Learning from flexibility Take a factory producing two cars, Model X and Model Y. As demand for X vs. Y goes up or down, having the ability to shift capacity to where it’s needed at the time can help mitigate risks and maximize profits. The benefits of such flexibility have been well established, especially where higher profit margins justify higher capex. Separate research suggests that managers
But what about in fast-paced business environments where
should seek out breakthrough technologies from big
margins are slimmer and where demand may not be so easy
science labs, aided by programs that help system-
to detect? Whenever sales data are not reflecting the real
atize “serendipity,” which might be loosely defined
underlying demand but rather the extent to which capac-
as “looking for lucky breaks or happy accidents.” Like
ity is available, we’re looking at censored data that ignores
gene therapy, innovative technologies such as radio-
lost sales. Increasing capacity to meet peak demand may be
therapy, touchscreens and even the World Wide Web
possible, but many companies prefer not to, since that can
were first discovered in big labs, but they may take
be very costly, especially in a rapidly fluctuating market and
decades before commercial applications are found.
when profit margins are moderate or lower. So, in the result-
To help move deep tech out of the lab and into
ing tradeoff, sales may be sacrificed.
the market, the EU’s ATTRACT initiative provides time-limited funding to spur labs’ commercializa-
This points to the need to learn from your resource flexibility,
tion efforts. Managers would do well to take advan-
so that you’re not censoring important data but allowing for
tage of such programs and speed the commercial-
more knowledge of the true demand. When production can
ization of the next revolutionary technology. Both
be shifted as the market demands, the actual demand can be
of these lines of research contain useful insights for
understood faster. That, in turn, gives better predictive abili-
managers to move innovation out of the realm of
ties. And with better insight, better capacity investments can
theory and put it into practice.
be made in real time, leading to higher profitability.
Laia Pujol et al.
Mihalis Markakis et al.
“Systematizing serendipity for big science infrastructures: The ATTRACT project” Technovation
“On the learning benefits of resource flexibility” Management Science
https://doi.org/10.1016/j.technovation.2021.102374
http://dx.doi.org/10.2139/ssrn.3212177
