Perspectives on Various Issues of Interest

Managing Radical Innovation & Paradigm Shifts

Radical change is a normal part of society’s evolution.  In the past century, there have been radical changes in transportation systems ranging from railroads, to automobiles, to airplanes, to jets, and to space shuttles and space exploration.   Radical changes in communication have been driven by telephones, then by radio, television, and related recording devices, and today we see are observing the impact of fiber optics and laser based digital data transport, email, Internet commerce and mobile communications.  These radical innovations have changed the basic fabric of society, and greatly enhanced our ability to communicate and share knowledge.  Today, countries that could never afford traditional fixed communication infrastructures are adopting advanced wireless communication systems. 

While radical innovations are unevenly distributed through time, they are often the drivers of incremental innovations.  Radical innovation typically occurs with new technologies and in new markets.  New technologies are typically untried in practice, lack critical value chain elements, provide limited product advantages, and lack supporting business models.  Radical innovations often create new classes of products or services. The introduction of the heart pacemaker in the 1950s, for example, was dependent upon new battery miniaturization and semiconductor technologies.  The market could not be developed until pacemaker performance was safe and reliable for individual users. 

Miniature batteries combined with semiconductor technology have since driven a whole new portfolio of innovations like hearing aids, electronic toys, and, when combined with even newer technologies, cell phones and low-cost global positioning systems (GPS).  Additional new technologies often stimulate discontinuous product changes that address existing markets.  For example, the “charge coupled device” or CCD allowed for the miniaturization of video cameras.  While the development costs and risks associated with Sony’s 16-year CCD development R&D program were great, Sony’s financial returns for being first-to-market allowed the company to recover all of its development costs within its first year of introduction.  Sony’s miniaturization strategy ultimately resulted in the development of the hand-sized PalmCorder. Once patent protection expires and “copycat” products are introduced, price competition stimulates market growth and eventual market saturation.  Today, new nanotechnologies are accelerating a new phase of miniaturizations including the miniaturization of rockets for space exploration.  New light weight, high strength nanotechnology materials are expected to reduce energy requirements for most transportation systems.  New combinations of technologies, including computers-on-a-chip and wireless or Internet-based communication, are driving more discontinuous and radical innovations.

Unlike evolutionary or incremental innovations, radical innovations typically stimulate the creation of new markets and entry of new competitors.  Players within established markets find that existing capabilities and infrastructures are seldom applicable to radical innovations.  Instead, radical innovations require new infrastructures and capabilities.  Such radical changes are called paradigm shifts. 

While new paradigms stimulate the development of new product-market opportunities, they also require new strategies and capabilities.  This raises questions about the nature of such strategies.  An integrated view of paradigm shifts and competitive priorities poses the following important questions: (i) How should firms manage their competitive priorities while crossing the chasm that separate two paradigms? 

Even though a new paradigm may not have open competition, competitive priorities are still relevant for strategies to cross the chasm between paradigms. In fact, competitive strategies exist across technological paradigms, since existing strategies are being threatened by the new technological paradigms. Each paradigm has its own life cycle of development, with a continuing sequence of competitive priorities leading to continuous improvements.  The performance of existing competitors impacts on the ability of firms with new paradigms from bridging the competitive market chasm, i.e., developing a strategy and capabilities for the paradigm that outperforms existing paradigms.  Hence, in the context of paradigm shifts, it is important to understand that competitive priorities are critical in bridging the chasm.

To cross the chasm, a paradigm’s success strongly depends on its existing capabilities and competitive performance.   This means that quality and cost metrics must first provide the new paradigm with a significant advantage over incumbent paradigms. This is akin to advancing the price/performance frontier. Accordingly, the need to focus on basic competitive performance suggests that quality, dependability, and cost may be critical in bridging the chasm. Flexibility appears to be a priority for maturing markets with more standardized technologies, such as Dell applies to computers.  Such flexibility is seldom a competitive factor in new business.  Quality remains the most important priority and reliability remains entry level priorities. Cost then sets the new paradigm on a growth vector.  The figure below provides a conceptual model of paradigm shifts and their competitive priorities.

