The Future of Technology Management

The Future of Technology Management

and the Business Environment

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The Future of Technology Management and the Business

Environment Lessons on Innovation, Disruption,

and Strategy Execution

Alfred Marcus

Publisher: Paul Boger Editor-in-Chief: Amy Neidlinger Executive Editor: Jeanne Levine Development Editor: Natasha Wolmers Cover Designer: Alan Clements Managing Editor: Kristy Hart Senior Project Editor: Lori Lyons Copy Editor: Gill Editorial Services Proofreader: Debbie Williams Indexer: Erika Millen Senior Compositor: Gloria Schurick Manufacturing Buyer: Dan Uhrig © 2016 by Pearson Education, Inc. Old Tappen, New Jersey 07675 For information about buying this title in bulk quantities, or for special sales opportunities (which may include electronic versions; custom cover designs; and content particular to your business, training goals, marketing focus, or branding interests), please contact our corporate sales department at [email protected] or (800) 382-3419. For government sales inquiries, please contact [email protected] . For questions about sales outside the U.S., please contact [email protected] . Company and product names mentioned herein are the trademarks or registered trademarks of their respective owners. All rights reserved. Printed in the United States of America. This publication is protected by copyright, and permission must be obtained from the publisher prior to any prohibited reproduction, storage in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise. For information regarding permissions, request forms, and the appropriate contacts within the Pearson Education Global Rights & Permissions Department, please visit www.pearsoned.com/permissions/. Printed in the United States of America First Printing December 2015 ISBN-10: 0-13-399613-1 ISBN-13: 978-0-13-399613-5 Pearson Education LTD. Pearson Education Australia PTY, Limited. Pearson Education Singapore, Pte. Ltd. Pearson Education Asia, Ltd. Pearson Education Canada, Ltd. Pearson Educación de Mexico, S.A. de C.V. Pearson Education—Japan Pearson Education Malaysia, Pte. Ltd. Library of Congress Control Number: 2015951698

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To my wife, my two sons, David and Ariel; to Massoud Amin, director of the Technological Leadership Institute (TLI) at the

University of Minnesota, who describes himself as “a happy geek on a mission with expertise in complex systems, energy, defense, pioneering smart self-healing grid,

CIP security, and resilience”; and to all among us who seek peace in a time of turbulence.

Contents-at-a Glance

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

PART I: TECHNOLOGY AND STRATEGY. . . . . . . . . . . . . . . . . . . . . . 9 Chapter 1 Technological Disruptions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Chapter 2 Commercialization’s Obstacles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Chapter 3 Hedging the Uncertainty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

PART II: MANAGING DANGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 Chapter 4 Dealing with Danger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

Chapter 5 Laws of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69

PART III: THE ENVIRONMENT OF TECHNOLOGY . . . . . . . . . . . 85 Chapter 6 Old, Young, and Global Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87

Chapter 7 Rich, Poor, and Global Inequality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111

Chapter 8 Abundance, Scarcity, and Global Sustainability . . . . . . . . . . . . . . . . . 129

PART IV: COPING WITH TECHNOLOGICAL DISRUPTIONS . . 147 Chapter 9 Missing the Boat on Mobile Technology: Intel and AMD . . . . . . . . . 149

Chapter 10 From Mass Customizing to Mass Commodity: Dell and Acer . . . . . 167

Chapter 11 Finding Growth and Profitability in Bookselling: Barnes & Noble and Amazon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189

Chapter 12 Escaping the Middle: Best Buy and Charles Schwab . . . . . . . . . . . . . 209

Chapter 13 Content for a New Age: Disney and Time Warner . . . . . . . . . . . . . . . 229

Final Thoughts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 249

Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 251

Contents

Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1The Next Set of Breakthroughs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2

The Information Revolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2Medical Technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2Genetics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2Alternative Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3Artificial Intelligence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3Material Sciences and Nanotechnology. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3

What This Book Is About. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3Part I: Technology and Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4Part II: Managing Danger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5Part III: The Environment of Technology. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5Part IV: Coping with Technological Disruptions . . . . . . . . . . . . . . . . . . . . . . . . . . .6

Endnotes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8

PART I: TECHNOLOGY AND STRATEGY. . . . . . . . . . . . . . . . . . . . . . 9 Chapter 1 Technological Disruptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11

The Powers of the Mind . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11Information Technology (IT) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12Medical Technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13Genetics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15Alternative Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16Artificial Intelligence, Material Sciences, and Nanotechnology . . . . . . . . . . . . . . . . . .16The Challenge of Commercialization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18Endnotes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18

Chapter 2 Commercialization’s Obstacles . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19Fumbling the Future at Xerox: IT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19Medical Technology: Cochlear Implants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20

Basic Research in Diverse Labs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21Breakthroughs in Other Disciplines. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21A Highly Committed Champion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22Multiple Developmental Paths . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22

viii Contents

Private Firms’ Failure to Cooperate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22Professional Endorsement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22FDA Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23Lack of Enthusiasm from the User Community. . . . . . . . . . . . . . . . . . . . . . . . . . .23High Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23Safety and Efficacy Concerns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23Auxiliary Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24Withdrawal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24New Entrants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24

Genetics: Agricultural Productivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24Sustainability as a Corporate Goal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25Opposition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25Rapid U.S. Market Penetration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25More Promised Progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26Government Restrictions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26Environmentalists’ Criticism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26Competition from DuPont . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27

Alternative Energy: The Electric Car . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27Less Pollution and Foreign Oil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28Range and Fossil Fuels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .281990s’ Failure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29Hybrid Successes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29Weak Plug-In Sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29Battery Subsidies from the U.S. Government . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29A Solution from Tesla and Panasonic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30Not Yet Affordable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30A New Business Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31The Slow and Arduous Path to Commercialization. . . . . . . . . . . . . . . . . . . . . . . .31

Why Xerox Missed Its Opportunity: Game Theory . . . . . . . . . . . . . . . . . . . . . . . . . . . .32Setbacks at Many Points. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33Uncertain Government Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34Project Management Insufficient to Overcome These Problems . . . . . . . . . . . . . . . . .35The Inclination to Undertake Safe Projects. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36Technologies Push and Markets Pull . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36Determination, Will, and Persistence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37Endnotes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37

ix Acknowledgments

Chapter 3 Hedging the Uncertainty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39Trends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40Expert Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40Historical Analogies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41Industry Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42Scenarios. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42

Surprises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43Taking Notice of the Periphery. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43Romances, Tragedies, and Comedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44The Narrative Details . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44Applying Scenario Logic to Technology Commercialization . . . . . . . . . . . . . . . .45Strategic Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46

Hedging . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47Gamble on the Most Probable Outcome . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47Take the Robust Route. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48Delay Until Further Clarity Emerges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49Commit with Fallbacks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49Shape the Future . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50Endnotes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50

PART II: MANAGING DANGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

Chapter 4 Dealing with Danger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55Bhopal: What Went Wrong . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55

Highly Toxic Chemicals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55Weak Infrastructure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56An Uncontrolled Explosion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56Nonfunctioning Backups. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .57Trapped Victims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .57Organizational Shortcomings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .57Warnings Ignored. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58The Price of the Accident . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58

The Deepwater Horizon Oil Spill: What Went Wrong. . . . . . . . . . . . . . . . . . . . . . . . . .59Beyond Petroleum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .59Tar Sands Processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .59Explosion in Texas City and Oil Leaks in Alaska . . . . . . . . . . . . . . . . . . . . . . . . . .59The Spill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .60The Many Mistakes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .60

x About the Author

Inherently Dangerous Technologies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .61Dilemmas in Managing Dangerous Technologies . . . . . . . . . . . . . . . . . . . . . . . . .63Individual Cognitive Limits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .64Experts’ Cognitive Limits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .64Organizations’ Cognitive Limits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .64How Much a Life Is Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65Inferences from Animal Studies to Humans . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65


Chapter 5 Laws of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .69Vioxx: What Went Wrong? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .69

Merck’s Positive Reputation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .70The Search for a Blockbuster Drug Without Gastrointestinal Complications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .70Early Warnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .70Failure to Communicate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .71The FDA’s Required Warning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .71More Criticism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .72Voluntary Recall . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .72Thousands of Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .72Criminal Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .73

Johnson & Johnson’s Hip Replacement: What Went Wrong? . . . . . . . . . . . . . . . . . . .73A Paragon of Social Responsibility. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .74The Acquisition of DePuy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .74All-Metal Replacements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .74Design Problems. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .75FDA Investigations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .75A Voluntary Recall . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .75Suits Against the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .76The Reimbursement Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .76

The Laws of Liability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .77Evolution of the Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .77Classic Tort Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .78Assumption of Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .78Punitive Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .78Strict Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .79The Justification for Strict Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .79

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Further Movement from a Fault-Based System . . . . . . . . . . . . . . . . . . . . . . . . . . .80Refinements of the Laws of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .81


PART III: THE ENVIRONMENT OF TECHNOLOGY . . . . . . . . . . . 85

Chapter 6 Old, Young, and Global Security . . . . . . . . . . . . . . . . . . . . . . . . . . . .87The Rise of the Elderly . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .87

Declining Fertility. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .88Economic Impacts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .90Technology to Assist the Elderly . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .91A Cure for Alzheimer’s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .91Reversing Aging . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .93

Among the Young: Hope and Disillusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .96Meaningful Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .97What Next . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .100Diminishing Youth Bulges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .102Technology to Combat Terror . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .106

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .108Endnotes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .108

Chapter 7 Rich, Poor, and Global Inequality . . . . . . . . . . . . . . . . . . . . . . . . . .111Trends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .111

Within Country Gaps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .112Between-Country Gaps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .112The U.S. Wealth Gap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .113The Rise of Neoliberalism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .115

Technology at the Top of the Pyramid. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .117Sophisticated Models . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .117What Hedge Funds Do. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .118Only for the Already Wealthy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .119Renaissance Technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .120

Technology at the Bottom of the Pyramid. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .121Telecommunications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .122Potable Water . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .123Health Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .124Nutrition and Crop Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .124

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Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .125Critiques. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .125


Chapter 8 Abundance, Scarcity, and Global Sustainability . . . . . . . . . . . . . .129Fossil Fuels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .130

Oil Price Declines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .130Hydraulic Fracking. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .132Tar Sands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .133Offshore Recovery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .134

Cleaner Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .135Building Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .136Industrial and Commercial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .138Solar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .138Wind. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .140Energy Storage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .142Biofuels. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .143


PART IV: COPING WITH TECHNOLOGICAL DISRUPTIONS . . 147

Chapter 9 Missing the Boat on Mobile Technology: Intel and AMD . . . . . .149The Mobile Revolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .149The Battles Between Intel and AMD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .152

Memory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .152Microprocessors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .153The Sub-Zero Segment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .153Speed and Continued Price Wars. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .154Branching Out. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .155The Hammer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .156Global Antitrust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .157Graphics and Other Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .157Divesting Manufacturing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .158

Searching for New Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .158ARM Architecture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .159Mobile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .159Gaming. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .159

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Mounting Mobile Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .160New Leadership at AMD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .160Field Programmable Gate Array (FPGA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .162The Internet of Things (IOT) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .162Smart Glasses and Augmented Reality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .163Risks Ahead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .164

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .164Glossary of Computer Terminology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .165Endnotes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .165

Chapter 10 From Mass Customizing to Mass Commodity: Dell and Acer . . .167Financial Woes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .168

An Industry in Decline. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .170The Fat Years: Dell’s Ascent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .170

A Competency in Mass Customization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .171Gateway Abandons the Direct Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .173

The Lean Years: Michael Dell’s Resignation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .174Acer’s Acquisition of Gateway. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .176Dell’s Plans for a Recovery. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .177

