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The unexpected "driver" in technology innovation

Surprise is the main characteristic of innovation. Professor Jeffrey Funk studied 19 electronic industries and found that in 12 of them, the types of customers who actually purchased the new products were unexpected. Also the new technology trajectories generated also new unexpected new industries. His findings can be found in his article "Creating and Succeeding in New Industries: lessons from the electronics industry", available on the web.

Jorge Nascimento Rodrigues interviews Jeffrey L. Funk, professor at Hitotsubashi University, Institute of Innovation Research, Japan, May 2004

Professor Funk is in Japan since 1996. First as an associate professor at the Graduate School of Business Administration at Kobe University, and since 2003 as professor at the Institute of Innovation Research at Hitotsubashi University, at Kunitachi Campus, near Tokyo. It took its Ph.D. at Carnegie Mellon University at US in 1984, and was visiting scholar at Michigan University until 1995.

The new book: "Mobile Disruption: The Technologies and Applications Driving the Mobile Internet" (compra do livro)
E-mail of Prof. Funk:
Home page of Prof. Funk:

One of the major findings of your study is the conclusion that the growth and mature of new industries are based in unexpected customers, people that the entrepreneurs and marketers of emergent sectors do not even imagine as clients in their original business or mental plans. What is the main result of this empirical finding for strategic management in new industries?

Firms design products and services based on assumptions about customer needs. When firms aim the new products and services at the wrong customers, they end up developing products that are not appropriate for the actual customers. Firms need to put more resources into identifying the appropriate customers.

The Entrepreneurs' sin

Do you think that one of the reasons for high rate death of start ups comes from this difficulty to rapidly change strategies in order to capture those unexpected clients?

Yes. Studies have found that start ups fail for more often for market than technical reasons and the large number of unexpected customers in new industries contributes to these problems.

Another major finding of your paper regards the empirical conclusion that new technologies trajectories "generated" unexpected applications or business models in adjacent or not adjacent sectors. What is the implication of this finding?

There are implications for firms and governments. An interesting example for both is the current debate about new energies for automobiles. While the focus is largely on electric or hydrogen vehicles where the trajectories are not very steep, the electronic trajectories (both wireless and semiconductors) are very steep and can be used to create completely new traffic systems. Governments should be using forecasts of the state of the electronics industry in 2020 to think about redesigning traffic systems using for example inexpensive wireless sensors, microprocessors, and wireless LANs.

Do you think that these unexpected applications and the "convergence" and interaction between multiple tech trajectories are one of the big opportunities for growth strategies based on adjacent diversification? How can a manager or entrepreneur "identify" these opportunities?

Yes I do. Firms can use the examples from the past to better understand the future. By understanding how firms have made mistakes about the initial customers and applications, they can better understand the currently unmet needs in society. Firms can then use their estimates of technological trajectories to better understand the ways in which new industries can be created in the future and when it is likely that they can be created.

The Mobile Business - a live case

Another interesting point of your paper is the clear distinction between the Web platform of the 90's and the mobility emergent sector of 21st century. Can you explain the reasons for a different approach regarding mobility?

Many people have mistakenly assumed that the mobile Internet is merely the PC Internet on your phone. Instead, a new set of users and applications have driven the initial growth in the mobile Internet. Thus, firms need to understand how these users and applications are different and how technological trajectories like improved microprocessors for phones are expanding these applications. For more information, see my recent book entitled "Mobile Disruption: The Technologies and Applications Driving the Mobile Internet.". My conclusion: Mobile Internet has a different set of initial customers and business models that requires a rather different kind of approach than the one used with the Web.

Japanese service providers were the first ones to find the unexpected initial customers - young people, largely through the use of entertainment contents and an expected business model, the micro payment system.

Can you refer the implications of your findings for regional or local cluster formation policy?

The importance of information about a new industry including both customer needs and how the new industry satisfies those needs is the major reason for clustering. Unexpected customers and business models contribute to this clustering since most regions will not focus on the appropriate customers or introduce the appropriate business models. This problem is magnified by barriers to information flows that might include different languages or different cultures. For example, this is a major reason why the U.S. and Europe continues to underestimate the importance of the mobile Internet, which is most successful in Japan and Korea.

In fact, Asia was the "driver" of mobility innovation with NTT DoCoMo,as you mention in your recent book. Why?

Japanese service providers were the first ones to find the unexpected initial customers - young people, largely through the use of entertainment contents and an expected business model, the micro payment system.

What can we expect from tech trajectories in the mobile business?

The emergence of standard application processes, 3D rendering techniques, GPS applications, infrared techniques or intranet applications will also impact on the overall architecture for the mobile Internet.

©, 2004

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