Competitive priorities between paradigms must be addressed in the same fashion as competitive priorities within established paradigms. Initially, the success of a new product-market strategy will depend on its competitive value, based on its quality and reliability characteristics, and then its cost.  Once a new paradigm becomes accepted, its competitive success hinges on a steady stream of innovation that sequentially and cumulatively improves competitive quality, dependability, cost and flexibility.

Let's consider an example from the automotive industry as a case in point.  Ford’s initial success with the Model T had nothing to do with flexibility.  However, flexibility had everything to do with GM’s ability to take industry leadership.  While fuel cells may become the dominant paradigm for future vehicle powertrains, they must first achieve competitive quality, dependability, and cost with internal combustion engines. Check out the TED video (recorded in 2005) in which Larry Burns (the former corporate vice president of R&D for GM) introduced GM's Sequel:



For GM’s Sequel car to become a feasible entry into the market, platform must prove itself as a viable family car.  Toyota believes that will take until 2030.  GM’s goal was 2010, but it has yet to see the light of the day.

Fuel cell powertrains will require a new infrastructure, as with the automobile industry of the early 1900s, to ensure the availability of fuel and services. With a basic infrastructure in place, competitive priorities for operational capabilities will be driven by increased competition over quality, dependability, cost and flexibility. Within the new fuel cell paradigm, these competitive priorities will develop and grow in multiple market segments.

Quality acts as an initial competitive priority for strategies to cross the chasm between new and established paradigms. Specifically, quality investments lead to improvement in product and process quality which reduces rework and failures. Meanwhile, quality improvements reduce inspection costs and improve delivery dependability. These cost savings can then be channeled into innovation activities that proactively support competitive priorities as well as improved flexibility and variety as markets mature. 

Managing competitive priorities and capabilities across and within paradigms will be the challenge of tomorrow’s executives. Firms must drive product performance up the S-curve by addressing competitive priorities in the sequence of quality, dependability, cost, and flexibility in both existing and new paradigms.  Each priority becomes the foundation for the next priority, and any neglect in established priorities will only weaken the sand cone.  Beginning with quality improvement, a firm can then improve delivery dependability, cost, and flexibility.  Meanwhile, the resources resulting from quality-driven cost savings can further support activities that move new or existing technologies up the S-curve. Competition between S-curves in established paradigms and S-curves in new paradigms determine whether a firm can cross the chasm of market acceptance. Subsequently, new paradigms will continue to address the competitive priorities to higher levels of performance. Here are some key takeaways:

1. Competitive priorities in an industry require the application of a variety of management practices.
2. Competitive priorities at the productivity frontier will be cumulative and integrated for both new and old paradigms. 
3. Quality, reliability and cost are critical priorities when bridging the chasm between competitive paradigms.

*Joint work with Professor Bill Boulton

Integrating operational and collaborative competencies for competitive advantage

Effective and collaborative supply chain management is increasingly becoming an important source of competitive advantage. Research studies have examined the motivations for collective action via collaborative strategies and alliance structures among firms. Research publications on interorganizational cooperation and the influence of network resources on firm capabilities suggest that a narrow resource-based view of the firm misses the importance and value of resources that constitute part of a firm’s network.  These research studies point towards integrating the traditional operational competence orientation typically encountered in operations strategy literature with the notion of collaboration competence. It can be argued that competitive advantage can be achieved if the individual members in the supply chain can move towards an efficient internal and external integration in the supply chain as well as a good relationship with other supply chain partners.

It has been argued that the process of creating value in the marketplace involves four types of players – customers, suppliers, competitors and complementors. Brandenburger and Nalebuff (1997) represented this conceptualization by means of a “value- net”. When companies join forces often the tendency is to emphasize the legal or financial aspects of the relationship. However, most strategic alliances targeted towards supply chain competitive advantage involve much more. Companies that know how to tap those possibilities, and manage alliances effectively, have a key corporate asset called "collaborative advantage."