The Enterprise Market. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .181Becoming a Private Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .182

Acer’s Efforts at Revitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .183Notebooks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .183Smartphones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .183Free Cloud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .185IOT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .185


Chapter 11 Finding Growth and Profitability in Bookselling: Barnes & Noble and Amazon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .189Barnes & Noble and the Superstore . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .189Amazon and Internet Commerce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .191

Amazon’s Reinvention. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .192Barnes & Noble’s Focus on Books. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .194

Sinking Profits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .195Amazon’s Fluid Identity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .195

Profiting from the Cloud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .197

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Barnes & Noble’s Decision to Split Up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .198Spinning Off the Nook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .198Spinning Off the College Division . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .199

How Attractive Was Bookselling?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .200Sales Trends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .200Reading Habits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .201Leisure Time Choices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .201Digital Devices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .202

The Publishers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .202Wholesale. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .203The Big Five. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .203The Spat with Amazon. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .204


Chapter 12 Escaping the Middle: Best Buy and Charles Schwab . . . . . . . . . . .209The Evolution of Best Buy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .210

Concept One: 1983–1989. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .211Concept Two: 1990–2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .211Concept Three: 2002–2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .212The Aftermath of the Financial Meltdown . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .214

The Evolution of Charles Schwab . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .214Discounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .214High Net Worth Clients . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .215A Category of One. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .215The Affluent of the Future. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .216Following Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .216

New Challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .217Competition in Consumer Electronics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .217Online. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .217Showrooming . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .218

Competition Among Discount Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .218Innovation Dilemmas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .219Major Industry Players . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .219

Best Buy’s Comeback Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .220Transforming E-Commerce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .220Cost Savings and Product Innovation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .221

xv Contents

Enhancing the Internet Platform: Charles Schwab . . . . . . . . . . . . . . . . . . . . . . . . . . .222Ranking the Platforms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .223The Robo-Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .223


Chapter 13 Content for a New Age: Disney and Time Warner . . . . . . . . . . . .229Vertical Integration: Disney. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .230Vertical Integration: Time Warner. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .231Mergers, Acquisitions, and Divestitures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .232The Disney-Capital Cities Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .235

ABC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .236The Iger Era . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .237

The AOL-Time Warner Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .237Trying to Revive AOL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .238Slimming Down . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .239HBO’s Edginess and Success . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .240

Disney’s Dominance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .241Cable Channels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .241The Studios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .242

Internet Initiatives and Cable’s Abandonment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .243Losing Young People . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .244


Final Thoughts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .249 The Future of Technology Management and the Business Environment:

Lessons on Innovation, Disruption, and Strategy Execution . . . . . . . . . . . . . . . .249

Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .251

xvi Acknowledgments

Acknowledgments

I would like to acknowledge my colleagues and my students. At the University of Min-nesota Carlson School of Management, I have learned about innovation from Andrew Van de Ven; about strategy from Aks Zaheer, Myles Shaver, Mary Benner, Aseem Kaul, and Anne Cohen; about entrepreneurship from Shaker Zahra, Harry Sapienza, and Dan Forbes; about the environment of business from Iain Maitland, Sri Zaheer, Joel Waldfogel, Paul Vaaler, Gurneeta Singh, Jiao Luo, Russel Funk, and Sunasair Dutta; and about timing from Stu Albert. My sincere hope is that the timing of this book is right.

At the Technological Leadership Institute, which is part of College of Science and Engi-neering at the University of Minnesota, I have learned from the director, Massoud Amin, to whom this book is dedicated, and from Lockwood Carlson, Kirk Froggat, Steve Kel-ley, and Brian Isle. At the Technion in Haifa, where I teach in the spring mini-semester in the MBA program, I have learned from Eitan Naveh, Mia Erez, Dovev Lavie, Ella Meron-Spektor, Erev Ido, Avi Shtub, and Ella Glickson. The many outstanding MBA and Masters of Technology students at the University of Minnesota and the Technion have inspired me to think deeply about technology. I am also indebted to the colleagues with whom I have done research in areas related to technology, including Ari Ginsberg at NYU Stern, Joel Malen at Hitotsubashi University of Innovation Research Japan, Adam Fremeth at Ivey Business School Canada, Mazhar Islam at Tulane University, Susan K. Cohen at the Katz School of Business University of Pittsburgh, J. Alberto Aragon-Correa at University of Surrey, and Hans Rawhouser and Michael Cummings at University of Nevada Las Vegas.

I have had the good fortune of living full time in Minnesota, with its thriving established business sector, and part-time in Israel, with its aspiring entrepreneurial business sec-tor. The great companies in both these places have provided me with many of my ideas about technology. Merav Lefkowitz, who helped me edit this book, deserves a very spe-cial thanks for the superb work she did. My wife, Judy, always inspires me with her care for my physical, psychological, and intellectual well-being, her patience, and her insights about current affairs. My son, David, who is co-editor of Dissent and teacher of history at Columbia, and my son Ariel, who is a Spotify data scientist, have brought me fresh views about technology’s promise and pitfalls. The world in which they live is so different from the world in which I grew up largely because of technology. I also want to thank Jeanne Levine of Pearson for encouraging me to do this project, Natasha Wolmers of Pearson for commenting on earlier drafts, and Lori Lyons for moving the manuscript through the production process.

xvii About the Author

About the Author

Alfred A. Marcus is the Edson Spence Chair of Strategy and Technological Leadership at the University of Minnesota, Carlson School of Management and the Center for Tech-nological Leadership. He is the author or co-author of many books, including Innova-tions in Sustainability published by Cambridge University Press; Management Strategy , published by McGraw Hill; Strategic Foresight , published by Palgrave MacMillan; and Big Winners and Big Losers , published by Pearson. His articles have appeared in the Stra-tegic Management Journal , Academy of Management Journal , Academy of Management Review , California Management Review , Business and Politics , Business and Society , and Organization Science , among other places.

His Ph.D. is from Harvard, and he has undergraduate and graduate degrees from the University of Chicago. Besides teaching in the Carlson School and Technological Leader-ship Institute at the University of Minnesota, Professor Marcus teaches in the Industrial Engineering Department in the MBA program in the Technion in Israel. He also has taught management courses in France, Norway, Hungary, the Czech Republic, Romania, and Costa Rica.

Professor Marcus has consulted or worked with many corporations, including 3M, Corning, Excel Energy, Medtronic, General Mills, and IBM. He was involved in a mul-tinational research project sponsored by the NSF involving companies in the United States, Finland, Israel, and India. He did a sabbatical year at the MIT Sloan School in Boston. Prior to the joining Minnesota’s faculty, he taught at the University of Pittsburgh Graduate School Of Business and was a research scientist at the Battelle Human Affairs Research Centers in Seattle, Washington.

1

Introduction

T echnology is both the cause of many of the world’s problems and the best hope for their cure. All the classical economists of the late 18th and early 19th cen-turies, including Adam Smith, David Ricardo, and John Stuart Mill, stressed

the importance of technological changes. Thomas Malthus’s pessimism that runaway population growth would lead to increasing misery as the world’s population expanded more rapidly than the food supply proved wrong because technological changes stayed ahead of population growth.

Prosperity is closely linked to technological advances. Technology is critical to the world’s continued economic growth. It provides the knowledge to convert the factors of production into goods and services. It also gives rise to an efficient division of labor, improves productivity, and permits the accumulation of capital. In his book The Long Wave Cycle , the Russian economist Nikolai Kondratiev (1892–1938) maintained that economic progress took place not linearly, but in long waves, each of them lasting about half a century. 1 Each wave had periods of prosperity, recession, depression, and recovery.

In Capitalism, Socialism, and Democracy , the Austrian economist Joseph Schumpeter connected technological innovations to the waves of economic growth. 2 Schumpeter’s argument was that technological change was a series of explosions in which one set of technologies replaced another (see Exhibit 1.1 ). The first period (l782–1845) was marked by major innovations in steam power and textiles; the second (1845–l892) was marked by major innovations in railroads, iron, coal, and construction; and the third period (1892–1948) was characterized by major innovations in electrical power, automobiles, chemicals, and steel.

2 The Future of Technology Management and the Business Environment

Exhibit I.1 Waves of Innovation 1845–1892 Railroads, iron, coal, construction 1892–1948 Electrical power, automobiles, chemicals, steel 1948–1973 Aerospace, pharmaceuticals, petrochemicals, synthetic and composite materials 1973–present Information technology, medical technology, genetics, alternative energy, artificial

intelligence, the material sciences, and nanotechnology

The Next Set of Breakthroughs From where will the next set of breakthroughs come? The American sociologist Daniel Bell has proposed, in his book The Coming of Post-Industrial Society: A Venture in Social Forecasting , that the period since 1973 has been one of post-industrialism, 3 in which ideas are more important than the material forces that dominated previous periods of economic growth. In this era, information technology (IT), medical technology, genetics, alternative energy, and advances in artificial intelligence, material sciences, and nano-technology are dominant forces.

The Information Revolution The information revolution has made it possible to disseminate knowledge instanta-neously around the globe, which gives the rise to virtual communities that create and enable an expanded international economy. With massive digitization, almost limitless storage in the cloud, and ubiquitous mobility, the information revolution has trans-formed how people learn, communicate, shop, travel, and socialize. The colossal data analytic capabilities called big data now promise degrees of reliability, productivity, and system optimization that have never before been experienced in history.

Medical Technologies Advances in medical technology are easing pain, eliminating many childhood diseases, and prolonging life. They facilitate the early detection and treatment of infectious dis-eases, the tracking of chronic diseases, the prevention of medical errors, and increased health care accuracy. The hope is that they will be able to lower health care costs as well.

Genetics The new genetics, including the Human Genome project, provide the foundation for medical advances and for greater agricultural biotechnology that should allow the world to feed the nine to ten million people projected to inhabit the planet by 2050 using less land.

3Introduction

Alternative Energy Renewable resources from the sun, wind, and plant material are starting to replace finite energy sources from coal, oil, and natural gas. Progress involving electric and other alternative vehicles has been made toward greater energy efficiency. On the horizon are smart appliances as well as a smarter electric grid.

Artificial Intelligence With massive amounts of computational power, artificial intelligence is making deep inroads into machine learning and speech recognition. Because of biomimetic sensors, many tasks formerly carried out by human beings can be more reliably performed by computer–assisted machines.

Material Sciences and Nanotechnology Advances in material sciences and nanotechnology have helped to produce computer memory that has greater speed. They also have generated designer alloys, ceramics, and polymers that provide for materials with super strength and other desirable properties.

Combined, and with their offshoots, these technologies offer great promise for bringing into being new economic growth and prosperity. Among other innovations, they enable wearable computers, the Internet of Things (IOT), targeted drug delivery, rapid bioas-says, fuel cell cars, energy storage, advanced robotics, and 3D printing. These innova-tions may be the engines of growth and the sources for fulfilling employment for millions of people, or they may not be.

What This Book Is About Their potential is what this book explores. These innovations face obstacles to their commercialization that must be managed by business firms and societies. From a com-mercial point of view, let alone a scientific and technical point of view, their success is not guaranteed. Their introduction involves risky decision-making.

As an unintended by-product of their introduction, these technologies can and do cause harm. Their widespread penetration, for example, does not guarantee job creation. They are likely to wipe out jobs as well as create them. They have both environmental and social costs. The servers that sustain the cloud are huge consumers of energy. Even the most well-intentioned new medical technology often has unforeseen side effects. This harm must be anticipated and prevented to the degree that it is possible without com-promising society’s willingness to take risks and make progress.

