Your company may be sitting on a hidden treasure. The technologies underlying your core business could have lucrative applications beyond the ones that you provide to your current customers. However, if your company is like others we have studied, you aren’t pursuing those opportunities, or you’re doing it half-heartedly at best.
In recent years, we have researched or provided consulting to several dozen organizations in the United States and Europe. In doing so, we have frequently identified untapped opportunities where fungible technologies might deliver significant benefits to customers in diverse industries.
Companies are often successful at applying technologies to new products for the customers they already serve. But they frequently stumble when they try to leverage their technologies in new markets. Determining how to go about applying one’s technologies to different markets isn’t obvious. The goal of this article is to help managers find and address applications outside of the businesses for which a technology was originally developed. We call this process “technology leveraging” — applying technological competence to customers the company does not yet serve.1
Consider Kuka AG, a producer of industrial robots headquartered in Augsburg, Germany. At the end of the 1990s, the company began looking for opportunities to apply its robotics technologies outside of manufacturing. The search led to the establishment of a new division aimed at the entertainment and simulation sectors. In 2010, the company’s robots became the core element of Universal Studios Florida’s Harry Potter and the Forbidden Journey ride. During the ride, the robotic arms dive, turn, and pivot in synchrony with projected images, giving participants the illusion of extreme movement. The new business provided Kuka, recently purchased by Midea Group Co. Ltd. of Guangdong, China, with a new source of revenue and profits.2
In our experience, only a small number of companies make a deliberate effort to tap the potential for business outside their core markets. As a result, most companies miss out on potential profits and avenues for growth and renewal. Society also loses because it doesn’t get to reap the benefits of technological progress. Through our research and practical expertise, we have developed a process to help companies better leverage technology. It relies on four steps:
- Characterize the technology.
- Identify potential applications.
- Select from among the identified applications.
- Choose the best entry mode.
1. E. Danneels, “The Process of Technological Competence Leveraging,” Strategic Management Journal 28, no. 5 (May 2007): 511-533.
2. C. Dell’Era, N. Altuna, S. Magistretti, and R. Verganti, “Discovering Quiescent Meanings in Technologies: Exploring the Design Management Practices That Support the Development of Technology Epiphanies,” Technology Analysis & Strategic Management 29, no. 2 (2017): 149-166.
3. A. King and K.R. Lakhani, “Using Open Innovation to Identify the Best Ideas,” MIT Sloan Management Review 55, no. 1 (fall 2013): 41-48.
4. M. Bianchi, S. Campodall’Orto, F. Frattini, and P. Vercesi, “Enabling Open Innovation in Small- and Medium-Sized Enterprises: How to Find Alternative Applications for Your Technologies,” R&D Management 40, no. 4 (September 2010): 414-431.
5. M. Bianchi, V. Chiesa, and F. Frattini, “Selling Technological Knowledge: Managing the Complexities of Technology Transactions,” Research-Technology Management 54, no. 2 (2011): 18-26.
6. An online tool such as the one hosted at www.npdportfolio.com can be used to make resource fit and requirement assessments.
7. E. Danneels, “The Dynamics of Product Innovation and Firm Competences,” Strategic Management Journal 23, no. 12 (December 2002): 1095-1121.
8. V. Govindarajan, P.K. Kopalle, and E. Danneels, “The Effects of Mainstream and Emerging Customer Orientations on Radical and Disruptive Innovations,” The Journal of Product Innovation Management 28, no. S1 (November 2011): 121-132.