Technological learning, architectural innovations, and the virtual utility concept

This paper highlights the potential benefits derived from deploying new methodologies in technology assessment and risk management that drive strategic technological and infrastructural investments by power utilities in response to internal and external contingencies they are confronted with in a rapidly deregulating, increasingly competitive environment. The role of technological learning in helping to continually re-shape decision making criteria and worldviews is illustrated and lends into formulating some ideas about how to integrate strategic (qualitative) with financial (quantitative) criteria in valuating architectural innovations such as the virtual utility concept. Moreover, the paper explores the nature of the different kinds of technological innovation, architectural, radical, generational, and incremental, and then illustrates-using examples from diverse technology-driven industries, such as the information technology, pharmaceuticals, and industrial chemicals industries-how capital budgeting, because of its narrow accounting orientation often fails to capture and qualify strategic benefits associated with emerging technologies, thus impeding the diffusion and adoption of technological innovations.