New technologies also offer tremendous potential for dealing with the most important societal challenges of this era. This era is characterized by cleavages between young and


old, rich and poor, and scarcity and abundance. These technologies can address these issues constructively. They can play a role in easing these tensions, but they also can exacerbate them.

This book is about the foresight and strategic actions that are needed for technologies to play a positive rather than a negative role. It is about the pathways that have been taken to commercialize some of these technologies, how some of these pathways have been blocked, and how some of them have been opened. It is about the disruptions that organizations have faced as a result of technological innovations they did not expect and how they have dealt with these disruptions by altering their business strategies and executing novel strategies. This book depicts the stories of many companies and how they have confronted these issues. The purpose is to learn lessons from the experience of these companies.

The book is divided into four sections: Technology and Strategy, Managing Danger, The Environment of Technology, and Coping with Technological Disruptions. It is meant for practitioners and students, for those already well versed on the issues in the book and novices. The juxtaposition of the material found in this book is designed to generate new insights. Reflection on the material will yield takeaway lessons on innovation, disrup-tion, and strategy execution, technology management, and the business environment for executives, practicing managers, and students. The sections in the book are best read in their entirety, but they can also be read separately. The five paired case studies in the last section of the book are ideal for executive, MBA, and undergraduate instruction in management of technology courses.

The material in this book is based on my more than thirty years of writing, teaching, and consulting in the areas of business strategy, ethics, and technology. I owe a great deal to my colleagues and to my students at the Technological Leadership Institute and Carl-son School of Management at the University of Minnesota and the Technion Faculty of Industrial Engineering and Management.

Part I: Technology and Strategy Chapter 1 , “Technological Disruptions,” starts with Schumpeter’s idea that technology is a series of explosions and Bell’s idea that the current era is one of post-industrialism. It discusses leading-edge technologies that may sustain economic growth in a post-industrial world.

Chapter 2 , “Commercialization’s Obstacles,” goes into detail about the obstacles in com-mercializing leading-edge technologies. It provides stories of attempts to commercialize IT technologies, a medical technology to assist the hearing impaired, genetic technol-ogy with the aim to increase agricultural productivity, and an electric car to move the planet away from its dependence on fossil fuels. This chapter comments on the slow and arduous path to commercialization, the setbacks at many points, the uncertainty of

5Introduction

government support, the inclination to undertake safe projects, and the need for deter-mination, will, and persistence.

Chapter 3 , “Hedging Uncertainty,” is about how business organizations can manage the uncertain outcomes described in the previous chapter. It considers the use of trends, expert opinion, industry analysis, and historical analogies, and it elaborates on the value of using scenarios, the topic of one of my previous books, Strategic Foresight: A New Look at Scenarios . 4 It goes on to put forth a series of hedging strategies that organizations can use to deal with the uncertainty: gamble on the most probable outcome, take the robust route, delay until further clarity emerges, commit with fallbacks, and shape the future.

Part II: Managing Danger The next part of this book deals with unanticipated consequences and the need to man-age danger.

Chapter 4 , “Dealing with Danger,” focuses on two major industrial accidents—Bhopal and the Deepwater Horizon oil spill—and what went wrong. It highlights dilemmas in managing dangerous technologies, such as the cognitive limits of individuals, experts, and organizations. It expounds upon the issue of determining the value of a human life and extrapolating and making inferences from animal studies to humans.

Chapter 5 , “Laws of Liability,” focuses on major mishaps in introducing new medical technologies—Merck’s Vioxx and Johnson and Johnson’s DePuy all-metal hip replace-ment. In both instances, despite ample warning, these companies failed to inform patients about risks and danger and failed to recall the technology before patients had suffered immense damage. Both companies were sued and had to compensate the vic-tims as well as pay large fines. Their reputations, as a consequence, suffered. This chapter examines the laws of liability in light of these two cases and traces its evolution toward harsh punitive actions and strict liability.

Part III: The Environment of Technology Part III of the book highlights the way business organizations have responded to the challenges of the following three global divisions: those between (i) young and old, (ii) rich and poor, and (iii) energy scarcity and abundance. These fractures, among the most important features of the business environment, affect whether there will be global secu-rity, inequality, and sustainability. They provide opportunities for technologies and com-panies as well as presenting threats.

The topics discussed in Chapter 6 are “Old, Young, and Global Security.” The rise of the elderly has led to efforts to find cures for Alzheimer’s and other diseases, to reverse aging, and to improve quality of life during aging. A changing economy and changing job mar-kets have made technology important for youth. They have given rise to a significant


population of people who do not work in traditional jobs; they work from home and do freelance jobs. Conversely, the disillusion found among many young people in the world who do not have meaningful work has contributed to global violence and terror. It has stimulated companies that have developed counterterror methods that can assist in preventing the bloodshed.

Chapter 7 , “Rich, Poor, and Global Inequality,” discusses the technological opportunities that have been opened up at the top and at the bottom of the pyramid. Global inequal-ity also has produced opportunities for companies. On the one hand, there are end-less opportunities to develop technologies that serve the wealthy, protect their wealth, and perpetuate their standing in society. On the other hand, there are opportunities to develop technologies to uplift the poor by providing them with better housing, more drinkable water, enhanced access to health services, improved nutrition, employment, and business opportunities. At the top, hedge funds have developed sophisticated algo-rithms for trading that have enjoyed remarkable success but are only available to those who are already wealthy. At the bottom, on the other hand, many companies, often in collaboration with nonprofit organizations and governments, have heeded to call to introduce products and technologies that can help the poor.

Chapter 8 , “Abundance, Scarcity, and Global Sustainability,” considers the possibility of energy abundance brought about by advances in both finite fossil fuels and renewable energy as well as the issue of energy scarcity brought about by the failure to innovate in these areas. 5 It also considers in-between states in which the most dependable path to the future relies on either fossil fuels or renewable fuels, to the exclusion of the other. On the one hand, a review of technologies like fracking and unconventional methods of oil exploration and development demonstrates the continued promise of fossil fuels. On the other hand, major advances in energy efficiency, solar, wind, energy storage, and biofuels are also considered.

Part IV: Coping with Technological Disruptions The final Part of the book focuses on pairs of companies operating in overlapping busi-ness segments that are confronted by technological disruptions. It discusses how they have coped and the challenges they still face in dealing with the threats to their businesses.

These chapters are presented as open-ended case studies that are meant for considering what these firms should do next. Most of these companies were pioneers in the IT revolu-tion. They were early movers who did well with innovations they introduced or helped to introduce, like the microprocessor, the PC, Internet commerce, the sale of electron-ics, and the creation of content that can be viewed on the Internet. This Part includes chapters on Intel and AMD, Dell and Acer, Barnes & Noble and Amazon, Best Buy and Charles Schwab, and Disney and Time Warner.

7Introduction

A second wave in the IT revolution has gained momentum, threatening the business models that once made these firms very successful. This second phase is characterized by growing digitization; mobility; the commoditizing of older technologies; a move toward smartphones, tablets, and e-readers; increased reliance on the cloud; greater competition between Internet and brick and mortar sales venues; and streaming. These developments have led to the near-obsolescence of once-vibrant business segments like PCs, bookselling, electronic showrooms, movies, and cable television. Given this disrup-tion, how should companies cope? How should they adjust their business models to new conditions they face, conditions brought about by these rapidly changing technologies?

Chapter 9 , “Missing the Boat on Mobile: Intel and AMD,” covers the consequences of these companies not responding to the challenge of mobile technologies. It asks the ques-tion of where they should turn to next.

Chapter 10 , “From Mass Customizing to Mass Commodity: Dell and Acer,” deals with the issue of the growing commoditization of PC sales, long the mainstay of these com-panies’ business. What options do they now have?

Chapter 11 , “Finding Growth and Profitability in Bookselling: Barnes & Noble and Ama-zon,” explores the issue of declining profits and revenue in bookselling in light of the rise of digital devices like e-readers and changes in people’s reading habits and bookselling practices. If these firms remain committed to bookselling, how can they innovate to stay profitable?

Chapter 12 , “Escaping the Middle: Best Buy and Charles Schwab,” delves into the uncom-fortable positions in which Best Buy and Charles Schwab find themselves—not leaders in the high end of their businesses, a role other firms like Apple and Morgan Stanley have seized, yet also not leaders in the low end, a role they deliberately ceded to the likes of Walmart and e*Trade. How can they survive the dual threat of technological leaders above and below them?

Chapter 13 , “Content for a New Age: Disney and Time Warner,” deals with the conse-quences of the decline of cable TV channels, the most profitable divisions of Disney and Time Warner, in the face of increased preference for Internet streaming services, such as Netflix and Amazon Prime. How do these companies deal with this technological disruption?

In sum, this book takes up some of the most important problems in the future of technol-ogy management and business environment and provides important lessons on innova-tion, disruption, and strategy execution.


Endnotes 1. Nikolaĭ Kondratiev, The Long Wave Cycle . New York: Richardson & Snyder, 1984.

2. Joseph Schumpeter, Capitalism, Socialism, and Democracy . New York and Lon-don: Harper & Brothers Publishers, 1947.

3. Daniel Bell, The Coming of Post-Industrial Society: A Venture in Social Forecasting . New York: Basic Books, 1999.

4. Alfred Marcus, Strategic Foresight: A New Look at Scenarios . New York: Palgrave MacMillan, 2009.

5. Alfred Marcus, Innovations in Sustainability: Fuel and Food . Cambridge, UK: Cambridge University Press, 2015.

11

1 Technological Disruptions

T echnological changes, according to Schumpeter, are like a series of explosions with innovations concentrating in specific sectors, or leading-edge industries that provide the momentum for future prosperity replacing each other in a reg-

ular, periodic way. Leading sectors propel economies forward; without them, economic growth would not be possible. According to Schumpeter, the process of technological transformation should be called “creative destruction,” 1 given that a set of superior tech-nologies supplants inferior technologies and becomes dominant at their expense. The lagging sectors fall behind, and their time passes, while the new set of technologies surge ahead and, according to Schumpeter, spur economic renewal and revitalization.

In the world’s industrial nations, a dynamic growth phase existed after the Second World War. However, by the start of 1970s, global growth slipped. The post-World War II boom in advanced industrial nations lost momentum. The need existed for a new set of advanced technologies.

The Powers of the Mind Sociologist Daniel Bell has described the shift away from the technologies that dominated the postwar boom as post-industrialism. In this period, theoretical knowledge formed the source of innovation, while technically trained professionals became dominant and technological assessment played a leading role.

The powers of the mind gained ascendance over the brute force of things. Previously, economic activity was centered on physical labor, natural resources, and capital. Now, wealth in the form of physical resources is losing ground to wealth in the form of ideas. An example is the microchip, the key element in the emergence of information technol-ogy (IT); (see Chapter 9 , “Missing the Boat on Mobile Technology: Intel and AMD”), where material costs constituted just 2 percent of production costs and most of the value came from the ideas for the design of the microchips. Other examples include medical


technologies, genetics, alternative energy, artificial intelligence, material sciences, and nanotechnology. The main value is not in the materials, but in the ideas. This chapter briefly discusses the promise of these technologies, whereas the next chapter considers concrete examples of efforts to commercialize such technologies and the problems they have encountered.

Information Technology (IT) The IT revolution has touched nearly every human endeavor. Internet usage has grown 183 percent since 2000 (see Exhibit 1.1 ). The number of Internet users increased tenfold from 1999 to 2013. In 2015, around 40 percent of the world’s population had an Internet connection, and a wireless hotspot existed for each 150 persons.

