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Technology Management
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Why MOT?
Rapidly changing technology which ischanging every industry and everybusiness
Rapidly increasing competition which willeventually envelop every market niche, nomatter how sheltered.
Increasingly efficient financial marketsrequiring ever shorter term returns.
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Rate of Technological change
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n er sc p nary a ure oMOT
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TechnologyTechnology consists of three componentsHardware The physical structure and logical
layout of the equipment or machinery that isto be used to carry out the required tasks
Software The knowledge of how to use thehardware in order to carry out the requiredtasks
Brainware the reasons for using the
technology in a particular way. This isreferred to as know-why.
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TechnologyThe fourth component Know-howIt encompasses all levels of technological
achievements
The learned or acquired knowledge regarding
how to do things wellIt may be result of experience, transfer of
knowledge or hands-on-practice
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Technology is
driving changes in the business landscape
no longer limited to supporting businessdecisions
breaking down traditional industrialboundaries
redefining a new era of competition
But still
people have been and will continue toexpress disbelief here is how..,
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Radio and TelevisionTelevision will not be able to hold on to any market it
captures after the first six months. People will soon get
tired of staring at a plywood box every night.
- Daryl F. Zanuck, Head of 20th Century-Fox, 1946
CommunicationWell informed people know it is impossible to transmit the
voice over wires and that were it possible to do so, the thing
would be no practical value
- Editorial in the Boston Post, 1865
ComputersThere is no reason for any individual to have a computer in
their home-Ken Olson, President of Digital Corporation , 1977
I think there is a world market of may be of five computers
- Thomas Watson, Chairman, IBM, 1943
640 K (internal memory) ought to be enough for anybody- Bill Gates, Microsoft, 19818
http://www.google.co.in/imgres?imgurl=http://www.indiastudychannel.com/attachments/Resources/84849-61415-desktop_computer.jpg&imgrefurl=http://www.indiastudychannel.com/resources/84849-Main-types-Computer-Based-Use-types.aspx&usg=__6l8Q33ycLxIGD4NfP-j0zEVPK8E=&h=288&w=407&sz=13&hl=en&start=17&zoom=1&um=1&itbs=1&tbnid=iyNGbfiAri2a4M:&tbnh=88&tbnw=125&prev=/images%3Fq%3Dcomputers%26um%3D1%26hl%3Den%26sa%3DN%26rlz%3D1T4RNWN_enIN316IN317%26tbs%3Disch:1http://www.google.co.in/imgres?imgurl=http://www.adlinktech.com/ampro-extreme-rugged/img/Communication.jpg&imgrefurl=http://www.adlinktech.com/ampro-extreme-rugged/applications.html&usg=__CZXLEWGhinqnWbCnDwpY97txMVo=&h=506&w=700&sz=45&hl=en&start=2&zoom=1&um=1&itbs=1&tbnid=9Xx1ZF0aHufC5M:&tbnh=101&tbnw=140&prev=/images%3Fq%3Dcommunication%26um%3D1%26hl%3Den%26rlz%3D1T4RNWN_enIN316IN317%26tbs%3Disch:1http://www.google.co.in/imgres?imgurl=http://www.dgreetings.com/gifts-to-india/newimages/big/Samsung-Television-2158.jpg&imgrefurl=http://www.dgreetings.com/gifts-to-india/gifts/TV-2158.html&usg=__KQvx5qhOjr9LS4xBUcdsyba78fU=&h=300&w=300&sz=19&hl=en&start=2&zoom=1&um=1&itbs=1&tbnid=nwmAxzMWVAZ53M:&tbnh=116&tbnw=116&prev=/images%3Fq%3Dtelevision%26um%3D1%26hl%3Den%26sa%3DN%26rlz%3D1T4RNWN_enIN316IN317%26tbs%3Disch:1 -
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ManagementArt of getting people together to
accomplish the desired goalsManagement comprisesPlanning
OrganizingStaffingDirectingControlling
Manages deployment and manipulation
ofhuman resources, financial resources,technological resources and naturalresources
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Management of TechnologyA discipline of management wherein an
organization leverages the technologicalfundamentals to create competitiveadvantage
An integrated application ofengineering, science and managementcapabilities
Process of MOT includesIdentification of technologiesSelectingProcurementAssimilationExploitation of technologies for production of
