Strategy and Technology
Course Number 1286
Professor David B. Yoffie
Fall; Q1Q2; 3 credits
This course explores the unique aspects of creating effective management and investment strategies for technology-intensive businesses. What are effective strategies for winning in markets with strong network effects? How can technology be leveraged to build (multi-sided) platforms? How can firms create and capture the value from intellectual property assets? What are the unique challenges of governing technology-intensive firms? And how can they sustain value despite wide-spread imitation and convergence with substitute technologies?
The course provides a series of useful concepts and frameworks which students can directly apply to strategic and investment problems they may encounter post-graduation. Throughout the course, there will be a heavy emphasis on going from concepts and market analysis to the formulation of concrete strategies. The types of firms range from pre-revenue start-ups to large multinationals.
Industries covered range widely, including smartphones, smart cars, cloud services, e-commerce, online video, social networking, browsers, semiconductors, intellectual property, mobile communications, electronic ink, wearable technologies, and the Internet of Things.
Course Content and Organization
The course is structured into several modules:
Network Effects and Increasing Returns: Technology-intensive businesses have unique attributes, which make their products increasingly valuable if more consumers buy their product or if more complements become available. Also, the cost structures of some technology businesses are fundamentally different from traditional manufacturing or service industries. What are the implications for market tipping, pricing and growth strategies?
Multi-Sided Platforms: The most important competitive battles in technology are no longer between standalone products or services but between platforms. The most successful companies are those who build multi-sided platforms (MSPs), which spawn large ecosystems of users and suppliers of complementary products and services. Why and how are MSPs different from "normal" firms? What are the key strategies for creating successful MSPs?
Judo & Sumo Strategy: Many of the critical challenges in fast-moving technology businesses are tactical in nature: how and when do firms cooperate and compete with firms within their industry? How can small firms use their larger competitors' size to their own advantage? When and how can large firms impose their will (sumo strategy) against other players in their ecosystem, without running afoul of anti-trust laws?
Governance of Technology Companies: Start-ups and large firms in the technology world face two special governance problems: extraordinary uncertainty and asymmetrical information between management and boards of directors. In this module, we will explore how to solve these challenges in early stage firms as well as large, incumbent technology players.
Intellectual Property: Another defining characteristic of technology industries is the disproportionate share of value which resides in intellectual property (IP) assets. We will look at two different sets of strategic issues. The first concerns firms which create IP and need to build business models enabling them to appropriate value from their IP. The second concerns firms which attempt to become intermediaries facilitating IP transactions: how can one build viable business models around IP marketplaces?
Digital Convergence: Large-scale industry change happens faster in technology than in other markets. One of the most disruptive forms of industry change is technological convergence. As previously separate industries collide and create new competitors, how can firms maintain their competitive edge and evolve in order to take advantage of new technological opportunities?
The course utilizes lectures, case analyses, independent reading, and will have several visitors from entrepreneurial and large companies. Grades are determined by class participation, participation in pre-class polls, and a short final paper.
The course should be of particular interest to those interested in managing a business for which technology is likely to play a major role, and to those interested in consulting, private equity or venture capital. The course may also be valuable for students who do not necessarily plan to pursue a career related to technology. Indeed, the concepts and frameworks covered (e.g., network effects, judo strategy, multi-sided platforms) apply well beyond technology industries.