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

1990 1995 2000 2005 2010 2015 Exhibit 1.1 Growth in Percentage of People in the World Who Regularly Use the Internet Data source: http://www.internetlivestats.com/internet-users/

The Internet changes the ways in which people socialize, relate, and do business. It has created virtual communities, via email, Facebook, LinkedIn, Twitter, and others. It has made telecommuting possible. Shopping, entertainment, and education are being done from people’s homes. Opportunities exist for increased involvement in politics. Online dating is common. Interactive medicine has become common as well.

Smartphones are ubiquitous. In just one device, they integrate phones, personal data assistants, MP3 players, cameras, voice recorders, watches, calculators, and other

http://www.internetlivestats.com/internet-users/

13Chapter 1 Technological Disruptions

functions. Computer use is expanding to many areas in which human intelligence pre-viously was applied, such as driverless cars and automated medical procedures.

Thanks to enhanced computer power and performance, it has become possible to auto-mate increasingly complex tasks. Manufacturing efficiencies are being accelerated as result of computerized controls. Although software that runs computers is not as cre-ative as human beings, its reliability is greater and less mistake prone, which makes it preferred for routine tasks. The use of computers is growing as the programs that run them are becoming better at learning, adapting, and self-correcting.

The full promise of the IT revolution, however, has not yet been tapped. Among the trends that continue to be important are these:

■ The ongoing digitization of audio, video, and film

■ The spread of fiber optics that carry television, telephone, radio, and computer signals simultaneously and make rapid communications possible

■ Expansion in the use of optical memory systems, such as disks, film, and barcodes

■ Parallel processing, which permits many computers to be used simultaneously

■ The evolution of chip technologies, which opens up the possibility for even more accelerated and powerful computers

It is not obvious which firms will take advantage of these opportunities. Their societal impact is considered in Chapter 6 , “Old, Young, and Global Security,” which covers the role they play in the fight against terror and in Chapter 7 , “Rich, Poor, and Global Inequality,” which portrays the role they play in perpetuating the world’s wealth gaps.

Chapter 2 , “Commercialization’s Obstacles,” discusses the case of Xerox, which failed to exploit technologies it had developed and missed out on the promise of the IT revolu-tion. There are other examples that could be cited. Kodak, for instance, missed out on the digital revolution despite accumulating the technical skills to be a part of it. The inability of established businesses to take advantage of technologies they have mastered and know are coming is considered in Chapter 2 .

Medical Technologies Medical technology includes the procedures and equipment by which medical care is delivered. It has affected many medical fields. A prime example is the treatment of heart disease. Each decade from the 1970s to the present has seen successive treatment improvements:


■ The 1970s introduced cardiac care units, lidocaine for irregular heartbeat, beta-blockers for lowering blood pressure, clot busters, and coronary artery bypass surgery.

■ In the 1980s, there was increased use of blood-thinning agents and minimally invasive surgery.

■ The 1990s saw drugs that were effective in inhibiting the formation of clots, stents to keep vessels open, and the implantation of defibrillators for irregular heartbeats.

■ Since then, better tests for diagnosis are available, drug-eluting stents are in com-mon use, and new drug strategies are centered on cholesterol-lowering statins.

Many doctors have replaced their stethoscopes with inexpensive, hand-held ultrasound scanners to detect heart problems. In the past, emergency room doctors had trouble distinguishing between bouts of heart failure and pneumonia. Now they have a blood test for B-type Natriuretic Peptide (BNP) secreted by a weakened heart muscle, which enables them to distinguish between these maladies. Although heart disease remains the leading cause of death in the U.S., overall mortality rates have fallen by almost half.

Another example of advances in technology that have changed outcomes is the treatment of preterm babies. In the 1950s, little could be done for them. However, by 1990, there were special ventilators, artificial pulmonary surfactants, and new methods of intensive care, which helped decrease mortality to a third of 1950s levels.

Surgery, too, has seen tremendous improvements. Advances have been made in surgical procedures such as angioplasty and in hip and joint replacements. Microwave scalpels equipped with lasers are replacing metal scalpels. Less invasive laparoscopic techniques have become common. Devices like MRIs and CT scanners are used commonly today. Enhanced electronic medical records systems now exist, facilitating the recording and transfer of information.

For humans with severed bones and defective hearts and lungs, bioelectricity has the potential to speed healing rates. Nerves, muscles, and glands can be stimulated to pro-mote, repair, and restore healthy functioning, and the technique can be used as an alter-native to addictive painkillers.

On the horizon are devices to provide individuals with instant health information and allow them to continuously monitor their health status. Blood sugar can be checked, sleep patterns analyzed, and people empowered with the tools to personalize their treat-ments and behavior on a real-time basis. Despite the advances in technology, their spread is often halted and takes longer than expected. Chapter 7 discusses the potential for


finding a cure for Alzheimer’s and reversing aging. The next chapter shows how hard it is to fully commercialize some of these technologies. Not all innovations are instanta-neously and fully adopted, as illustrated by the story of cochlear implants.

Genetics Genetic technology refers to efforts to understand gene expression, take advantage of genetic variation, and modify and transfer genes. Passed from one generation to another and found in all living organisms, genes are the coded instructions that organisms use to make proteins, which are the structures of all living things and which perform the func-tions that make life possible.

The genetic code of living organisms has been mapped for ongoing gene restructur-ing and remodeling. Genomics and molecular biology are laying the foundation for many advances. The integrated use of genetic diagnostics and treatment can help guide therapy. For example, diabetics who have problems making and secreting insulin can be distinguished from diabetics who react poorly to insulin and can be given custom treat-ments. Identifying genes and their functions can lead to the more efficient breeding of plants and animals, such as marker-assisted breeding, as the identification of desirable trait markers in genes speeds the selection process.

As scientists map the genome, they can discover and isolate disease-causing genes and identify treatments for inherited diseases like Alzheimer’s and muscular dystrophy. It also gives them the ability to both predict diseases and create the treatments to fight them.

The genetic code also can be mapped to improve existing crops and create new ones. Sci-entists have developed seeds that resist pests and increase the nutrient content of foods, making them better for human and animal consumption. There are nearly 50,000 genes in a grain of rice. With this knowledge, scientists are trying to alter the nature of the rice so that it will be less sensitive to drought and disease. Using their knowledge of genetics, they can breed insects that attack the rice’s main predators. Genetic technology has the promise to better feed the world’s population.

Agricultural biotechnology may also be used to find ways to convert plant material into energy. Scientists are working on biogenetic material that can consume carbon dioxide. However, genetic technology is also controversial, and in some quarters it is met with stiff resistance that has slowed the pace of adoption. The case of Monsanto discussed in the next chapter illustrates this point. The dangers of technology and the ways societies and companies have evolved to manage these dangers are the main topic of Chapters 4 and 5.


Alternative Energy Energy efficiency exists along with renewable energy sources like wind, solar, and bio-mass. By themselves and in combination with fuel cells, energy storage, geothermal energy, and nuclear energy, these renewal energy sources provide alternatives to fossil fuels like oil, coal, and natural gas. They address concerns spurred by fossil fuel use, such as the buildup of climate-changing gases in the atmosphere, the depletion of fossil fuel supply, and the vulnerability of nations that use fossil fuels because of security issues. 2

There have been many advances in energy efficiency. Better software and computing technologies have improved the monitoring and control of energy use. LED lighting, which requires less energy use and is longer lasting than conventional incandescent and fluorescent lighting, has been developed. Superconductors carry and transfer electricity more efficiently and with fewer losses. They make it possible to build magnetic levita-tion trains and faster computer circuits that run on less energy, as well as more energy efficient advanced magnetic resonance imaging (MRI) machines.

Wind and solar power have become far less expensive than they once were. In many parts of the world, their costs are equal to, or lower than, other forms of electricity generation. Solar energy cells have been long available in pocket calculators and remote power appli-cations. Though solar made up less than one percent of the electricity market in 2015, the International Energy Agency has projected it will be the world’s most important source of energy by 2050. 3

Lithium-ion batteries are current leaders in energy storage and are used across many applications from laptops to mobile phones to electric vehicles. With mass production, their price is likely to keep declining. Even with these advances, there have been struggles to commercialize alternative energy. In the next chapter, the effort to make energy-effi-cient, low-priced electric vehicles widely available is discussed, and Chapter 8 is devoted to the commercialization of renewable energy and energy efficiency technologies.

Artificial Intelligence, Material Sciences, and Nanotechnology Working in tandem with the technologies previously mentioned are artificial intelli-gence, material sciences, and nanotechnology. Artificial intelligence has moved into many areas where human intelligence formerly was applied. Robots, now found in facto-ries and homes alike, rely on a form of artificial intelligence and perform many complex, nonrepetitive tasks that humans once carried out.


In the material sciences, new materials are being constructed molecule by molecule and atom by atom using supercomputers in their design. These materials are lighter, stron-ger, and more resistant to heat than older materials. Many have found their way into automobiles, trucks, airplanes, and ships and made them more energy efficient. Automo-biles use high-tech ceramics that are resistant to corrosion, wear, and high temperatures and make the engines leaner running. Lightweight and noncorrosive fiber-reinforced composites, which are stronger than steel, are found in buildings, bridges, and aircraft. New polymers are being created that will be used in products from garbage bags to tanks, from ball bearings and batteries to running shoes. Tailor-made enzymes for industrial use also are being produced that can assist in converting plant material into fuel. Nano-technology holds out the promise for additional new materials (see Exhibit 1.2 ).

Exhibit 1.2 Applications of Nano-Technology

Information Technology Advanced Chemicals Photolithography, electronics, and opto-electronics Catalysts Quantum computing and telecommunications Membranes and filtration Medical Coatings and paints Detection, analysis, and discovery Abrasives and lubricants Drug delivery Composites and structural materials Prosthetics antimicrobial Aerospace and Defense Antiviral and antifungal agents Weapons Alternative Energy and Automotive Surveillance Fuel cells Smart uniforms Solar power Life support Rechargeable batteries (charged in under a minute)

Power transmission

Lighting and other forms of energy savings

Structural materials and coatings

Sensors

Displays

Catalytic converters and filters

Fuel

Electro-mechanical systems


The Challenge of Commercialization The technologies described have great promise. Already they are causing disruption. The next wave of innovation is giving birth to a post-industrial society that is less dependent on materials and force of things and more dependent on ideas . Futurist Magazine annu-ally makes forecasts 4 about what is likely to take place next. Its forecasts have included innovations in IT (a more intelligent cloud), medical technology (handheld breathalyzers to diagnose disease), genetic technology (designer genes), alternative energy (cars that produce, rather than consume, power), and artificial intelligence (robot caregivers). The commercial appeal of these technologies surely is high, but they must overcome obstacles to their commercialization. The slow and arduous path of their commercialization is the subject of the next chapter.

Endnotes 1. Joseph Schumpeter, Capitalism, Socialism, and Democracy . New York: Kessinger

Publishing, LLC, 2010.

2. Alfred Marcus, Innovations in Sustainability: Fuel and Food . Cambridge, UK: Cambridge University Press, 2015.

3. International Energy Agency, “How solar energy could be the largest source of electricity by mid-century.” International Energy Agency. Sept. 29, 2014. http://www.iea.org/newsroomandevents/pressreleases/2014/september/how-solar-energy-could-be-the-largest-source-of-electricity-by-mid-century.html .