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Evolution of Management ofTechnology
1950 1970 1980 1990s
R & D Management of Technology Value Based
Management Innovation Strategy Management
Era of Plentiful Resources Era of Accountability
New venture Linking to Broader vision
divisions business of technology
Allocation of Innovation Mgmt. Different org. Outsourcing
Funds to projects arrangements
Scientists & Tools to assess
Engineers values
Leadership Internal Markets
R & D Manager Chief Technology officer 11
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Perspectives in ManagementMarket BasedResource Based
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Market Based Vs ResourceBased
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Key concepts of MOTTo develop ideas about the management of
technology within an open system, fourmajor concepts are employed:Firms as value chainPrimary activities
Support activitiesIndustries as competitive domainsCapacity drivenCustomer drivenKnowledge driven
Forms of technological changeProduct technologyProcess / production technology
Value creation and competitiveadvantages
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Porters Model of Value Chain
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Classification of Industries
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Forms of TechnologicalChangeProcess Technology / ProductionTechnology
Product Technology
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Evolution by Ages
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Evolution of ProductionTechnology
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Product Techology
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Value Creation andCompetitive AdvantageCompetitive advantage is the ability of the
firm to outperform rivals on profitability
It depends on the how the firm is able tocreate for its customers value that exceeds
the cost of creating a product
Value is what the customers are willing topay, and superior value stems from offering
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Levels of Development
Descriptive Flow chart
First level -Individual develops
tacit knowledgeSecond level tacit
knowledge iscodified
Finally there is alevel ofdevelopmentwhere theknowledge is put to22
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Classification of technology
New TechnologyEmerging Technology
High Technology
Medium TechnologyLow Technology
Appropriate Technology
Codified Vs Tacit Technology
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Four Characteristics of MOTOpportunity:The art of perceiving the
triggering event for technology development; itis truly a human activity.
Appropriability: Where the technologydevelopment is due to economic motives,individuals will pursue development only to theextent that there is a reasonable assurancethat the fruits of their labor will flow back to
the developers.
Transferability:Technology or knowledgetransfer is not smooth; knowledge is sticky.
Resources:Technolo develo ment24
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The Creation-ApplicationSpectrum
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Spinning out technology
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Core Knowledge needed forMOT
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SC
OPE
OFMO
T
ResearchDevelopment
ResearchDevelopmentDesignManufacturin
g
ResearchDevelopmentDesignManufacturin
gMarketingSalesPhysicalDistributionCustomerservice
ResearchDevelopmentDesignManufacturin
gMarketingSalesPhysicalDistributionCustomerserviceInformation
systemsHumanResourcesFinancePurchasingPatent andLegalPublicRelationsGeneralAdministration
ResearchDevelopmentDesignManufacturin
gMarketingSalesPhysicalDistributionCustomerserviceInformation
systemsHumanResourcesFinancePurchasingPatent andLegalPublicRelationsGeneralAdministrationCustomersSuppliersOther
influences(Internal;28
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Exploitati
on
Acqu
isition
Identificationand
selection
Managerial function of MOT
Technology Strategy
Business Strategy
Technology
Development and
utilization
Technology acquisition
and transfer
R & D
Product and Process
Technology
NPD
Knowledge
Management
Information
Management
Technology
forecasts
Commercialization
