Technology strategy: an evolutionary process perspective
Robert A. Burgelman and Richard S. Rosenbloom Technology is firms functional capability which gives a competitive advantage in the market. Therefore, it calls for the development of a technology strategy. The author uses evolutionary process perspective as a framework for discussing technology strategy. As biological evolution perspective is integrated, it provides variation, selection and retention mechanisms to explain the behavior of social system. It also recognizes the importance of individual and social learning process and emphasizes social context of innovation. Embedded in the cultural evolutionary perspective, capabilities-based perspective perceives strategy making as a social learning process consists of three components: capabilities, strategy and experience. Capabilities are resource of organization that need to be discovered, selected and retained. Based on the capabilities, strategy is developed and carried out. The experience gained from the execution provides feedback on capabilities and it is accumulated as a form of skills. Then the paper discusses the internal forces and external forces for technology strategy. In the case of internal forces, generative mechanisms and integrative mechanisms are employed to explain strategic behavior and organizational context respectively. Strategic behavior is associated with routines of organization, also known as gene in the term of biological evolutionary perspective. Due to the existence of inertia behavior, the development for new product and process tends to be enhancement of existing capacities. Organizational context explains that behavior is supported by the dominant culture of organization. This selection mechanism affects firms ability to explore and exploit. Secondly, the external forces such as technology evolution and industry are also explained by generative mechanisms and integrative mechanisms respectively. Technological capability of organization is significantly affected by the technological evolution that occurs in the field that the organization is part of. Industry context emphasized the occupying advantageous market place. Last section of the paper suggests four dimension of technology: competitive positioning, value chain, scope of technology strategy, and depth of technology strategy. To sum up, the author used an evolutionary process perspective as a framework to understand the concept of technology strategy, which is a very popular subject until nowadays. However, the paper lacks multi-level study to fully convert reader into the perspective. The thorough analysis of using the framework and the argument of opposition needs to be fully examined to generalize the perspective. The author mentioned few examples of firms that support the framework, but these examples are brief overview of the full story. More detailed case study would further help readers to understand the framework. Also while the paper focuses on the perspective of general managers, it will be further strengthened if the responsibility of functional manager is elaborated. In Fig18.1 it was stated that the experience provide feedback to capabilities. However it brought question of is feedback only provided to the capabilities not to strategy, if so is strategy also accumulative? Instead of affecting the capabilities, sometimes there seems to be a case of changing strategy to save time or lack of resource. Technical Progress and Co-invention in computing and in the uses of computers Timothy Bresnahan & Shane Greenstein This paper explores the process of transiting from host-based computing to client/server computing in late 80s and early 90s. Host based computing were employed most of major establishments in 80s. It enabled managers to control many aspect of business with database manager system. There were problems of management and complexity of the program but stable industry structure by cluster of firms such as IBM maintained the status by the end of 1980s. Client/server computing programs started to spread at the end of 1980s due to its superior technology and lower cost. The authors suggest several mechanisms of switching process: classic diffusion theory, vendor lock-in theory, market thickness theory, MIS agency theory, idiosyncratic application theory and co-invention theory. The theories were tested with seven empirical models. Buyer-seller connection proved idiosyncratic theory and market thickness theory was supported rather than MIS agency theory and lock-in theory respectively. Evidence from Software use indicated that the establishment with higher used of scientific application has higher speed of switching to C/S computing. The pattern of higher degree of embeddedness of computing in establishment makes it harder and slower switching supported co-invention theory rather than the classic diffusion theory. Overall decrease in the total percentage of DSO indicated the switching process is getting easier with time. The paper thoroughly tested its theories by setting complex experiment method. The complexity and delicateness of setting variables were very impressive. However, there were few aspects that the author overlooked. First of all, the author ignores the price variable and demand function in the market. The purpose of software, relationship with vendors are important factor of deciding the transition however, the price effect is hardly mentioned. Also in the paper, it was written that establishments tend to focus on the higher adjustment cost and switching cost than high benefit that can come from the transition, but there is no actual numerical data to support the argument. The interpretation sounded probable but empirical data is in needed. In last, the paper is based on specific events in relatively short period of time. To generalize the co-invention theory, more case studies in a variety fields would be further help the understanding of co-invention.
Explicating dynamic capabilities: the nature and microfoundations of (sustainable)
enterprise performance David J. Teece The focus of the paper is maintaining competitive advantage in fast moving and globalized market where economy became more diverse and opened requires dynamic capabilities, continuous creation, extension and upgrade of capabilities. Dynamic capabilities frame work is based on the resource based theory but while the resources are considered as static in sustaining technical fitness in the perspective of rb theory, dynamic capabilities emphasizes sensing and seizing the opportunities provided from unstable environment and amplifying evolutionary fitness. Foundation of dynamic capabilities lies within sensing, sensing and managing threats/transformation. Sensing opportunity is an organizational process depends on the process of information with specific knowledge and practical wisdom. Identifying trajectories, capturing users need and monitoring external development can examples. Seizing opportunity is related with unbiased decision making of leaders deciding when, where and how much to invest. Selecting and creating business model for strategy in the context of organizational innovation also needs to be taken under consideration. Routine and standard procedures built upon previous success of the firm prevent decision making for radical innovation. Microfoundation of seizing opportunity is further specified into selecting business model, enterprise boundaries, managing complements and platforms, and avoiding bias. Lastly, managing threats and reconfiguration brings attentions to decentralization, cospecializaion and knowledge management. Decentralization of organization offers responsibility and flexibility to managers by giving them control of decision making process followed by higher performance. Cospecialization is process of enhancement of value by collaboration. It is especially signified in the industries where innovation is cumulative and requires platform. The paper provided general theory of strategic management that recognize the unstable and fast moving economy and acknowledge the dynamic capabilities. By elaborating on sensing, seizing, and managing process, the process of organization to maintain competitive advantage was well addressed. However, personally the explanation dealing with crisis such as sudden threat or complete technology shift was wanted. The author fully understands the flux and instability of global market and captures the process of firms response to it. But the explanation of firms strategy in the case of rapid change and urgent shift where their resource and technology looses usefulness was lacking.