Chapter 11 discusses mechanisms for appropriating gains. The first part of the chapter is spent discussing the inherent limitations of patents and how overemphasizing the importance can lead to a distortion in the analysis in three aspects:
- Giving the impression that patents are the dominant means that innovators can use to get returns on their emerging technologies
- Contributing to the misallocation of attention and resources to gain revenue from the technology
- Making mistakes about what technologies to select and pursue
The authors then go on to talk about four mechanisms to create a better strategy for appropriating gains, including patents. They argue that patents should not be the only emphasis, but should be in the context of the other three mechanisms.
Patents and related legal protection
This is important for inventions that are related to the early development of new technology-based industries. They are available for four types of subject matter: machines, manufactured products, composition of matter, and processes. Patents are, however, limited in that legal costs for patents can be prohibitive, they can be ineffective in many industries, and others can find ways to “invent around” the patented technology.
Secrecy
This is a straightforward, but limited way to protect a technology without government help. Secrecy is difficult because competitors can gain knowledge of the technology by posing as customers, lead employees can leave and go to other companies, and other companies can gain physical control of the product and sell its services. It is much easier to keep secrets about processes than products. Also, secrecy can also have a negative effect on communication within the company with the product.
Complementary Assets
Discussed in chapter 8, complementary assets include everything from customer and supplier relationships to complementary products. Those firms that do not have complementary assts may have difficulty capturing gains from their innovation.
Lead Time
The most effective mechanism for appropriating gains from product innovations, it can also have substantial variations across industries in its effectiveness. In fact, innovative leaders will see the most gains if they are not only the leader, but the creator of the industry niche. Lead times can also be coupled with learning capabilities to extend the amount of lead time a producer has. Lead time can be effected by product characteristics and can be increased with the innovator can establish a strong reputation or can make the cost of switching to a different high enough that they secure their customers. Lastly, lead time can lock in complementary assets and make it difficult for rivals that finally do join the game.
Chapter 17 examines emerging emerging organizational forms that have evolved in response to the sicontinuous technological breaks that have happened recently. Managers are in a period of experimenting with new forms to captor two capabilities that are viewed as critical for success: the balancing and exploration of what it is doing and what its vulnerabilities are and the creation of new blends of existing competencies to capitalize them without being locked in.
There are six elements of organizational form: goals, strategies, authority relations, technologies, markets and processes. Today, traditional forms are being used in conjunction with, or completely replaced by six new forms
Virtual Organizations
These organizations consist of employee’s suppliers and customers in geographically different locations that are united by technology. This form minimized asset commitments that allows for flexibility, lower costs, and faster growth. They also have learned to exploit the medium through which they sell and learn to create better relations with individual customers, as well as communities for those customers.
Network Organizations
These organizations are based on autonomous or semi-autonomous work units to deliver a product or service. External Network orgs consist of a core that concentrates on particular competencies with legal ties to other independent entities with the necessary skill to create the service or product. Joint ventures and formal partnerships create external network organizations. Internal network organizations are much like external networks but they are created inside a firm with strategic business unite, micro enterprises, and autonomous work tenants. Both these forms are flexible and modular, giving them advantage over others in their industry.
Spinout Organizations
These organizations are created inside a company from new business concepts and then detached—wither partially or completely—from the company. The parent company acts as the venture capitalist, protective incubator, and mentor. These organizations can help when the emerging technology is risky and or expensive.
Ambidextrous Organizations create an environment that allows innovation and established technologies work side by side. This form allows the organization to overcome the “innovator’s dilemma”. It can be especially useful for managing the emerging technology without leaving existing technologies
Front-back Organizations
In this form, customers are put at the front while all of the organizational functions are put in the back to serve the front.
Sense and Respond Organizations
This organization focuses on sensing the customer’s need and responding to it.
1 comment:
I was struck by something that was left out of the six elements of organizational form: goals, strategies, authority relations, technologies, markets and processes. Where do people come into play? It seems to me that when deciding what, if any, new organizational form you should move to you would want to consider the people that make up your organization. What kind of corporate culture(s) do you have? How accepting of a new organizational form will your people be? I don't think these questions are adequately covered by the six mentioned forms.
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