Stragon and Okspok

Avoiding the Pitfalls of Emerging Technologies

George S. Day Paul J. H. Schoemaker

merging technologies'—such as gene therapy, interactivity and electronic commerce, intelligent sBnsors, digital imaging, micro-machines, or super conductivity—have the potential to remake.£atife4ft4ust«es—=^ and obsolete established strategies.^ This is exhilarating for the attackers who can write—ariH exploit—the newTnules of competition, especially if they are not encumbered by an existing business. For incumbents, however, emerging technologies are often traumatic. Most of these firms feel they must participate in the markets that emerge. Their first reason is defensive, driven by the belief that the newcomers are plotting to use the new functionalities to attack their core markets. Home banking via the Internet is already happening, although no one knows how widely it will be adopted. Yet many bankers are filled with trepidation that the banking industry will be profoundly reshaped.' Their second reason is the converse of the first: if the emerging technology realizes its potential, it will be too attractive to ignore. However, the odds of large, established incumbents prevailing in these emerging markets are generally poorjsee Table 1). In this article, we address the questions of w/7y these incumbents have so much difficulty with disruptive tecfihologies, and how they can anticipate and overcome their handicaps.

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Challenges for Incumbents

There are four common pitfalls for incumbents that erode their commitment and put them at a disadvantage with an emerging technology. The basic theme is that established firms may resist participation at the outset, or that they

Portions of this article will appear in George S. Day and Paul J. H. Schoemaken editors, Wharton on Managing EmergingTechnologies (New York. NY: John Wiley and Sons, 2000).

CALIFORNIA MANAGEMENT REVIEW

VOL 42, NO. 2

WINTER 2000

Avoiding the Pitfalls of EmergingTechnologies

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