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Pathways for Identifying New Technologies

Case Aims: To illustrate how in existing large firms, new technology from outside mainstream activities is brought into the entrepreneurial development process

O'Connor and Mark (2002) undertook a case-based evaluation of opportunity recognition in relation to radical innovation in a number of large US corporations. Included in their study were the following projects:

Air Products and Chemicals Corporation developed an ionic transport membrane (ITM) for separating oxygen from air which has the potential to completely change the current delivery system in medical and metal cutting applications areas.

  • Analog Devices developed a micro-electro-mechanical (MEMS) accelerometer, a small microchip that can measure changes in speed. The initial market disruption was to replace electro-mechanical airbag sensors with accelerometers.
  • Dupont's Biomax, a polyester material that can be recycled or decomposed. This makes the material suitable for agricultural, industrial and consumer product applications such as mulch containers, mulching film, seed mats, plant pots, disposable eating utensils, blister packs, yard waste bags, parts of disposable diapers and blown bottles.
  • Dupont's Electron Emitter, a fibre that emits light at a rate significantly faster than any known source. The most promising application areas are in electronic display technologies.
  • GE's advances in medical diagnostic technology, especially imaging systems. GE has found a way to combine digital X-ray technology with fluoroscopy, a technology that allows the filming and digitisation of movement within the body.
  • GM's involvement in alternative power systems for hybrid automobiles.
  • IBM's commercialisation of a new microchip based on a silicon germanium alloy (SiGe), which promises to become the basis for high-performance new transistors with switching speeds up to four times faster than those of traditional semiconductors.
  • IBM's project involving confluence of display, power and memory technologies to enable the creation of an 'electronic book' that could be used to store vast amounts of data such as technical manuals, doctors' files or newspaper articles, could be portable and could receive written information as well as be highly readable.
  • NetActive enabled game publishers' software to be encoded in such a way that a user could obtain the application for a fraction of the normal purchase price.
  • Texas Instruments' Digital Light Processor, a projector that creates a screen image by bouncing light off 1.3 million microscopic mirrors squeezed onto a 1 square-inch chip. Potential applications exist in the


hard-copy markets, home-movie projection systems and large-screen movie theatres.

United Technologies' Otis Elevator, a system of people movement that solves the problem of cable length requiring the staging of elevator usage in very tall buildings. It allows for elevator cars to become separated from the shaft, and to move onto other shafts. A combination of horizontal and vertical movement opens up the opportunity for new thinking about conveyance systems.

O'Connor and Mark (2002) concluded that the high degree of technical and market uncertainty associated with breakthrough innovation means the understanding of the opportunity often changes over time, requiring a repeat of the opportunity recognition process that may result in a new or substantially re-defined opportunity. An example quoted by O'Connor and Mark to illustrate how opportunity understanding may change over time was the case of the technical research for the project first initiated in the mid- 1970s that ultimately became Texas Instruments' Digital Light Processor. Opportunity recognition first occurred with respect to this technology in 1978, when an application domain was identified. Prototypes were developed by 1980, and the technical breakthrough was incorporated into a consumer product in 1983. Within a year, the product was abandoned. At this point the project could have died, but two new potential applications were recognised, and middle and senior research managers and senior corporate management continued to provide financial support to sustain the project (O'Connor and Mark 2002). Similarly, in the case of Dupont's biodegradable material project, when the initial application was killed by the business unit, the manager of the research team identified a new market opportunity through industry contacts. The new product that was developed embodied a characteristic of the original product not deemed important in the original application but which was the technical breakthrough for the new product. Next, when anticipated government regulations requiring biodegradable diapers did not materialise, a key customer pushing for the development of the technology suddenly lost interest. Fortunately a senior technical researcher in another business unit recognised an opportunity associated with a new application for this technology and reinvigorated the project.

The capacity of the firm for opportunity recognition depends on continuity in the informal network of individuals engaged in the conversion of breakthrough innovations into new ventures. Upward networks providing access to senior managers create protection and access to money, while the broader- based lateral and downward networks provide information, confirmation of the recogniser's perception of the opportunity and other resources. The researchers opined that networks are efficient and cost-effective in support(continued)

ing technological entrepreneurship. Organisations that are not promoting networks may be missing opportunities to help their people think and act creatively. In the case of IBM's silicon germanium project, for example, the opportunity was based on a scientific breakthrough that conflicted with commonly accepted research results that turned out to be incorrect. In addition, the market for the technology represented a market discontinuity for the firm. As a result, there was substantial resistance from both market and technical perspectives to recognising the opportunity. The well-established network of the research manager was critical to success in getting the opportunity recognised at multiple levels in the organisation and re-recognised when market-related discontinuities occurred along the project development path.

The study demonstrates that there are actions firms can take to encourage entrepreneurial idea generation and opportunity recognition. When senior managers communicate a need for breakthrough ideas, they get a response. These communications can either happen explicitly or can be part of the fabric of the firm's culture. For example, Jerry Junkins, former CEO of Texas Instruments, announced the need to 'find businesses in the white spaces between our existing business units'. The Digital Light Processor project was one of the results of that call. At Nortel, a new ventures group was set up and began calling for proposals for new business ideas. Their first taker was the group that eventually became the NetActive project. This was originally a group of individuals who had been assigned to one of the business units to 'play in the idea sandbox' to try to develop applications for the broadband technologies that were diffusing into homes.

A large percentage of the projects examined by O'Connor and Mark ensued from management's articulation of strategic intent to grow in a particular technology or market domain. This behaviour provided the impetus for a mid-level researcher working in avionics at GE's corporate R&D centre to recognise the potential for the fluoroscopy technology which he was developing in medical applications. He then made his counterpart in the medical systems group of the R&D lab aware of the technology. Similarly, it was Analog Devices' president Jerry Fishman's explicit statement of strategic intent during the early 1980s to 'get into [the] automotive business' that motivated the effort that ultimately led to the accelerometer device as an airbag actuator.

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