Technological innovation and technology assessment

One of the great challenges of managing e-commerce is the need to be able to assess which new technological innovations can be applied to give competitive advantage. I’m often asked what is ‘the next big thing’ or to predict changes in e-commerce over the next 5 years. The truth is no one can predict the future, there are lots of examples of companies that have mis­understood the market for products.

‘This “telephone” has too many shortcomings to be seriously considered as a means of communication. The device is inherently of no value to us. ’

Western Union internal memo, 1876

‘Who the hell wants to hear actors talk?’

H.M. Warner, Warner Brothers, 1927

‘I think there is a world market for maybe five computers. ’

Thomas Watson, chairman of IBM, 1943

‘There is no reason for any individual to have a computer in their home’.

Ken Olson (President of Digital Equipment Corporation) at the Convention of the World Future Society in Boston in 1977

I personally believe the best that organizations can do is to analyse the current situation and respond rapidly where appropriate. This is encapsulated by the quote by the Canadian science- fiction writer William Gibson, who said:

‘The future is here. It’s just not widely distributed yet.’

A slightly different, and more forward-looking, perspective came from Bruce Toganizzi, who founded the Human Interface Team at Apple and developed the company’s first interface guidelines (E-consultancy, 2007):

‘Successful technology-predicting is based on detecting discontinuities and predicting the trends that will flow from them.’

He gives the example of the introduction of the Apple iPhone and the other devices based on gestural interfaces that will follow.

In addition to technologies deployed on the web site, the suitability of new approaches for attracting visitors to the site must be evaluated – for example, should registration at a paid-for search engine, or new forms of banner adverts or e-mail marketing be used (Chap­ter 9)? Decisions on strategy are covered in Chapter 5.

The manager may have read several articles in the trade and general press which have highlighted the issue and then faces a difficult decision as to whether to:

• ignore the use of the technique, perhaps because it is felt to be too expensive or untried, or the manager simply doesn’t believe the benefits will outweigh the costs;
• enthusiastically adopt the technique without a detailed evaluation since the hype alone convinces the manager that the technique should be adopted;
• evaluate the technique and then take a decision whether to adopt it according to the evaluation.

Depending on the attitude of the manager, this behaviour can be summarized as:

1. Cautious, ‘wait-and-see’ approach.
2. Risk-taking, early-adopter approach.
3. Intermediate approach.

This diffusion-adoption process (represented by the bell curve in Figure 4.12) was identified by Rogers (1983) who classified those trialling new products as innovators, early adopters, early majority, late majority, or laggards.

Figure 4.12 can be used in two main ways as an analytical tool to help managers. First, it can be used to understand the stage customers have reached in adoption of a technology, or any product. For example, the Internet is now a well established tool and in many developed countries we are into the late majority phase of adoption with larger numbers of users of services. This suggests it is essential to use this medium for marketing purposes. But if we look at 3G or mobile services (Table 4.3) it can be seen that we are in the innovator phase, so invest­ment now may be wasted since it is not clear how many will adopt these services. Second, managers can look at adoption of a new technique by other businesses – from an organiza­tional perspective. For example, an online supermarket could look at how many other e-tailers have adopted personalization to evaluate whether it is worthwhile adopting the technique.

An alternative graphic representation of diffusion of innovation has been specifically devel­oped by technology analyst Gartner for assessing the maturity, adoption and business application of specific technologies (Figure 4.13). Gartner (2005) recognizes the following stages within a hype cycle, an example of which is given in Figure 4.13 for trends current in 2005:

1. Technology Trigger – The first phase of a hype cycle is the ‘technology trigger’ or break­through, product launch or other event that generates significant press and interest.
2. Peak of Inflated Expectations – In the next phase, a frenzy of publicity typically gener­ates over-enthusiasm and unrealistic expectations. There may be some successful applications of a technology, but there are typically more failures.
3. Trough of Disillusionment – Technologies enter the ‘trough of disillusionment’ because they fail to meet expectations and quickly become unfashionable. Consequently, the press usually abandons the topic and the technology.
4. Slope of Enlightenment – Although the press may have stopped covering the tech­nology, some businesses continue through the ‘slope of enlightenment’ and experiment to understand the benefits and practical application of the technology.
5. Plateau of Productivity – A technology reaches the ‘plateau of productivity’ as the benefits of it become widely demonstrated and accepted. The technology becomes increasingly stable and evolves in second and third generations. The final height of the plateau varies according to whether the technology is broadly applicable or benefits only a niche market.

Trott (1998) looks at this organizational perspective to technology adoption. He identifies different requirements that are necessary within an organization to be able to respond effec­tively to technological change or innovation. These are:

• Growth orientation – a long-term rather than short-term vision
• Vigilance – the capability of environment scanning
• Commitment to technology – willingness to invest in technology
• Acceptance of risk – willingness to take managed risks
• Cross-functional cooperation – capability for collaboration across functional areas
• Receptivity – the ability to respond to externally developed technology
• Slack – allowing time to investigate new technological opportunities
• Adaptability – a readiness to accept change
• Diverse range of skills – technical and business skills and experience.

The problem with being an early adopter (as an organization) is that the leading edge of using new technologies is often also referred to as the ‘bleeding edge’ due to the risk of fail­ure. New technologies will have bugs, may integrate poorly with the existing systems, or the marketing benefits may simply not live up to their promise. Of course, the reason for risk taking is that the rewards are high – if you are using a technique that your competitors are not, then you will gain an edge on your rivals.

Source: Dave Chaffey (2010), E-Business and E-Commerce Management: Strategy, Implementation and Practice, Prentice Hall (4th Edition).