Marketing Innovation and Complementary Assets: Is Everything in Place for Success?

I recently had the opportunity to hear Steve Case, the founder of AOL talk about the first ten years of AOL. He pointed out that only three percent of the population went on-line and that was one time per week for an hour at a cost of $10 per hour. There was little content. You had to buy a peripheral for your computer if you wanted to get online. And the list of barriers goes on. It is easy to see why people would dismiss this new technology.

If there is underlying utility in the technology, an ecosystem will emerge that will support the new technology. One reason is those problems provide business opportunities. If the concern with ordering online is credit card security, then a company will solve that problem. The challenge for those interested in marketing innovation is determining if the ecosystem for a new technology is in place. If you had been developing e-commerce initiatives during the early years, then you might have been too soon as the ecosystem was not in place to support it.

One way to determine if a new technology is ready for you to invest in is determining if the complementary assets are in place. David Teece defines complementary assets this way: Complementary assets are assets, infrastructure or capabilities needed to support the successful commercialization and marketing of a technological innovation, other than those assets fundamentally associated with that innovation.

In a previous post, I made the analogy that CMOs should take a VC approach to investing in new technologies. An additional perspective is to ask, what barriers exist that would prevent wide scale adoption of this technology?  When eBay was developed, people were concerned about buying items from strangers, not being able to see the quality of the merchandise and receiving money for payment.  Rating systems were developed so buyers could feel good about purchasing from sellers they did not know and payment systems such as PayPal were created to help with the transactions.

Besides determining if the pieces of the ecosystem are in place, such as the complementary assets necessary to make using the technology easy and frictionless, consider these issues as well.

Behavior Changes - What behaviors must change in order for this new technology to be adopted? An example might be people feeling comfortable typing in their credit card information online. People are feeling increasingly comfortable providing more personal information or giving up privacy as a way to get improved personal recommendations. That is a behavior change that makes a wide range of technologies possible and improves existing ones.

Technological Changes - at first it was believed many activities would not be done online because it took too long to turn on a computer, wait for it to boot up, dial into a network and then find the information. Why go through all of that trouble when you could just call directory assistance to get a company’s phone number, and call the company for directions? With smart phones, that entire process is now eliminated. The technology is “always on” and information is available on demand. It is now possible to “Google” the company; find the directions on the company website, if not an address that could be entered into your phone’s GPS system to help navigate your way to the location as well.

Mental Model Changes - Salesforce.com asked people to think differently about how software is deployed. Deploying software deployed from the “cloud” instead of installing software on a hard drive, and charging annual maintenance fees, required a new mental model.

Tipping Points - At some point a technology is adopted because it seems that, “everyone else has it.” If everyone has it, then everyone wants it. A technology goes from being novel to mainstream. In the AOL example, 184,000 people adopted the technology during the first ten years, and 20 million during the second decade.

Early Adopters - Talk to early adopters of the technology and find out what they see as the challenges of adopting the technology. Most likely there are case studies or use cases that talk about the success of the technology. Dig into these and try to understand the challenges. Look at any type of product reviews, and try to speak to the reviewers so you can go deeper into the specifics.

Product Management -Talk to the company to determine what types of improvements and enhancements are planned and when, and if they will address the known challenges or what challenges won’t be addressed in the next version.

When the ecosystem and all of the complementary assets are in place, it is easy to make investments in a new technology. For example, creating a Nav app for a smart phone. Everything a company needs to create, deploy and maintain one is in place. When looking to incorporating a new technology such as augmented reality into a mobile device, what technologies are still needed or need to be improved, that would make augmented reality more widely used? Ask yourself that type of question when looking to adopt an emerging technology as a way to innovate your marketing.

New technologies provide a great opportunity to create competitive advantage by providing the chance to innovate marketing in a way that competitors might not for years. The key is timing the adoption. While there is some advantage to being early, there is the mistake of being way too early. Making sure the ecosystem or complementary assets are in place and reviewing how much people need to change their thinking, behavior and/or if all of the necessary complementary assets are is in place for the technology to operate smoothly and frictionlessly are the keys to success.