Value chain Management
Product Life cycle management
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Managerial functions of MOT
ProtectionIdentify options
Establish strategy
Monitor effectiveness
Identification
Technology assessment
Pre selection Framework
Technology / Market scanning
Information Management
Selection
Technology forecasting
Benchmarking
Decision criteria and Process
Monitoring / Improvement
Acquisition
Internal R & D
Licensing and Joint ventures
Organizational change
Project Management
Technology Insertion
Exploitation
Customer supplier Network
Incremental Development
Product Management
Complementary Assets
Source: Gregory : 199530
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Audit Forecasting Selection &Plan
Acquisition Exploitation
Assessutilization ofexistingtechnology*
Identify thegaps
Priorities
areas for newinputs intechnologyfrom:IncrementalImprovementSchemes*
ModernizationProgramMajor
TechnologyDevelopmentProgram*
Assess thedevelopmenttrends of allthetechnologiesavailable*
Analyzecompeting
alternatives;Costs; Techno-Economic;Adaptability;andEnvironmentalCompatibility*
Comparetechnologyfrom in-house(R&D) andexternalsources *
Analyze Cost;Techno-Economics;Adaptability;Flexibility; TimeFrame; andCompetitorsStrategy, forthe competing
alternativetechnologies
Match theCorporateNeeds with the
Technologies
available andidentify thegaps to bebridged*
Prepare acomprehensive
StrategicTechnology
Obtain andcomprehend:DetailProject Report
ContractManualsTrainingCommissioni
ngAssimilatethetechnologyprocuredthrough use;and
ImproveStandardOperatingPractice*
UpgradeTechnologyafterInduction*
Document;modifyStandardOperating
Practice
Transfer tomarket or inhouse it afterup gradation
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The Framework for Technology
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S t M d l R
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System Model: Resources.Infrastructure and Activities
Resources Infrastructure ActivitiesPeople Purposes Business
Intellectual Property Objectives Management
Information Strategies System
Organizationalcharacteristics
Organizationalstructure
Project
Technology Guiding principles Functional
Time Policies andpractices
Group
Customers Managementattitudes
Individual
Suppliers Managementexpertise
External
Plant and equipment Support for
innovationFacilities Acce tance of risk
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G l d t t i f
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Goals and strategies of aFirm
A firms goals and strategies represent theaggregate of its products, technologies,and services
For such goals to be credible they must be
linked directly to the set of developmentprojects the firm intends to undertake(referred to business architecture)
A business architecture in MOT identifieswhat business parameters to address tomake a good business decision regardingkey problems encountered in achievingobjectives and goals of the strategies of a
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Development ChainThe development of any product or service
includes the following chain of acceptancesteps:The research and development of an idea or invention
The competitive evaluation of the ideaThe research required in technologies to develop the
idea
The transfer or purchase of a selected technology forsupport of a process, a component of a product, or a
further development of the technology for its ownmarketability
The acceptance of a proposal to develop the product
The acceptance of the design of the product and/ ortechnology
The acceptance of the products manufacturability i.e.at the volumes and s ecific ualit levels re uired
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Business Architecture
It is necessary to look at the generaldevelopment steps and identify key checkpoints in decision making that relate tobusiness parameters
These steps have a business assessmentcriteria associated with them for whichthere must be a payoff
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MOT FlowchartThe flowchart shows
the practice oftechnologymanagement inresponding to the
business.The model shows a
process that identifiesmajor development
steps starting withtechnology researchleading to an ultimatecustomer payoff
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Business Architecture