4. “Forecasts from The Futurist Magazine,” World Future Society, 2015, Web. http://www.wfs.org/Forecasts_From_The_Futurist_Magazine .

http://www.iea.org/newsroomandevents/pressreleases/2014/september/how-solar-energy-could-be-the-largest-source-of-electricity-by-mid-century.html



http://www.wfs.org/Forecasts_From_The_Futurist_Magazine

http://www.wfs.org/Forecasts_From_The_Futurist_Magazine

251

Index

A ABC, 236 abundance. See global sustainability Acer

acquisition of Gateway, 176 - 177 decline of PC industry, 170 efforts at revitalization, 183 - 185

free cloud computing service, 185 IoT (Internet of Things), 185 notebooks, 183 smartphones, 183 - 184

financial performance (2015), 168 - 172 overview, 167 - 168

Achronix, 162 Acumen Fund, 124 Aducanumab, 92 Advanced Bionics, 24 Advanced Technology Investment

Company, 158 aging, reversing, 93 - 95

Bimagrumab, 95 Calico research venture, 95 Metformin, 44 NAD (nicotinamide adenine

dinucleotide), 93 - 94 rapamycin, 94 - 95

agricultural biotechnology Monsanto, 24 - 27

competition from DuPont, 27 environmentalists’ criticisms, 26 - 27 government restrictions, 26 opposition, 25 promised progress, 26 rapid U.S. market penetration,

25 - 26 sustainability as corporate goal, 25

overview, 15 AI (artificial intelligence), 3 , 16 aircraft protection, 108 all-metal hip replacement design, 74 - 75 Altera, 162 alternative energy, 3

cleaner energy biofuels, 143 - 145 building energy, 136 - 138 energy storage, 142 - 143 industrial and commercial energy,

138 progress and challenges, 135 - 136 solar power, 138 - 140 wind power, 140 - 142

252 Index

electric cars, 27 - 32 1990’s failures, 29 advantages, 28 affordability, 30 - 31 battery subsidies, 29 - 30 hybrid successes, 29 range limitations, 28 Tesla and Panasonic, 30

overview, 16 Alzheimer’s, treatments for, 91 - 92 Amazon, 50 , 217

bookselling market digital devices, 202 leisure time choices, 201 reading habits, 201 sales trends, 200 - 201

financial performance of major book-sellers (2015), 189

fluid identity of, 195 - 196 history of, 191 - 194 Kindle, 196 profit from cloud-based services,

197 - 198 relationship with publishers, 193 - 194 ,

202 - 205 Big Five publishers, 203 conflicts, 204 - 205 wholesalers, 203

AMD, mobile technology and battles between Intel and AMD,

152 - 158 AMD Hammer technology, 156 - 157 branching out by Intel, 155 - 156 divesting manufacturing, 158

global antitrust litigation, 157 graphics and other products, 157 memory, 152 - 153 microprocessors, 153 speed and price wars, 154 - 155 sub-zero segment, 153 - 154

mobile revolution, 149 - 151 computer company finances (2015),

151 income, revenue, and market cap in

computer industry (2015), 150 revenue growth in computer

industry (2015), 151 overview, 149 search for new markets, 158 - 164

ARM architecture, 159 field-programmable gate array

(FPGA) chips, 162 gaming, 159 - 160 Internet of Things (IoT), 162 - 163 mobile losses, 160 mobile market, 159 new leadership at AMD, 160 - 161 risks, 164 smart glasses and augmented reality,

163 - 164 terminology, 165

American Academy of Otolaryngology-Head and Neck Surgery, 22

Ameritrade, 219 Amoco, 59 amorphous silicon, 139 Amyris, 144 “animal spirits,” 37 antitrust litigation (AMD), 157

253 Index

AOL-Time Warner merger, 237 AppAssure Software, 181 Apple, 179 , 222 applying scenario logic to technology

commercialization, 45 Aquion Energy, 142 ARM architecture, 159 ARM Holdings, 150 artificial intelligence, 3 , 16 ASR (Articular Surface Replacement)

system. See hip replacements (Johnson & Johnson)

assessment of risk, 63 assumption of risk, 78 ATI Technologies, 157 augmented reality, 163 - 164 Ayerst Laboratories, 94

B B. Dalton, 189 Babbage, Charles, 40 Baker & Taylor, 203 Bapineuzumab, 91 Barnes & Noble

bookselling market digital devices, 202 leisure time choices, 201 reading habits, 201 sales trends, 200 - 201


focus on books, 194 - 195 history of, 189 - 191

relationship with publishers, 202 - 205 Big Five publishers, 203 wholesalers, 203

sinking profits, 195 split of, 198 - 200

college division, 199 - 200 Nook, 198 - 199

superstore concept, 189 - 191 BarnesAndNoble.com website, 194 Barrett, Craig, 155 Basis, 93 Basis Science, 163 batteries, 142 - 143

electric car batteries battery subsidies, 29 - 30 Panasonic, 30

flow batteries, 142 - 143 Graphene Energy, 143 lead-acid batteries, 142 lithium-ion batteries, 16 , 142 nickel-based aqueous batteries, 142 nickel-cadmium batteries, 142 nickel-metal hydride batteries, 142 sodium-nickel-chloride batteries, 142 vanadium flow batteries, 142 zinc-bromide flow batteries, 142

Bayer Crop-Science, 124 Baysean judgement, 41 Bell, Daniel, 2 , 11 Bertelsmann, 204 Best Buy

Best Buy Mobile, 217 Best Buy Video Sharing, 217

254 Index

comeback plans, 220 - 222 cost savings and product innovation,

221 - 222 improving e-commerce platform,

220 - 221 reverse showrooming, 221 shipping from stores, 220

evolution of, 210 - 214 1983-1989, 211 1990-2001, 211 - 212 2002-2007, 212 - 214 aftermath of financial meltdown,

214 financial performance (2015), 209 new challenges, 217 - 218

competition in consumer electronics, 217

online, 217 - 218 showrooming, 218

between-country gaps (wealth distribution), 113 - 115

Bewkes, Jeff, 240 , 243 Bezos, Jeff, 191 , 205 Bhopal, India accident. See Union Car-

bide plant explosion (Bhopal, India) Big Five publishers, 203 Bimagrumab, 95 bioelectricity, 14 biofuels, 143 - 145 Biogen, 92 biometrics, 107 Biostem, 22 Blackstone Group, 182 Blockbuster, 233 blocking plague in brain, 91 - 92

Bloom Energy, 138 BNP (B-type Natriuretic Peptide), test

for, 14 Boeing, 49 Boire, Ron, 199 bookselling

Amazon fluid identity of, 195 - 196 history of, 191 - 194 Kindle, 196 profit from cloud-based services,

197 - 198 third-party selling, 193 - 194

Barnes & Noble focus on books, 194 - 195 history of, 189 - 191 sinking profits, 195 split of, 198 - 200 superstore concept, 189 - 191


market factors digital devices, 202 leisure time choices, 201 reading habits, 201 sales trends, 200 - 201

publishers, 202 - 205 Big Five publishers, 203 spat with Amazon, 204 - 205

wholesalers, 203 Borders, 190 - 191 , 195 bottom of income pyramid, technology

at, 121 - 126 benefits and challenges, 121 - 122 energy, 125 - 126

255 Index

health services, 124 nutrition and crop protection, 124 - 125 potable water, 123 - 124 telecommunications, 122 - 123

BP (British Petroleum), 125 Deepwater Horizon oil spill, 59 - 61

branching out by Intel, 155 - 156 British Petroleum. See BP (British

Petroleum) Brown, Peter, 120 Bryant, Bear, 240 B-type Natriuretic Peptide (BNP), test

for, 14 Build Your Own Cloud (Acer), 185 building energy, 136 - 138 Business Environmental Leadership

Council, 59

C cable companies. See entertainment

companies cable TV, abandonment by younger

viewers, 243 - 245 cadmium tullride (Cdte), 139 Calico research venture, 95 Capital Cities, merger with Disney,

235 - 236 Capitalism, Socialism, and Democracy

(Schumpeter), 1 Carlson Companies, 220 cars, electric, 27 - 32

1990’s failures, 29 advantages, 28 affordability, 30 - 31

battery subsidies, 29 - 30 hybrid successes, 29 range limitations, 28 Tesla and Panasonic, 30

Carville, James, 106 Case, Steve, 237 , 239 “a category of one” (Charles Schwab),

215 - 216 CBS, 204 , 233 , 239 CDC (Centers for Disease Control and

Prevention), 123 Cdte (cadmium tullride), 139 Celeron processor, 153 central processing units (CPUs), 165 Centrino, 156 Charles Schwab

competition among discount brokers, 218 - 219

enhancement of Internet platform, 222 - 224

ranking the platforms, 223 robo-advisor, 223 - 224

evolution of, 214 - 217 affluent of the future, 216 “a category of one”, 215 - 216 discounting, 214 - 215 following customers, 216 - 217 high net worth clients, 215

financial performance (2015), 209 - 210 Chen, Jason, 168 Chiesi Pharmaceuticals, 92 chip technologies, 13 Chromebook (Acer), 183 CIA post-9/11 scenarios, 99 - 101

256 Index

Cialdini, Robert, 137 CIGS (copper indium gallium selenide),

139 Circuit City, 214 CIS (copper indium selenide), 139 Cisco, 181 classic tort law, 78 cleaner energy, 135 - 145

biofuels, 143 - 145 building energy, 136 - 138 energy storage, 142 - 143 industrial and commercial energy, 138 progress and challenges, 135 - 136 solar power, 138 - 140 wind power, 140 - 142

Clerity Solutions, 181 clock rate, 165 cloud-based services

Acer, 185 Amazon, 197 - 198

CNN, 242 Coca-Cola Bottling Co., 80 cochlear implants

auxiliary services, 24 barriers to commercialization, 20 - 21 breakthroughs in other disciplines, 21 championing of, 22 costs, 23 early research, 21 FDA approval, 23 lack of enthusiasm from user

community, 23

multiple developmental paths, 22 new entrants to industry, 24 private firms’ failure to cooperate, 22 professional endorsements, 22 - 23 safety and efficacy concerns, 23 - 24 withdrawal of original companies, 24

Cochlear Limited, 24 cognitive limits

experts’ cognitive limits, 64 individual cognitive limits, 64 organizations’ cognitive limits, 64 - 65

Cohen, Stephen, 107 Coleman, Ed, 176 college division of Barnes & Noble,

199 - 200 The Columbia History of the World

(Garrity), 194 Columbia Pictures, 233 combating terror, 106 - 108

aircraft protection, 108 biometrics, 107 explosives-detection technology, 108 network-centric operations, 107 nonlethal weapons, 107 - 108 Palantir Technologies, 106 - 107

Comcast, 229 , 234 comeback plans

Acer, 183 - 185 free cloud computing service, 185 IOT (Internet of Things), 185 notebooks, 183 smartphones, 183 - 184

257 Index

Best Buy, 220 - 222 cost savings and product innovation,

221 - 222 improving e-commerce platform,

220 - 221 reverse showrooming, 221 shipping from stores, 220

Dell, 177 - 183 becoming a private company,

182 - 183 enterprise market and acquisitions,

181 - 182 profit margins and revenue growth

changes for major computer vendors, 179 - 180

revenue and employees of major computer vendors, 177 - 179

comedies, 44 The Coming of Post-Industrial Society: A

Venture in Social Forecasting (Bell), 2 commercial energy efficiency, 138 commercialization, 19

challenge of, 18 cochlear implants, 20 - 24

auxiliary services, 24 barriers to commercialization, 20 - 21 breakthroughs in other disciplines,

21 championing of, 22 costs, 23 early research, 21 FDA approval, 23 lack of enthusiasm from user

community, 23 multiple developmental paths, 22 new entrants to industry, 24

private firms’ failure to cooperate, 22

professional endorsements, 22 - 23 safety and efficacy concerns, 23 - 24 withdrawal of original companies,

24 electric cars, 27 - 32

advantages of, 28 affordability, 30 - 31 battery subsidies, 29 - 30 hybrid successes, 29 1990’s failures, 29 range limitations, 28 Tesla and Panasonic, 30 weak plug-in sales, 29

