Technological Adjacency

Two days ago I talked about Technological convergences, yesterday I discussed how firms can enable technological convergences. Today I’m going to talk about technological adjacencies. First though, why do we care about these? There’s a couple reasons. One at the micro level, specifically you, understanding how technological adjacencies work can help you determine different industries that your skill set applies. Does understanding ceramics only help in making durable dishwares or can they be used in the semiconductor industry too? It turns out they can be. Ceramics are great insulators and are used on many different types of tools for manufacturing semiconductors. A step above, at the firm level, being able to produce ceramics can allow a company that used to only make dishware to move into creating other types of technologies, like for semiconductors. This shift can eventually open up an entire new market to allow for continued growth. However, as I mentioned yesterday, this doesn’t always work and can leave a company weaker than it was before the shift into the new industry. Finally, technological adjacencies can help spur regional and national growth.

Companies aren’t the only thing that can be viewed to have specific capabilities. Regions and countries typically have specialties Pittsburgh used to be the major hub in the world for steel. However, steel collapsed in the 70’s and 80’s there. Now Pittsburgh has turned itself into a medical and biomedical hub. Because of the steel industry Pittsburgh already had two world class universities and a number of great universities. After the crash of steel these became the main drivers of the economy. The firms that were created helped to rebuild the area.

As I mentioned above technological adjacencies are fairly simple to find after the fact. They are difficult to see ahead of time. It’s difficult to know what is a good bet and what is not a good bet for a company. This is why it’s important to have an R&D branch that is allowed to explore the adjacent technology spaces around your major technologies. If you don’t do this then there could be some great markets your missing out on.

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