There are two phases of architectureResearch and technology phaseProduct development phase
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R h d T h l
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Research and TechnologyPhase
Research /
Development
Analysis
Competitive
Analysis
Creativity and
Innovation
Technology
Research
Technology
Transfer
Industry
Analysis
CompetitiveAdvantage
Risk
Analysis
Customer
Requirements
FundingTransfer
Pricing
Make Vs
Buy
Technology
Forecasting
Reverse EngineeringProductivity
PayoffTechnology Goals Business Goals
Invention
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Product Development Phase
Market Driven
Proposal
Acceptance
Design / Tech
Acceptance
Software and
Manufacturing
Acceptance
MarketAcceptance
Business
Case
CustomerRequirement
Return on
Assets
RevenueMarketSegmentation
Parts, CIM,
CFM
CAD /Packaging
Opportunity Analysis
PayoffProduct Goals Business Goals
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Changing trends in IndustryFactor Traditional New
Life cycle Long life cycles Short life cycles
Innovations
Few Continuous
Competition
Expected competitionCompetitors are the
enemyCooperation non allowed
Stronger competitionAlliance with competitors
accepted
Market Expected marketLocal market
Uncertain marketGlobal market
Quality Quality is desirable Imperative
Production
Mass productionProduce in large lotsNo commitment tosuppliersLarge inventoriesFixed manufacturing
Customized productionProduce in small lotsSuppliers are partnersReduce inventoriesFlexible manufacturing
Organiza Large corporations Smaller plants; outsourcing,41
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Old New TrendsReducing the directcosts of productionshould be primary focusof management concern
The indirect costs of thefirm should be reducedwhile improvingcompetitiveness isviewed as a major
challenge
Production economiesrequire large volume
Single critical
technology-basedproduct lines will havelong product life cycles
Multi-core technology
product lines will haveshorter product life cycle
World markets can bedivided on a national
basis, with nationalfirms dominant in domes
World markets aretechnology are now
global and enterpriseshould be globally42
Strategic Operational and
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Strategic, Operational andManagement Issues
Strategic Issues1. Understanding the scope of managing technology
2. Managing Technology different levels
3. Adding value with technology
4. Developing a technology policy
5. Bridging the gap between technology policy andresults
6. Precursors to technology strategy
7. Including technology in business strategy
8. Rationalizing strategy and operations9. Managing the decision making process
10. Systems thinking the imperative
11. Negative impact of single issue management
12. The role of technology in achieving competitive
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Strategic Issues
Understanding the role of technology in thebusinessA business, not technical responsibilityIntegrating resources, infrastructure and
activitiesIncluding Technology in business strategyResearchDevelopmentDesignManufacturingMarketingAdministration
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Strategic Issues
Managing Technology different levelsGlobally
Corporate, sector, group, division, strategic businessunit
Research, development, design, manufacturing,
marketing, sales, physical distribution, customerservice, all administrative and support functions
Managing project at the project level, team level
Managing technology by scientists, engineers andother professionals
Technology Managers Who managestechnology?At different levels from executive to individual
decision make
Description of role45
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Strategic IssuesAdding value with technology leveraging available
sourcesInternal and worldwide
External and worldwide
Developing a technology policy
Bridging the gap between technology policy andresultsTransforming the thinkers into thinkers and doers
Transforming the doers into doers and thinkers
Managing the decision making process Practices
and modelsConsensus
Quantitative and qualitative
Intuitive
Balanced46
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Operational Issues1. Idea and concept generation2. Forecasting