The following figure presents a conceptualization of competitive advantage through collaborative supply chain management by means of integrating operational and collaborative competencies:


The notion of operational competence is well ingrained in the existing operations management literature. It has been defined as a ‘patch’ around the point where the product and process structures intersect on the product-process matrix. It has also been defined as the preparedness , skill, or capability that enables manufacturers to prosecute and product-market specific business strategy. It can be observed that an internal orientation is prevalent in almost all of the conceptualizations of competence and the aspect of collaboration is notably absent. 

Many factors have converged over the past few years to provide a new emphasis on partnerships and alliances in manufacturing industries. While economic drivers (such as global competition and downsizing) are the principal forcing factors, advances in computing and communications suggest new and attractive opportunities. 

It has been recognized that by embracing lean production techniques, many companies have become more flexible and responsive to customer demands. However, applying lean techniques to discrete activities is not the end of the road. If individual breakthroughs can be linked up and down the value chain to form a continuous value stream that creates, sells, and services a family of products, the performance on the whole can be raised to a dramatically higher level. The notion of the value stream defines the lean enterprise - a group of individuals, functions, and legally separate but operational synchronized companies. The companies joined together in a lean enterprise must target the best opportunities for exploiting their collective competitive advantage. The information revolution is changing the nature of business and can create competitive advantage for those value-chains who can leverage from it. New information technology is transforming companies' value chains by expanding their capabilities and is improving companies' abilities to exploit linkages between activities in the value chain.  It is important for an organization that instead of focusing on individual elements of corporate strategy: resources, businesses or organization, it develops an insight that turns these elements into an integrated whole. That insight is the essence of competitive advantage - the way a company creates value through the configuration and coordination of its supply chain activities.

Collaboration in business is no longer confined to conventional 2-company alliances, such as joint venture or marketing accords. Today groups of companies are linking together for a common purpose. The collaboration in operations could be argued to be one of the common purpose that could bind firms. Under pressure to improve productivity, quality, and speed, organizations have embraced tools such as TQM, benchmarking, and reengineering. Dramatic operational improvements have resulted, but rarely have these gains translated into sustainable profits. And gradually, the tools have taken the place of strategy. As managers push to improve on all fronts, they move further away from viable competitive positions. It is argued that operational effectiveness, although necessary to superior performance, is not sufficient, because its techniques are easy to imitate. In contrast, the essence of strategy is choosing a unique and valuable position rooted in systems of activities that are much more difficult to match. The economic basis of competitive advantage requires one to give due cognizance to the other important constituents of competitive strategy, especially the ones that are not easy to imitate.In a supply chain scenario one of the inimitable characteristic is a synergistic collaborative supply chain management among supply chain partners. 

Source: Nair, A. 2002. "Competitive Advantage in Collaborative Supply Chains: Some Propositions and Research Directions,” Proceedings of 2002 National Decision Sciences Institute Conference, San Diego, CA

Reference:  

Brandenburger, A; Nalebuff, B.J, 1997, “Co-opetition,” Doubleday, New York.

Importance of logistics and supply chain management

Even as companies have learnt to squeeze efficiencies out of their manufacturing plants through concepts like just in time replenishment, statistical process control, and lean manufacturing practices, they still find that moving goods and services through several layers of their global supply chains is time consuming and costly.  Logistics and supply chain management has become one of the last frontiers that still remain to be conquered by most businesses in the twenty first century.  Yet this cannot be done unless all managers and supervisors, irrespective of their functional orientation and current job responsibilities, fundamentally understand their supply chains and how their effective functioning flows right down to the bottom line. 

