time: How to Make Sure Your Ecosystem is

Ready for the Newest Technologies," Harvard Business Review, 2016, 94(11): 60-67

• Organizing for New Technologies, MIT Sloan Management Review, 2017, 58(2): 85-86

• Challenges in the Gene Therapy Commercial Ecosystem, Nature Biotechnology, 2017, 35(9): 813-815.

• Capabilities, Technologies, and Firm Survival during Industry Shakeout: Evidence from the Global Solar Photovoltaic Industry, Strategic Management Journal, 2017.

• Value Creation in Innovation Ecosystems: How the Structure of Technological Interdependence Affects Firm Performance in New Technology Generations,” Strategic Management Journal, 2010, 31(3): 306-333.

Thank You!

rahul kapoor, management department emerging technologies: “nokia” problem anticipating the...

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