3. Evaluating
4. Justifying Investments
5. Planning management
6. Managing the project management process7. Managing discontinuities
8. Descriptions how, where and why?
9. Resolving problems and exploring opportunities
10. System cycle management
11.Technological intelligence
12. Innovation
13. Entrepreneurship
14.Technology transfer
15. Information
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Operational Issues
16.Functional Integration17. Investing in research
18.Organizing for effective product development
19.Market pull and or technology push
20. Introducing new process
21. Introducing new product
22.Selecting, monitoring and terminating projects
23. Integrating technology, products and markets
24.Linking purposes, objectives and strategies
25.Focussing on value adding activities
26.Resolving the information paradox
27.Effectiveness, efficiency and economic use of resources
28.Analysis followed by synthesis determines results
29.Differentiating the mean and the ends
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Operational Issues
30.Eliminating the barriers to effectivemanagement of technology
31.Developing and using business unittechnology plans
32.Organizing and allocating resources33.Developing as-is profiles
34.Closing the gaps from competence tocapability to competitive advantage
35. Implementing activity based management
36. Implementing the project approach at alllevels
37.Auditing research, development, technologies
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Operational Issues
Idea and concept generationForecasting
Technologies
Products
Markets
Productivity and Performance
Technological IntelligenceDeveloping a process: Internal and external
Recognizing emerging technologies
Using technological intelligence for technologyleadership
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InnovationDescription and scope
Organizational environment
Role of creativity
In all business functions not just science andenginering
Innovating on schedule
Technology TransferWithin the organization, business units, functions,
individualsAcademia and industry
Government agency and industry
Global opportunities
Consortium
Operational Issues
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Investing in ResearchCorporate or operationalInternal and external
Organizing for effective product
developmentRequirement total systemThe processLimitations of formalized structureNeed for flexibilityBalancing freedom and constraintsBalancing stability and changeCreating an appropriate environment
Operational Issues
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Management Issues
People relatedDeveloping competent personnel
Overcoming objections and resistance to change
Competencies and capabilities
Productivity and performance
Specialization and segmentation
Providing a balanced environment
Educating the organization
Focusing the organization
Integrating business functions
Achieving gains from technology management
Facing realities
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Management Issues
Achieving the gains from TechnologyManagementAutomation of work in all functions
Computer-integrated manufacturing
Computer aided design, engineering, manufacturingand others
Concurrent and simultaneous engineering
Information systems that provide information
Using technology and business models and
simulationsUsing other computer-aided technologies such as
artificial intelligence, expert systems, chaos theoryetc.
Business related processes
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F th Cl ifi ti f
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Further Classification ofTechnologies
State of the art technologies :Those technologiesthat equal or surpass the competitors
Proprietary technologies: those technologiesprotected by patents or secrecy agreements thatprovide a measurable competitive advantage
Known technologies: those technologies that may becommon to many organizations but are used in uniqueways
Core technologies: those technologies that are
essential to maintain a competitive positionLeveraging technologies: those technologies that
support several products, product line, or classes ofproducts
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Further Classification of
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Supporting technologies: technologies that supportthe core technology
Pacing technologies: technologies whose rate ofdevelopment controls the rate of product or processdevelopment
Emerging technologies: technologies that arecurrently under consideration for future products orprocesses
Scouting technologies: formal tracking of potentialproduct and process technologies for future study orapplication
Idealized unknown basic technologies:technologies that, if available, would provide asignificant benefit in some aspect of life
Further Classification ofTechnologies
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Introduction
1. Technological environment can be viewedas a network of organizations consisting ofdevelopers and facilitators.
2. Technology development occurs in stages.
Each stage then provides the basis fordevelopment in ensuing stages.
3.The way in which technology develops isnot determined solely by a developer.
National and often international, politicalconsiderations will drive technologicaldevelopment.
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Scope
1. What is meant by environment andtechnological environment in particular?
2. Who are the main actors in thetechnological environment?
3. How do changes occur in thetechnological environment?
4. What are some of the major currentdevelopments in the technologicalenvironment?
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What is meant by environmentand technological environment in
particular?
Technology Environment
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Levels of Environments
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Task Environment
It refers to the set of customers, suppliers,competitors and other environmentalagencies directly related to the firm
The task environment is more or less
specific to a firm and is not necessarilyshared by its competitors
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Competitive Environment
It comprises of the firm and its competitorsNew entrants, substitute products,
suppliers, customers and competitioninfluence what happens in an industry
The factors affect different competitorsdifferently
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Macro Environment
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Technological Environment
Technology environment is the most visibleand pervasive macro-environmentalsegment in a society:
1.Brings new products, processes andmaterial
2.Directly impacts every aspect of thesociety around us (entertainment,communications, health care,
Transportation modes)
3.Alters the rules of global trade andcompetition65
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Technology Environment
It comprises two institutionsNew knowledge (Science)The application of the knowledge to develop
new products, processes and materials
(Technology)Thus, Technology Development consists of
two sets of activitiesCreation of knowledge and
Application of that knowledge
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Creation of Knowledge
The knowledge base of technology isderived from basic research
The basic research focuses on generatingscientific knowledge and deal with
fundamental question of scienceScientific research is often cumulativeResearch questions begin in some current
state of scientific knowledge; these questions
stimulate research projects from whichscientific results are published in scientificliterature
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Application of Knowledge
Scientific knowledge is put into practice todesign an innovation that will solve aperceived need or problem.