Since today it is not uncommon to see companies develop a product in one country, manufacture it in another, and sell it to a third country, the complexities associated with global trade must be accounted for in designing and managing supply chain. In addition, new products could be introduced in several countries almost simultaneously, and suppliers with special expertise and technology could collaborate with manufacturers in different countries to create global products. As the world moves toward an international economy, the battle cry for corporations is increasingly becoming one of “global operations and supply chain management”. While globalization promises enormous strategic benefits by coordinating operations located in different countries, it is imperative for managers to develop a perspective that can fully understand and exploit the intricacies of the global marketplace. Managing manufacturing and service operations across cultural, economic, and political boundaries is a formidable challenge, because of which many globalization efforts are falling far short of their promise.

The following video highlights the importance of logistics and supply chain management: 

Vaccine Management Assessment Tool (VMAT)

Vaccine Management Assessment Tool (VMAT) was developed as a result of the WHO-UNICEF Effective Vaccine Store Management (EVSM) initiative. It is designed to investigate vaccine management knowledge and practices amongst health staff operating at national, sub-national (state level or regional) or intermediate (district) and service delivery (block) levels. It is based on the data and practices of the last six months. The tool helps assessors toidentify and document the areas of strengths and good practices. It also helps to identify major knowledgeand performance gaps in a consistent format. Targeted support and training can be provided to overcome these deficiencies. The objective of VMAT is to identify the following aspects:

- Strengths and good practices
- Major knowledge gaps
- Major performance gaps
- Resource and training needs
- Develop internal capacity of the system to conduct similar self assessment periodically.
- Strengthen future planning & prepare the system for storage space and management of future vaccines like Hepatitis B (Hep B), Measles & Rubela (MR) and 2nd Dose of Measles etc.

VMAT is a spreadsheet-based tool that provides a set of structured questions for the use of national and external assessors. It is designed to be used to carry out a rapid assessment of vaccine-management procedures in a national store, followed by a similar assessment of a sample of subnational stores and service points. Assessment results are displayed in graphical form and should be supplementedby written comments.The tool is based upon eleven global criteria essential for a performing vaccine and cold chain management system. These are listed below:

1. Vaccine arrival procedures
2. Vaccine storage temperatures
3. Cold storage capacity
4. Buildings, cold chain equipment and transport
5. Maintenance of cold chain equipment and transport
6. Stock management
7. Effective vaccine delivery
8. Correct diluents use for freeze dried vaccines
9. Effective VVM use
10. Multi-Dose Vial Policy (MDVP)
11. Vaccine wastage control

Global biopharma cold chain market

According to the first ever study conducted by Pharmaceutical Commerce, the size of temperature sensitive global biopharmaceutical market space is around $5.1 billion and is expected to grow to $6.6 billion in 2011. While the North American market will grow by 15% over the 2008-2011 period (or roughly 5% annually, in line with the overall pharma market), the global market will show a growth rate of double that. The report entitled, "Cold Chain Biopharma Logistics Sourcebook 2010" surveys growth rates for pharma, biotech, vaccines, blood products and clinical materials, US and international regulatory bodies such as FDA, USP, PDA, IATA, MHRA and others, and air, ground and ocean carrier modes. It also includes packaging materials and technologies, refrigeration systems and instrumentation. The report suggests that seven of the top 10 global pharma products in 2014 will require cold-chain handling. According to industry estimates, vaccines will grow on average 8% per year through the next five years.

The clinical trials industry, which has been expanding globally in recent years, will add more volume during the coming decade. Biosimilars (biotech products made by other than the original inventor) are expected to hit the market by 2015. Further, new technologies to turn refrigerated biotech products into room-temperature-storage products will also kick in, affecting some product temperature and storage requirements. The challenges for biopharma manufacturers will not be in terms of developing new technologies to handle shipments, but in process changes to manage the regulatory and reporting demands cost-effectively.

Understanding Process Boundaries

No organization is an island. Organizational boundaries are permeable and yet boundaries tend to suppress and resist the flow of products, services and information (PSI); the resistance to flow at the boundary manifests itself as transaction cost which is a measure of resources “lost” at the boundary. Furthermore, in addition to organizational boundaries, the boundaries of intra-organizational units such as departments, and distinct departmental processing units or work centers can act as process boundaries. When process boundaries are impermeable, the flow to and from an organization cease—then, the value of the organization may cease.

