Technology is changing our world more quickly than anyone ever anticipated. Everything from customer tastes to regulations is forcing companies to develop radically new capabilities in order to compete. So when faced with these major developments, managers are faced with a tough question: build a bridge or blaze a trail?
According to the findings from the study “Alliance Activity as a Dynamic Capability in the Face of a Discontinuous Technological Change” by Jaideep Anand, Raffaele Oriani, and Roberto Vassolo, some managers attempt to develop new technologies in-house while others seek alliances to access those technologies.
Option #1: Blaze a trail & develop new technologies
- Many managers choosing to develop technologies in-house do not realize that existing technologies can be a handicap — not a help.
- Firms with stronger technological capabilities are more likely to enter new domains.
- Remember, even though you aren’t building external relationships, you still need complementary capabilities, such as being proactive in seeking new technologies and having a strong internal development research team.
- Firms with capabilities in traditional technologies do not have an advantage in entering emerging technological fields through internal development. In fact, capabilities in the traditional technology not only decrease the likelihood of entering new domains but also might have a negative effect
Option #2: Build a bridge & form alliances
- Managers seeking alliances may not know that successful alliances require more than connecting technological capabilities.
- Technologically disadvantaged companies also are less likely to enter new domains.
- Firms with good complementary capabilities are more likely to find competent partners and access their capabilities.
- Alliances build the “give-and-take” relationships that effective alliances require. In the study, creating alliances in the pharmaceutical industry gave companies the technology they needed in exchange for testing, marketing and distribution.
If you want to dig deeper into this (and other) of the latest risk research, the full paper and accompanying translation are available on our website.