Magazine Summer 2011 Big Idea: Leading Sustainable Organizations Research Feature

Innovating in Uncertain Markets: 10 Lessons for Green Technologies

History shows that the road to technological innovation is long and winding, but lessons from successes and failures with other emerging technologies offer managers a helpful guide.

George S. Day and Paul J.H. Schoemaker Reading Time: 25 min 

Topics

Leading Sustainable Organizations

Corporate adoption of sustainable business practices is essential to a strong market environment and an enduring society. What does it mean to become a sustainable business and what steps must leaders take to integrate sustainability into their organization?
More in this series
Permissions and PDF Download

Innovations often follow the path of LED technology: beginning at the periphery before becoming more widely adopted.

Image courtesy of Flickr user kitroed.

Talking about “green technology” gets people excited. It’s thrilling to think that a new wave of inventions and discoveries will revolutionize the way we live, halt the degradation of our planet and conserve resources for future generations. And it’s more than just talk: Investors are committing real dollars. By one estimate, the global market for alternative energy sources (for example, wind, solar energy and biofuels) will reach $315 billion by 2018. In the past few years, the number of “significant investments” has grown by more than 30%.1

As the level of activity increases, however, discussions about green technology raise as many questions as they answer. Let’s say we start plugging our cars into a smart electric grid: Who will make the batteries, using which technologies, and what energy sources will we use to charge them? Similar debates arise over biofuels. Should we produce biofuels from algae? Will it become a more promising feedstock than corn or sugar cane? Can we produce a type of cement that releases considerably less carbon dioxide into the air — or should we begin developing alternative materials to replace it? Will energy management software spur U.S. households to regulate their peak load use — or is it simply too difficult to change people’s behavior?

The Leading Question

What can managers involved with green technologies learn from prior experiences in other technologies?

Findings
  • Take the time to study the market opportunity, and don’t expect growth to be predictable or steady.
  • Craft a flexible strategy that will help secure sustainable market leadership.
  • Build an organization that can anticipate threats as well as opportunities, and adapt to them.

Addressing these questions is complicated by the fundamental uncertainties that are at the heart of the green technology market. The evolution of this market space depends on forces that are beyond the control of any individual entrepreneur or investor. (See “Defining Green Technologies.”) Governments must fashion coherent and durable energy policies. Risk capital must be available to fund massive infrastructure projects. And there are additional wild cards: oil price volatility, geopolitical conflicts, the rate of economic growth and public attitudes toward warnings of global climate change.

Topics

Leading Sustainable Organizations

Corporate adoption of sustainable business practices is essential to a strong market environment and an enduring society. What does it mean to become a sustainable business and what steps must leaders take to integrate sustainability into their organization?
More in this series

About the Authors

George S. Day is Geoffrey T. Boisi Professor and professor of marketing at the Wharton School of the University of Pennsylvania, where he codirects the Mack Center for Technological Innovation. Paul J.H. Schoemaker is research director of the Mack Center, an adjunct professor of marketing at Wharton and also the founder and chairman of Decision Strategies International Inc. of West Conshohocken, Pennsylvania.

References (23)

1. J. Bennett, “Are We Headed Toward a Green Bubble?” Entrepreneur (April 2010): 51-54.

2. The research supporting this study was funded by the Mack Center for Technological Innovation at the Wharton School of the University of Pennsylvania. See G.S. Day and P.J.H. Schoemaker, “Wharton on Managing Emerging Technologies” (New York: Wiley, 2000).

Show All References

Acknowledgments

The authors would like to thank Paul Kleindorfer, Ron LaSalvia, Patia McGrath, Kimberly Schoemaker, Scott Snyder and Arjen van den Berg for their valuable feedback, as well as Gretchen Anderson for her valuable editorial support.

Tags:

Reprint #:

52411

More Like This

Add a comment

You must to post a comment.

First time here? Sign up for a free account: Comment on articles and get access to many more articles.

Comments (2)
Horia Liviu POPA
A very valuable paper! 

Prof.Dr.Eng. Horia Liviu POPA
Politehnica University of Timisoara, Management Faculty
Siswanto Gatot
yes, the most crucial factor is timing, when we start to do. business in green technology needs long perspective and continuous innovation. we must break the zone of comfort first, shifting to a new habit and culture