Why do boundaries consume resources and incur costs? How could these costs be trimmed? If organizational boundary is akin to a membrane, could it be peeled away? Answers to these questions are a function of our understanding of boundaries, which is limited. 

Consider the fact that Transportation Security Agency (TSA) at airports slows down the flow of passengers and luggage in airports; the flow will greatly improve if TSA is peeled away from airports but it would make passengers, airports and planes vulnerable to terrorism. This is an extreme example of the conflicting demands on a boundary entity, the TSA. 

Boundaries play the dual role of a valuable, discriminating gatekeeper that blocks the inflow of some but allows the flow of others. An organization needs protection from external influences and may use the boundary to form a “firewall” to prevent external influences from flowing into the firm. Computers today have firewalls that prevent selected items from entering the computer from the Internet, while allowing the bulk of the information to flow to and fro from the same computer. The discriminating “firewall” is a form of boundary. An ideal computer firewall is transparent to the computer user, and all relevant information is permitted to flow freely to and from the computer.

Product development is one of the most challenging of tasks undertaken by businesses. It is impeded by the number of organizational boundaries in its path. Over the last two or more decades, product development teams have evolved to overcome the challenges posed by organizational boundaries. Teams have evolved over the last few decades as a powerful tool to subdue the negative effects of boundaries. However, product development across boundaries still remains a complex and daunting task.

Marketing literature acknowledges the challenge of being a Product Manager who plays an important boundary-spanning role. The product manger, in the role of a boundary-spanner, fields information from competition, consumers, other organizations, consultants, and retailers outside the organizational boundary, and five other entities from inside the organizational boundary. Boundaries extract a heavy price, not always measured in dollars.

Managing the flow through boundaries occupies a good part of a manager’s time and effort, particularly the time and effort of boundary-spanners. Organizations that master the art and science of minimizing the restriction to PSI flow at process boundaries perform more efficiently and effectively than organizations that do not. The resistance at the boundaries is overcome at the expense of resources without adding any value to the customer purchasing products, services or information. Thus the flow through boundaries adds to the costs of a product or service without adding value to the customer; clearly undesirable. Thus, making the boundaries more porous to PSI flow is a function of management.

*Part of work-in-progress with Professor Paul Swamidass 

VillageReach - Last Mile Medical Supply Distribution System

VillageReach is a social enterprise that aims to "improves access to healthcare for remote, underserved communities around the world. We partner with governments, businesses, nonprofits, and other organizations to improve the performance and reliability of health systems in the most inaccessible and isolated last mile communities" (http://villagereach.org/about-us/about-villagereach/). The organization has built a bottom up integrated support system to serve the last mile segment. The system uses modern business management techniques and advanced technology to generate accurate, ongoing information regarding needs at the last mile. As a result, medical supply distribution systems can be turned into “pull” systems that are responsive to and support the health centers, health workers, outreach teams and ultimately the people they serve. The overall operational model is as follows:


 
The operational model can be scaled up to create a supply chain for low-resource countries:


 
Further information regarding VillageReach can be found in this fascinating video:

 

Complementing Food and Vaccine Delivery

The refrigerator and freezer guide (September 2009) created by New Hampshire Department of Health and Human Services' Division of Public Health Services (Immunization Program) highlights the recommendation by The Centers for Disease Control (2008 CDC Vaccine Storage & Handling Toolkit (CD edition)) :

- be able to maintain required vaccine storage temperatures year round
- be large enough to hold the year’s largest inventory (influenza season)
- have a certified calibrated thermometer inside each storage compartment
- be dedicated to the storage of vaccines. Food and beverages should not be stored in a vaccine storage unit because this practice results infrequent opening of the door and destabilization of the temperature. (emphasis added)

World Health Organization's Fact Sheet states: "Vaccines must be held to a very high standard of safety. Stringent measures are taken to ensure quality and safety in the research and development, manufacturing, licensing, transport, storage and use of vaccines, and in the disposal of needles and other equipment after vaccinations are carried out." 