Monsanto case study, 24 - 27 competition from DuPont, 27 environmentalists’ criticisms, 26 - 27 government restrictions, 26 opposition, 25 promised progress, 26 rapid U.S. market penetration,


obstacles to inclination to undertake safe

projects, 36 insufficient project management,

35 - 36 market needs, 36 - 37 uncertain government support,

34 - 35 persistence and determination, 37 setbacks, 33 - 34 Xerox case study, 19 - 20 , 32 - 33

258 Index

committing with fallbacks, 49 - 50 commoditization

Acer case study Acer’s acquisition of Gateway,

176 - 177 decline in PC industry, 170 efforts at revitalization, 183 - 185 financial performance for 2015,

168 - 172 overview, 167 - 168

Dell case study decline in PC industry, 170 financial performance 2009-2013,

168 - 172 history and growth of, 170 - 171 mass customization and direct

model, 171 - 173 overview, 167 - 168 plans for recovery, 177 - 183 resignation of Michael Dell, 174 - 176 sales and operating margins for Dell

and Gateway, 1994-1999, 173 - 174 Compellent, 181 competition

among discount brokers, 218 - 219 in consumer electronics, 217

complexity, dangerous technologies and, 61 - 62

Composyt, 163 computer power and performance, 13 Conoco, 27 consumer electronics, competition in,

217 . See also Best Buy copper indium gallium selenide (CIGS),

139

copper indium selenide (CIS), 139 Coskata, 144 cost of cochlear implants, 23 Cowherd, Colin, 242 CPU clock speed, 165 CPUs (central processing units), 165 Credant Technologies, 181 criminal charges against Merck, 73 crop protection, 124 - 125 crystalline silicon (c-Si) cells, 139 c-Si (thick-film crystalline silicon) cells,

139 Cycle of Fear post-9/11 scenario, 99 - 101

D dangerous technologies, managing . See

also liability law Deepwater Horizon oil spill, 59 - 61 overview, 55 problems in managing inherently

dangerous technologies, 61 - 66 basics of risk assessment, 63 complexity, 61 - 62 experts’ cognitive limits, 64 individual cognitive limits, 64 inferences from animal studies to

humans, 65 - 66 organizations’ cognitive limits,

64 - 65 quantifying value of human life, 65 tight coupling, 61 - 62

Union Carbide plant explosion (Bhopal, India), 55 - 58

Daniels, Mitch, 59

259 Index

Davos post-9/11 scenario, 99 - 101 Day, George, 43 DC Comics, 234 declining fertility, 88 - 89 Deepwater Horizon oil spill, 59 - 61 delaying until clarity emerges, 49 delegators, 215 Dell

decline of PC industry, 170 financial performance (2015), 168 - 172 history and growth of, 170 - 171 mass customization and direct model,

171 - 173 overview, 167 - 168 plans for recovery, 177 - 183

becoming a private company, 182 - 183

enterprise market and acquisitions, 181 - 182

profit margins and revenue growth changes for major computer vendors, 179 - 180

revenue and employees of major computer vendors, 177 - 179

resignation of Michael Dell, 174 - 176 sales and operating margins for Dell

and Gateway, 1994-1999, 173 - 174 Dell, Michael

founding of Dell, 167 , 170 plans for Dell’s recovery, 177 - 183 resignation from Dell, 174 - 176

Delphi method, 40 demographic transition, challenges of

elderly

declining fertility, 88 - 89 economic impact, 90 - 91 percentage of world population,

87 - 88 reversing aging, 93 - 95 technology to assist elderly, 91 treatments for Alzheimer’s, 91 - 92

overview, 87 technology to combat terror, 106 - 108


young people, 96 - 108 diminishing youth bulges, 102 - 106 hope and disillusion, 96 - 97 meaningful work, 97 - 99 post-9/11 scenarios, 99 - 101

DePuy, 73 , 74 determination, commercialization and,

37 digital devices, bookselling industry

and, 202 diminishing youth bulges, 102 - 106 direct model (Dell), 171 - 173 direct random access memory (DRAM),

165 discount brokers, competition among,

218 - 219 . See also Charles Schwab discounting by Charles Schwab, 214 - 215 Disney

ABC, 236

260 Index

cable’s abandonment by young viewers, 244 - 245

Disney-Capital Cities merger, 235 - 236 dominance and financial performance,

241 - 243 cable channels, 241 - 242 financial performance (2015), 241 studios, 242 - 243

Iger era, 237 Internet initiatives, 243 - 244 mergers, acquisitions, and divestitures,

232 - 235 overview, 229 - 230 vertical integration, 230

Disney, Roy, 236 , 237 disruptions. See technological

disruptions distribution of wealth. See wealth

distribution divesting manufacturing (AMD), 158 divestures by entertainment companies,

232 - 235 DRAM (dynamic random access

memory), 152 - 153 , 165 DreamWorks, 237 DuPont, 27 , 124 dynamic glass, 138 dynamic random access memory

(DRAM), 152 - 153

E E*Trade, 223 eASIC, 138 economic growth, technological changes

and, 1

economic impact of elderly, 90 - 91 Edison, Thomas, 40 8-through-64-bit architectures, 165 Einstein, Albert, 40 Eisner, Michael, 235 Ekdahl, Andrew, 75 Elan, 91 elderly

declining fertility, 88 - 89 economic impact, 90 - 91 percentage of world population, 87 - 88 reversing aging, 93 - 95



technology to assist elderly, 91 treatments for Alzheimer’s, 91 - 92

electric cars, 27 - 32 advantages, 28 affordability, 30 - 31 battery subsidies, 29 - 30 hybrid successes, 29 1990’s failures, 29 range limitations, 28 Tesla and Panasonic, 30

Elgin, Suzette Haden, 194 Eli Lilly, 92 Elysium Health, 93 - 94 eMachines, 176 Emerging Markets strategy (hedge

funds), 118

261 Index

energy . See also batteries cleaner energy, 3 , 135 - 145

biofuels, 143 - 145 building energy, 136 - 138 energy storage, 142 - 143 industrial and commercial energy,


energy storage, 142 - 143 fossil fuels, 130 - 135

hydraulic fracking, 132 - 133 offshore recovery, 134 - 135 oil price declines, 130 - 132 tar sands, 133 - 134

nuclear power, 129 technology to benefit the poor,

125 - 126 Energy Policy Act, 35 entertainment companies

cable’s abandonment by young viewers, 244 - 245

Disney ABC, 236 Disney-Capital Cities merger,

235 - 236 dominance and financial

performance, 241 - 243 financial performance (2015), 241 Iger era, 237 vertical integration, 230

Internet initiatives, 243 - 244 mergers, acquisitions, and divestitures,

232 - 235

overview, 229 - 230 streaming services, 244 - 245 Time Warner

AOL-Time Warner merger, 237 cable holdings, 241 - 242 financial performance (2015), 241 HBO, 240 vertical integration, 231 - 232

environmentalists’ criticisms of Monsanto, 26 - 27

Equity Market Neutral strategy (hedge funds), 118

e-readers, 202 ESPN, 230 , 240 , 242 ethanol, 143 - 145 Ethicon, 73 Event-Driven strategy (hedge funds),

118 everolimus, 95 evolution

of Amazon, 191 - 194 of Barnes & Noble, 189 - 191 of Best Buy, 210 - 214

1983-1989, 211 1990-2001, 211 - 212 2002-2007, 212 - 214 aftermath of financial meltdown,

214 of Charles Schwab, 214 - 217

affluent of the future, 216 “a category of one,” 215 - 216 discounting, 214 - 215 following customers, 216 - 217 high net worth clients, 215

of Dell, 170 - 171

262 Index

expert opinion managing uncertainty with, 41 uncertainty and, 40 - 41

experts’ cognitive limits, dangerous technologies and, 64

explosion at Union Carbide plant (Bhopal, India), 55 - 58

explosives-detection technology, 108 Eyefluence, 163

F Fabricant, Daniel, 94 fallbacks, committing with, 49 - 50 fault-based liability, movement away

from, 80 FDA

approval of cochlear implants, 23 investigation of Johnson & Johnson

hip replacements, 75 Vioxx warning, 71

FedEx, 50 fertility rates, 88 - 89 fiber optics, 13 field-programmable gate array (FPGA)

chips, 162 Fitzgerald, Garret, 70 five-forces-plus model, 42 Fixed Income Arbitrage strategy (hedge

funds), 118 flash memory, 165 flow batteries, 142 - 143 Fortune , 232

fossil fuels, 130 - 135 hydraulic fracking, 132 - 133 offshore recovery, 134 - 135 oil price declines, 130 - 132 tar sands, 133 - 134

FPGA (field-programmable gate array) chips, 162

fracking, 132 - 133 From the Earth to the Moon , 240 Fujitsu, 152 - 153 , 156

G Gale Technologies, 181 gallium nitride (GaN), 138 gambling on most probable outcome,

47 - 48 game theory, 32 - 33 gaming market, 159 - 160 GaN (gallium nitride), 138 Garrity, John, 194 Gateway

Acer’s acquisition of, 176 - 177 sales and operating margins for Dell

and Gateway, 1994-1999, 173 - 174 GE Healthcare, 124 Geek Squad, 213 General Motors, 27 , 29 genetic technology, 15

Monsanto case study, 24 - 27 competition from DuPont, 27 environmentalists’ criticisms, 26 - 27 government restrictions, 26 opposition, 25

263 Index

promised progress, 26 rapid U.S. market penetration,


genetics, 2 genome, mapping of, 15 The Gentle Art of Verbal Self-Defense

(Elgin), 194 Gettings, Nathan, 107 Gevo, 144 Gini index, 112 glass, dynamic, 138 global antitrust litigation (AMD), 157 Global Climate Coalition, 59 global inequality

within-country gaps, 112 between-country gaps, 112 - 113 overview, 111 rise of neoliberalism, 115 - 116 technology at bottom of income

pyramid, 121 - 126 benefits and challenges, 121 - 122 critiques, 125 - 126 energy, 125 health services, 124 nutrition and crop protection,

124 - 125 potable water, 123 - 124 telecommunications, 122 - 123

technology at top of income pyramid, 117 - 121

hedge funds, 118 - 121 sophisticated models, 117

U.S. wealth gap, 113 - 115

Global Macro strategy (hedge funds), 118

global security, demography and elderly

declining fertility, 88 - 89 economic impact, 90 - 91 percentage of world population,

87 - 88 reversing aging, 93 - 95 technology to assist elderly, 91 treatments for Alzheimer’s, 91 - 92

overview, 87 technology to combat terror, 106 - 108


young people, 96 - 108 diminishing youth bulges, 102 - 106 hope and disillusion, 96 - 97 meaningful work, 97 - 99 post-9/11 scenarios, 99 - 101

global sustainability cleaner energy, 135 - 145

biofuels, 143 - 145 building energy, 136 - 138 energy storage, 142 - 143 industrial and commercial energy,


264 Index


Monsanto, 25 overview, 129 - 130

GlobalFoundries, 158 Gold, Stanley, 237 government support, commercializa-

tion and, 34 - 35 Graham, David, 72 Grameen, 122 - 123 Graphene Energy, 143 Grassley, Charles, 72 Guarente, Leonard, 93

