Strategic Management of Technological Innovation Melissa SchillingINTRODUCTION2Importance of Technological InnovationTechnological innovation now the single most important driver of competitive success in many industriesMany frms earn over one-third of sales on products developed within last fve yearsGlobalization has increased competitive pressureProduct innovations help frms protect margins by oering new! dierentiated features" #ony produces more than $% models of its &al'man that dier in size! color! music format and other featuresProcess innovations help ma'e manufacturing more e(cient"3Importance of Technological Innovation)dvances in information technology have enabled faster innovation*)+,*)M systems enable rapid design and shorter production runs-mportance of innovation and advances in information technology have lead to. #horter product lifecycles /more rapid product obsolescence0More rapid new product introductionsGreater mar'et segmentation4Why Innovation Is Becoming More ImportantTechnology is changing fast! new products come from new competitors1ast changing environment! product lifetimes shorter! need to replace products soonerProducts are increasingly di(cult to dierentiate *ustomers are more sophisticated! segmented and demanding! and e2pect more in terms of customization! newness! 3uality and price *ustomers have more choice)pparently separate technologies come togetherMar'ets forming and changing fast &ith mar'ets and technology changing fast! and good ideas 3uic'ly copied! there is continual pressure to devise new and better products! processes and services faster5Innovation Is!ositive MessageTell people you are going to cut headcount - and lose their supportTell people you are going to downsize - and lose their supportTell people you are going to reengineer - and 456 won7t cooperateTell people you are going to be innovative - and win their enthusiastic support 6Impact on SocietyThe aggregate impact of technological innovation can be seen in G+P /gross domestic product the total annual output of an economy0"The average G+P per capita for the world has risen steadily since 89$8! particularly in the developed economies:conomist ;obert #olow showed that the growth in G+P was not solely on growth in labor and capital inputs but technological changes as well /