The fact sheet further notes: 

"Vaccines must constantly be kept at optimal temperature, typically at between 2 degrees and 8 degrees Celsius, from the place of manufacture to the point of use. This is a logistical challenge, especially in developing countries. The network set up to ensure that the required temperature is maintained is called the “cold chain.” Refrigerators, ice packs, and cold boxes are employed on airplanes, helicopters, and trucks, and in various storage locations; in areas not reached by road, chilled vaccine carriers are transported by hand to reach the point of use.

If electricity is not available, gas, kerosene, or even solar-powered refrigerators or freezers may be used. Most refrigerators and related equipment can be selected to meet WHO-UNICEF Performance Quality and Safety standards. Staff at international, national, and local levels are trained to manage cold chain networks. They include technicians, shippers, customs officers, pilots, drivers, government officials, health workers, and community leaders. Among other things, they monitor the temperature of the vaccines and discard those that have exceeded the established limits.

Vaccine vial monitors (VVMs)—temperature-sensitive labels—can be attached to vaccine vials and indicate through a change in color whether an individual vial has been exposed to heat that is likely to have damaged the vaccine. These labels have been successfully used to monitor vaccines taken beyond well-established cold chain settings, such as clinics, to field sites used for mass immunization campaigns. In these latter settings, which may be remote and without any access to refrigeration, the vaccines need to be kept in containers with cold packs. The VVM vial labels enable health care providers to determine at a glance if a vial has been kept within the needed temperature range or not."

While to address this requirement of dedicated storage, one option is to create a dedicated supply chain for vaccine delivery. The other option is to take advantage of potential economies of scope by prudently managing supply chain needs for a wider portfolio of products (e.g. perishable foods and vaccines). I wonder if there are examples of cold storages that have clearly compartmentalized and dedicated spaces for storing food and pharmaceutical products. Are there some capacity sharing possibilities in storage/transportation? Is it possible to tailor supply chains for unique needs of food and healthcare industry, yet take advantage of complementary supply chain assets in storage, transportation, and information systems? The collaborative effort between WHO and PATH (Optimize: Immunization Systems and Technologies for Tomorrow) present one possible solution. The passively cooled carts used to deliver produce to European supermarkets maintain consistent temperatures, are capable of carrying a significantly higher volume than traditional vaccine cold boxes, and could save considerable expense in both the short and the long term. These carts could be used to move vaccines from one storage location to another in developing countries.

Surely, there must be many such opportunities that remain untapped...  

Specialization in exploration and exploitation: A systems approach

Technologically oriented firms must allocate resources between exploration (research) and exploitation (development) activities. While scholars have emphasized the need for a mix between exploration and exploitation, some firms consciously choose to specialize only in either exploration or exploitation. The reasons for such a strategic posture could be many, including rigidities emanating from resources or routines. While previous studies suggest that an exploration/exploitation mix is necessary for success in an innovation strategy, focused strategies have recently come into research focus. In this research we adopt a methodological approach using case studies combined with an agent-based simulation model in order to learn about the effectiveness of specialization strategies.  The results suggest that an exploration based specialization strategy can have a relative advantage over an exploitation based specialization strategy, and a balanced strategy is not absolutely necessary to ensure innovation success.  We find that as competitive intensity increases, the relative advantage of exploration based specialization strategy diminishes.  

Traditional innovation strategy planning has consistently suggested that firms need to excel in both exploitation as well as exploration, and in incremental as well as discontinuous innovations for competitive success. While both exploration and exploitation are essential for organizations, the resource commitment needed for these distinctly different endeavors requires a firm to make choices between the two based on current resource levels, organizational routines, alternatives and competitive strategies.  Although a balance between exploration and exploitation delivers significant rewards, the complications to achieve this balance is enhanced by the the underlying organizational and system-based complexities. It is therefore reasonable to expect that some firms facing this situation may completely focus on either exploration or exploitation.