H Hachette, 204 Halliburton, 60 Hammer technology (AMD), 156 - 157 Hand, Learned, 79 Hanks, Tom, 240 HarperCollins, 204 HBO, 240 HBO NOW, 243 health services, technology to benefit

the poor, 124 heart disease, treatments for, 13 - 14 hedge funds, 118 - 121

Renaissance Technologies (RenTech), 120 - 121

standards for qualified purchasers, 119 trading strategies, 118

hedging uncertainty committing with fallbacks, 49 - 50 delaying until clarity emerges, 49 expert opinion, 40 - 41 industry analysis, 42 overview, 39 robust strategies, 48 - 49 scenarios, 42 - 46

applying scenario logic to technology commercialization, 45

gambling on most probable outcome, 47 - 48

narrative details, 44 romances, tragedies, and comedies,

44 strategic adjustments, 46 surprises, 43 taking notice of periphery, 43 - 44

shaping the future, 50 trends, 40

high net worth clients of Charles Schwab, 215

hip replacements (Johnson & Johnson), 73 - 77

acquisition of DePuy, 74 all-metal replacement design, 74 - 75 FDA investigations, 75 lawsuits against Johnson & Johnson,

76 prior reputation of Johnson &

Johnson, 74 reimbursement plan, 76 - 77 voluntary recall, 75 - 76

265 Index

history of Amazon, 191 - 194 of Barnes & Noble, 189 - 191 of Best Buy, 210 - 214

1983-1989, 211 1990-2001, 211 - 212 2002-2007, 212 - 214 aftermath of financial meltdown,

214 of Charles Schwab, 214 - 217

affluent of the future, 216 “a category of one”, 215 - 216 discounting, 214 - 215 following customers, 216 - 217 high net worth clients, 215

of Dell, 170 - 171 of technological changes, 1

Hitachi, 152 HLI Lifecare LifeSpring, 124 Honda, 27 , 29 House, William, 22 HP, 181 Hubbert, M. King, 130 Hulu, 237 human life, value of, 65 Huseby, Michael, 198 , 199 Husk Power Systems, 125 hydraulic fracking, 132 - 133 Hyundai, 152

I IBM, 97 Icahn, Carl, 182 , 239

ideas, power of alternative energy, 16 artificial intelligence, 16 genetic technology, 15 IT (information technology), 12 - 13 material sciences, 16 - 17 medical technologies, 13 - 15 nanotechnology, 16 - 17

IEA (International Energy Agency), Iger, Robert, 237 , 243 IISC (Indian Institute of Science), 125 inclination to undertake safe projects,

36 income distribution. See wealth

distribution Indian Institute of Science (IISC), 125 individual cognitive limits, dangerous

technologies and, 64 industrial and commercial energy, 138 industry analysis, managing uncertainty

with, 42 inferences from animal studies to

humans, 65 - 66 information revolution, 2 information technology (IT), 12 - 13 Ingram, 203 innovation

theoretical knowledge as source of innovation, 11 - 12

waves of, 1 Inouye, Wayne, 176 Institutional Intelligent Portfolios

(Charles Schwab), 223 - 224

266 Index

Intel, mobile technology and battles between Intel and AMD,

152 - 158 AMD Hammer technology, 156 - 157 branching out by Intel, 155 - 156 divesting manufacturing, 158 global antitrust litigation, 157 graphics and other products, 157 memory, 152 - 153 microprocessors, 153 speed and price wars, 154 - 155 sub-zero segment, 153 - 154






(FPGA) chips, 162 gaming, 159 - 160 Internet of Things (IoT), 162 - 163 mobile, 159 mobile losses, 160 risks, 164 smart glasses and augmented reality,


International Energy Agency (IEA), Internet of Things (IoT), 162 - 163 , 185

Internet platform (Charles Schwab), 222 - 224

ranking the platforms, 223 robo-advisor, 223 - 224

Internet use, 12 IoT (Internet of Things), 162 - 163 , 185 iPad, 179 IT (information technology), 12 - 13

J J&J. See Johnson & Johnson (J&J) Jobs, Steve, 20 , 156 Johnson & Johnson (J&J), 49

Bapineuzumab, 91 hip replacement components, 73 - 77


76 prior reputation of Johnson & John-

son, 74 reimbursement plan, 76 - 77 voluntary recall, 75 - 76

Joly, Hubert, 220 The Junction Boys , 240

K KACE Networks, 181 Kandel, Eric, 94 Karp, Alex, 107 Karplus, Martin, 94 Katzenbert, Jeffrey, 235 , 237

267 Index

Kindle, 196 Kior, 143 - 144 Kiva robots, 97 Kleiner Perkins Caufield & Byer, 191 Knight, Bobby, 240 Kodak, 13 , 49 Kondratiev, Nikolai, 1 Krzanich, Brian, 160 Kyoto Protocol, 35

L law, liability law, 69

assumption of risk, 78 classic tort law, 78 evolution of, 77 Johnson & Johnson hip replacement

case study, 73 - 77 movement away from fault-based

system, 80 overview, 77 punitive action, 78 recent refinements in, 81 strict liability, 79 - 80 Vioxx case study, 69 - 73

lawsuits against Johnson & Johnson, 76 MacPherson v. Buick Motor Co., 79 against Merck, 72 - 73 United States v. Carroll Towing Co.,

79 LBO (leveraged buyout), 182 lead-acid batteries, 142 Leaf, 30

LED lights, 137 LEED (Leadership in Energy &

Environmental Design) program, 137 leisure time choices, bookselling

industry and, 201 Lemoptix, 163 Lenovo, 169 leveraged buyout (LBO), 182 Levin, Jerry, 237 LG Chem, 29 liability law, 69

assumption of risk, 78 classic tort law, 78 evolution of, 77 Johnson & Johnson hip replacement

case study, 73 - 77 acquisition of DePuy, 74 all-metal replacement design, 74 - 75 FDA investigations, 75 lawsuits against Johnson & Johnson,



movement away from fault-based system, 80

overview, 77 punitive action, 78 recent refinements in, 81 strict liability, 79 - 80 Vioxx case study, 69 - 73

communication failures, 71 criminal charges against Merck, 73 criticism of Vioxx, 72

268 Index

development of Vioxx, 70 early warnings, 70 - 71 FDA’s required warning, 71 lawsuits against Merck, 72 - 73 reputation of Merck prior to Vioxx,

70 voluntary recall, 72

life expectancy, 88 LinkedIn, 50 Liquid Leap wristband (Acer), 185 lithium-ion batteries, 16 , 142 The Long Wave Cycle (Kondratiev), 1 Lonsdale, Joe, 107 Lucas film, 234 Lynch, William, 198

M Macmillan, 204 MacPherson v. Buick Motor Co., 79 Magnolia Design Centers, 222 Maker Studios, 234 Malthus, Thomas, 1 managing

danger . See also liability law Deepwater Horizon oil spill, 59 - 61 overview, 55 problems in managing inherently

dangerous technologies, 61 - 66 Union Carbide plant explosion

(Bhopal, India), 55 - 58 uncertainty

expert opinion, 40 - 41 industry analysis, 42

overview, 39 scenarios, 42 - 46 trends, 40

market needs, commercialization and, 36 - 37

Marvel Entertainment, 234 Mascoma, 144 mass customization (Dell), 171 - 173 material sciences, 3 , 16 - 17 McAfee, 158 McNeill, 73 Medallion Fund, 120 - 121 MED-E, 24 medical technologies, 2 , 13 - 15

Alzheimer’s, treatments for, 91 - 92 cochlear implants, 20 - 24

auxiliary services, 24 barriers to commercialization, 20 - 21 breakthroughs in other disciplines,

21 championing of, 22 costs, 23 early research, 21 FDA approval, 23 lack of enthusiasm from user

community, 23 multiple developmental paths, 22 new entrants to industry, 24 private firms’ failure to cooperate,

22 professional endorsements, 22 - 23 safety and efficacy concerns, 23 - 24 withdrawal of original companies,

24

269 Index

hip replacements (Johnson & Johnson), 73 - 77




reversing aging, 93 - 95 Bimagrumab, 95 Calico research venture, 95 Metformin, 44 NAD (nicotinamide adenine


Vioxx, 66 , 69 - 73 communication failures, 71 criminal charges against Merck, 73 criticism of Vioxx, 72 development of Vioxx, 70 early warnings, 70 - 71 FDA’s required warning, 71 lawsuits against Merck, 72 - 73 reputation of Merck prior to Vioxx,


memory battles between Intel and AMD,

152 - 153 DRAM (dynamic random access

memory), 165 flash memory, 165

Mercer, Bob, 120 Merck

treatments for Alzheimer’s, 92 Vioxx case study, 66 , 69 - 73

communication failures, 71 criminal charges against Merck, 73 criticism of, 72 development of, 70 early warnings, 70 - 71 FDA’s required warning, 71 lawsuits against Merck, 72 - 73 reputation of Merck prior to Vioxx,


mergers in entertainment industry, 232 - 235

Metformin, 44 methyl isocyanate (MIC), 56 . See also

explosion at Union Carbide plant (Bhopal, India)

Meyer, Dirk, 158 Meyerson, Morton, 170 microprocessors, 153 , 165 . See also

mobile technology Microsemi, 162 Microsoft, 222 Mill, John Stuart, 1 mind, power of. See ideas, power of Mitsubishi, 152 mobile revolution, 149 - 151

computer company finances (2015), 151

income, revenue, and market cap in computer industry (2015), 150

revenue growth in computer industry (2015), 151

270 Index

mobile technology battles between Intel and AMD,

152 - 158 AMD Hammer technology, 156 - 157 branching out by Intel, 155 - 156 divesting manufacturing, 158 global antitrust litigation, 157 graphics and other products, 157 memory, 152 - 153 microprocessors, 153 speed and price wars, 154 - 155 sub-zero segment, 153 - 154






(FPGA) chips, 162 gaming, 159 - 160 Internet of Things (IoT), 162 - 163 mobile, 159 mobile losses, 160 new leadership at AMD, 160 - 161 risks, 164 smart glasses and augmented reality,


Model S (Tesla), 30 - 31 models

five-forces-plus model, 42 trading models, 117

Monsanto, 15 , 24 - 27 competition from DuPont, 27 environmentalists’ criticisms, 26 - 27 government restrictions, 26 opposition, 25 promised progress, 26 rapid U.S. market penetration, 25 - 26 sustainability as corporate goal, 25

Moore, Gordon, 153 Moore’s Law, 153 Murdoch, Rupert, 204 , 229 Musicland Group, 212

N NAD (nicotinamide adenine

dinucleotide), 93 - 94 Nanotechnology, 3 , 16 - 17 Napster, 217 narrative details, 44 National Semiconductor, 153 NBC, 233 NBCUniversal, 229 , 234 , 237 NEC, 152 , 153 neoliberalism, rise of, 115 - 116 Nest, 137 Netronome, 162

271 Index

network-centric operations, 107 Neurelec, 24 New Caliphate post-9/11 scenario,

99 - 101 New Deal policies, 116 News Corp, 229 , 233 , 234 nickel-based aqueous batteries, 142 nickel-cadmium batteries, 142 nickel-metal hydride batteries, 142 Nickelodeon, 242 nicotinamide adenine dinucleotide

(NAD), 93 - 94 nonlethal weapons, 107 - 108 Nook, 198 - 200 notebooks (Acer), 183 Noyce, Robert, 153 nuclear power, 129 Nucleus, 22 Nurotron, 24 nutrition, 124 - 125 NVidia, 161