In our study, an agent-based model simulated an environment in which firms compete for different types of consumers based on a simplistic specialization strategy of exploitation or exploration.  The firms in the model manufacture either incremental or innovative products as a part of their strategy.  The results of this study suggest that, ceteris paribus, exploration based specialization strategy leads to higher profitability as compared to exploitation based specializations strategy.  We do find support to the theoretical argument that emphasizing exploitation can compromise performance and, in turn, affect competitive position.  We thus observe that macro-level market correction is possible for specialization strategies.  We find this to be true for an exploration focus but not an exploitation focus.  This finding supports the R&D strategy of companies like Proctor & Gamble who hire design houses such as IDEO, which focuses on providing ‘exploration’ services to innovating firms.  Our findings also suggest that firms should not completely forgo exploration activities within their own organization.  Leaving R&D to other firms becomes an issue of knowledge management.  Further, within the notion of punctuated equilibrium where exploration and exploitation are temporally sequenced in a firm’s R&D strategy, the results of the study highlight that allocating a larger proportion of time for the strategy of exploration as compared to the strategy of exploitation would likely yield better firms performance.

In our model, competition also plays an important role in the profitability of a firm.  Overall, we find that competitive intensity moderates the relationship between specialization strategy and average profits.  We observe that competitive intensity negatively impacts the profits of a firm if it adopts non-adaptive specialization strategy of exploration.  More competition obviously results in performance degradation within a set market size.  However, as the competitive intensity increases, although the firm adopting exploration-only strategy display higher performance than the firm adopting exploitation-only strategy, the difference in their relative performance decreases.  It can be argued that in the presence of large number of competitors, the resource commitment required for exploration puts them in a somewhat more disadvantageous position than the firm adopting an exploitation-only strategy.  Beyond the immediate profit-based performance advantage, exploration strategy also enables a firm to reap first-mover advantage (such as creation of lock-in situations) and advantages pertaining to leading-edge knowledge.  These aspects were not directly addressed in this study and provide directions for future research.

Since agent-based models can be useful as learning tools to guide intuition, the results of this model can be generalized for other similar types of innovating firms.  The model showed that a firm can be profitable in highly competitive environments by not focusing solely on macro customer demands but instead finding a niche and building products for that niche.  It is a strategy that Apple Inc. has been very successful at – starting with the niche market and later expanding into the general marketplace.  For example, Apple’s iMac computer has only in the last few years entered mainstream business markets as opposed to being mainly targeted at the home, education, and creative professional markets.  Our model shows how this can be a profitable strategy.  

Our findings also provide additional support that theory regarding exploration and exploitation strategizing should be further developed for contingent environments. Firms that slowly evolve over time can do so without significantly hurting their performance outcomes.  By taking a holistic approach to the exploration-exploitation dilemma, it was seen that adaptive firms tend to do better, but a firm that adopts a specialization strategy and intends to stick with it seem to do well when it chooses to invest its resources on exploration. As competitive intensity increases, the firm may evaluate its specialization posture and move its resource allocation towards exploitation strategy or assume a more ambidextrous form. We observe that firms that find a niche within which to operate can succeed in the marketplace.

Source: Garcia, R., Nair, A., Rummel, P. (2011). Specialization in exploration and exploitation: A systems approach. International Journal of Business and Systems Research, 5(1), 1-21.

Optimize: Immunization Systems and Technologies for Tomorrow

"Optimize: Immunization Systems and Technologies for Tomorrow" is a collaborative effort between the World Health Organization (WHO) and PATH aimed at utilizing technological and scientific advances to:

- define the ideal characteristics for health products
- create a flexible and robust vaccine supply chain to handle an increasingly large and costly portfolio of vaccines, and thereby improve the efficiency of health care delivery.