O obstacles to commercialization . See also

commercialization inclination to undertake safe projects,

36 insufficient project management,

35 - 36 market needs, 36 - 37 uncertain government support, 34 - 35

Office of Health Technology Assess-ment (OHTA), 23

offshore oil production, 134 - 135 OHTA (Office of Health Technology

Assessment), 23 oil. See fossil fuels oil spills. See Deepwater Horizon oil

spill Oki, 152 Olbermann, Keith, 242 online competition, Best Buy and,

217 - 218 Only the Paranoid Surviv e (Grove), 152 Opower, 137 Opteron, 156 - 157 optical memory systems, 13 Orcam, 163 organizations’ cognitive limits,

dangerous technologies and, 64 - 65 Otellini, Paul, 158 , 160

P P&G (Proctor & Gamble), 123 Pacific Kitchen and Homes, 222 Packard Bell, 176 Palantir Technologies, 106 - 107 Palo Alto Research Center (PARC), 19 Panasonic, 30 - 32 parallel processing, 13 Paramount, 233 PARC (Palo Alto Research Center), 19 Parsons, Dick, 237 - 240 Pax Americana post-9/11 scenario,

99 - 101

272 Index

Pearson, 204 Penguin Random House, 204 Pentium clones, 153 Pentium processors, 153 periphery, taking notice of, 43 - 44 Perot Systems, 181 Perrow, Charles, 61 persistence, commercialization and, 37 Pfizer, 91 photovoltaics (PVs), 138 - 140 Pinnacle Hip Replacement System. See

hip replacements (Johnson & Johnson) Pittman, Robert, 237 Pixar, 234 - 235 , 237 plague in brain, blocking, 91 - 92 plans for recovery. See comeback plans Playmakers , 240 Porter, Michael, 42 post-9/11 scenarios, 99 - 101 post-industrialism, 11 - 12 potable water, 123 - 124 powers of the mind. See ideas, power of preterm babies, treatment of, 14 price wars, Intel and AMD, 154 - 155 Prius, 29 probable outcome, gambling on, 47 - 48 problems in managing inherently

dangerous technologies, 61 - 66 basics of risk assessment, 63 complexity, 61 - 62 experts’ cognitive limits, 64 individual cognitive limits, 64 inferences from animal studies to

humans, 65 - 66

organizations’ cognitive limits, 64 - 65 quantifying value of human life, 65 tight coupling, 61 - 62

Proctor & Gamble (P&G), 123 Product Value Lab (Acer), 176 production tax credit (PTC), 35 professional endorsements of cochlear

implants, 22 - 23 project management, commercializa-

tion and, 35 - 36 PTC (production tax credit), 35 Public Utility Regulatory Policies Act

(PURPA), 35 publishers, 202 - 205

Big Five publishers, 203 spat with Amazon, 204 - 205 wholesalers, 203

punitive action, 78 PURPA (Public Utility Regulatory

Policies Act), 35 PVs (photovoltaics), 138 - 140

Q In-Q-Tel, 106 quantifying value of human life, 65 Quantum Investment Fund, 118

R Rand Corporation, 40 ranking discount broker platforms, 223 rapamycin, 94 - 95 Read, Rory, 159 , 160 reading habits, 201

273 Index

RealNetworks, 217 recalls

Johnson & Johnson hip components, 75 - 76

Vioxx, 72 Recon Instruments, 163 recovery plans. See comeback plans Redstone, Sumner, 239 reimbursement plan (J&J), 76 - 77 Renaissance Technologies (RenTech),

120 - 121 RenTech (Renaissance Technologies),

120 - 121 reversing aging, 93 - 95



Rhapsody, 217 Ricardo, David, 1 Rice, Condoleezza, 106 Riggio, Leonard, 189 Riggio, Steve, 195 rise of neoliberalism, 115 - 116 risks

assessment of, 63 assumption of, 78 Intel and AMD market risks, 164

Roadster, 30 Robertson, Julian, 118 robo-advisor (Charles Schwab), 223 - 224

robust strategies, 48 - 49 Rodman, Dennis, 240 Rollins, Kevin, 174 romances, 44 Ruiz, Hector, 152

S safe projects, commercialization and, 36 sales trends (bookselling), 200 - 201 Samsung, 152 , 222 Sanders, Jerry, 153 SanDisk, 217 scarcity. See global sustainability scenarios

energy future scenarios, 130 managing uncertainty with, 42 - 46


committing with fallbacks, 49 - 50 delaying until clarity emerges, 49 narrative details, 44 robust strategies, 48 - 49 romances, tragedies, and comedies,

44 shaping the future, 50 strategic adjustments, 46 surprises, 43 taking notice of periphery, 43 - 44

post-9/11 scenarios, 99 - 101 Schoemaker, Paul, 43 Schumpeter, Joseph, 1 Scottrade, 219 , 223

274 Index

Seagram, 233 search for new markets, Intel and AMD,

158 - 164 ARM architecture, 159 field-programmable gate array

(FPGA) chips, 162 gaming, 159 - 160 Internet of Things (IoT), 162 - 163 mobile, 159 mobile losses, 160 new leadership at AMD, 160 - 161 risks, 164 smart glasses and augmented reality,

163 - 164 A Season on the Brink , 240 Second Restatement of Torts, 80 SecureWorks, 181 security. See global security,

demography and Sehgal, Suren, 94 self-directed investors, 215 senior citizens. See elderly setbacks to commercialization, 33 - 34 Sevin, 56 Sex and the City , 240 shaping the future, 50 Shell, 42 Shih, Stan, 176 , 185 shipping from stores (Best Buy), 220 showrooming, 218 , 221 Silver Lake Partners, 182 Simmons, Bill, 242 Simon & Schuster, 204 Simons, Jim, 120

Sinclair, David, 93 Sirtris Pharmaceuticals, 93 smart glasses, 163 - 164 smartphones, 12 - 13

Acer, 183 - 184 overview . See also mobile technology

Smith, Adam, 1 sodium-nickel-chloride batteries, 142 Solae, 124 solanezumab, 92 solar power, 16 , 138 - 140 solar thermal (ST) energy, 138 - 140 Solyndra, 140 SonicWall, 181 Sony, 47 , 233 The Sopranos , 240 Soros, George, 118 Sound of Music, 211 Southwest Airlines, 50 SparkNotes, 194 split of Barnes & Noble, 198 - 200

college division, 199 - 200 Nook, 198 - 200

Sports Illustrated , 232 Spotify, 50 Spring Networks, 137 ST (solar thermal) energy, 138 - 140 Steinhardt, Michael, 118 Storz, 22 strategic adjustments, 46 streaming services, 244 - 245 Streptomyces hygroscopicus, 94 strict liability, 79 - 80 Su, Lisa, 160

275 Index

sub-zero segment, 153 - 154 Südhof, Thomas, 94 superstore concept (Barnes & Noble),

189 - 191 surgical procedures, 14 surprises, uncertainty and, 43 sustainability

cleaner energy, 135 - 145 biofuels, 143 - 145 building energy, 136 - 138 energy storage, 142 - 143 industrial and commercial energy,



Monsanto, 25 overview, 129 - 130

Sweeny, Anne, 236 Symbian, 22 Szostak, Jack, 94

T Tabula, 162 Taiwan Semiconductor (TSMC), 164 taking notice of periphery, 43 - 44 tar sands, 133 - 134

taxes, impact on distribution of U.S. income, 113 - 114

TBS, 242 TD Ameritrade, 223 TD Waterhouse, 219 technological disruptions

alternative energy, 16 artificial intelligence, 16 explained, 11 genetic technology, 15 importance of, 1 material sciences, 16 - 17 medical technologies, 13 - 15 nanotechnology, 16 - 17 theoretical knowledge as source of

innovation, 11 - 12 waves of innovation, 1

telecommunications technology to benefit the poor, 122 - 123

Telefonica, 181 Tenet, George J., 106 terror, combating, 106 - 108


Tesla, 30 - 32 Tetlock, Philip, 40 theoretical knowledge as source of

innovation, 11 - 12 Thiel, Peter, 107 third-party selling by Amazon, 193 - 194

276 Index

3M, 22 tight coupling, 61 - 62 Time , 234 Time Warner

AOL-Time Warner merger, 237 cable holdings, 241 - 242 cable’s abandonment by young

viewers, 244 - 245 financial performance (2015), 241 HBO, 240 Internet initiatives, 243 - 244 mergers, acquisitions, and divestitures,

232 - 235 overview, 229 - 230 vertical integration, 231 - 232

TNT, 242 top of income pyramid, technology at,

117 - 121 hedge funds, 118 - 121

Renaissance Technologies (RenTech), 120 - 121

standards for qualified purchasers, 119

trading strategies, 118 sophisticated trading models, 117

Topol, Eric, 71 tort law, 78 Touchstone, 236 Toyota, 27 , 29 trading models, 117 tragedies, 44 transfers, impact on distribution of U.S.

income, 113 - 114 Transocean, 60 Transphorm, 138

treatments. See medical technologies trends

bookselling sales trends, 200 - 201 uncertainty and, 40

TSMC (Taiwan Semiconductor), 164 turbines, 140 - 142 Turner, Ted, 237 Twentieth Century Fox, 229 20th Century Fox studios, 233 - 234 , 237

U Uber, 50 uncertainty

committing with fallbacks, 49 - 50 delaying until clarity emerges, 49 expert opinion, 40 - 41 gambling on most probable outcome,

47 - 48 historical analogies, 41 industry analysis, 42 overview, 39 robust strategies, 48 - 49 scenarios, 42 - 46


narrative details, 44 romances, tragedies, and comedies,

44 strategic adjustments, 46 surprises, 43 taking notice of periphery, 43 - 44

trends, 40 uncertain government support,

commercialization and, 34 - 35

277 Index

Union Carbide case study (Bhopal, India), 55 - 58

Union Carbide plant explosion (Bhopal, India), 55 - 58

United States v. Carroll Towing Co., 79 Universal Studios, 233

V validators, 215 value of human life, quantifying, 65 vanadium flow batteries, 142 Verlagsgruppe Georg von Holtzbrinck

group, 204 vertical integration

Disney, 230 Time Warner, 231 - 232

Via Technologies, 153 Viacom, 229 , 233 , 239 Vioxx, 66 , 69 - 73

communication failures, 71 criminal charges against Merck, 73 criticism of Vioxx, 72 development of Vioxx, 70 early warnings, 70 - 71 FDA’s required warning, 71 lawsuits against Merck, 72 - 73 reputation of Merck prior to Vioxx, 70 voluntary recall, 72

Volt, 29 Volta, Alessandro, 21 voluntary recalls. See recalls Vuzix, 163

W Walden Books, 190 WALK method, 213 Walmart, 217 Washington Post , 11.105 water, potable, 123 - 124 waves of innovation, 1 wealth distribution

within-country gaps, 112 between-country gaps, 112 - 113 overview, 111 rise of neoliberalism, 115 - 116 technology at bottom of income

pyramid, 121 - 126 benefits and challenges, 121 - 122 energy, 125 - 126 health services, 124 nutrition and crop protection,

124 - 125 potable water, 123 - 124 telecommunications, 122 - 123

technology at top of income pyramid, 117 - 121

hedge funds, 118 - 121 sophisticated models, 117

U.S. wealth gap, 113 - 115 weapons, nonlethal, 107 - 108 The Weather Channel, 242 websites, BarnesAndNoble.com, 194 West, Tony, 73 wholesalers (book industry), 203

278 Index

“willingness to pay” criteria, 65 wind power, 16 , 140 - 142 within-country gaps (wealth

distribution), 112 World Resources Institute (WRI), 123 WRI (World Resources Institute), 123

X Xeon processor, 154 Xerox, 19 - 20 , 32 - 33 , 35

Y Yeh, Carolyn, 176 young people, 96 - 108

abandonment of cable industry, 244 - 245

diminishing youth bulges, 102 - 106 hope and disillusion, 96 - 97 meaningful work, 97 - 99 post-9/11 scenarios, 99 - 101 technology to combat terror, 106 - 108


youth bulges, diminishing, 102 - 106

Z Zilog, 153 zinc-bromide flow batteries, 142

The Future of Technology Management

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