Researches involved in application are the
main consumers of basic researchThe end result of their efforts is often a
product prototype that may havecommercial potential
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Application of knowledge
Activities of application knowledge:Applied Research: consists of scientific
investigations of known phenomena that donot typically advance scientific knowledge
Development: reduces the knowledge topractice in workable prototype form
Engineering: defines the knowledge forcommercial exploitation or other practical end
usersCommercialization: includes activities such as
manufacturing that finally put the technologyto use till it becomes adopted and used by
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Who are the main actors inthe technological
environment?
Technology Environment
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Types of actors in the
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ypenvironment
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Roles of corporations
1.As technology developers, they are driversof change in the technology environment
2.Beneficiaries of technology changeinitiated by others.
3.Facilitate technology development byothers external to the firm throughinvestments in their research projects.
4.Corporations may also be the victims oftechnology change created by others.
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Innovation Networks
In the technological environment, inter-linkages develop between numerousorganizations.Interconnections among technology
developersIndustry-university linkages
Alliances
Interconnections among technologydevelopers and facilitatorsIncubation
Government agencies
Cross National differences among networks
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Innovation Networks
Networks facilitate the flow of information,resources, personnel and other inputsnecessary for technology development anddiffusion
Networks speed technology developmentfor several reasonsAssist in the diffusion of technologyCreate a critical mass of skill that speed
knowledge developmentProvide a social safety net for individuals.
Because technology development in risky
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3. How do changes occur inthe technological
environment?
Technology Environment
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Influence of Regulatory
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g yEnvironment
The influence of the political/regulatoryenvironment is felt in at least three ways:
1.It influences the thrust of major basic
research
2.It can facilitate or impede every phase oftechnology development
3.It can act as a facilitator of private sectortechnology development
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Long wave theory of
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g yEconomic change
A reciprocal linkage exists betweentechnological and economic segments
Long wave theory works as followsFirst, discoveries in science trigger technological
innovation
Second, new industries are formed around thesemarkets, and continued innovations in these newlyformed industries expand the markets
Third, as technology matures, many competitors enterinternationally, eventually creating excess capacitythat in turn decreases profitability
Finally, business failures, unemployment, andattendant economic turmoil in financial markets maylead to depressions
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A Comparison of Tofflers Three
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A Comparison of Toffler s ThreeWaves
TechnologicalDevelopment
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4. What are some of themajor current developments
in the technological
environment?
Technology Environment
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Overview of Trends in
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Technology Environment
GlobalizationResource allocated to technology development
Changing location of manufacturing facilities
Rise of multinationals
Comparative advantage of nationsTime CompressionShortened product life cycles
Shortened development times
Decreasing payback periodsTechnology IntegrationCombining technologies to develop new products
Combining technologies to commercializeproducts82
The Impact of Trends on
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pInstitutions
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Process of Technology Change
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Technology Change
Technology change consists of two closelylinked processes:
Innovation
Diffusion
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Focus of Technology change
What are the different types of innovation?
What are the dynamics of technologyevolution?
What are the characteristics of innovativefirm?
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Dynamics of Technological
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Change
Firm Level
Technology Level
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Firm Level
Technological change may be described asa process of problem solving.
Four stages in the process of problem
solving1.Problem Recognition
2.Technology Selection
3.Solution Development4.Commercialization / implementation
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A model of problem solving
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Technology Level
Technological change displays evolutionary dynamics thatare not controlled by a single firm
Actors of these changes
1.Technology developers, which typically are firmsinvolved in innovation in their pursuit of competitive
advantage2.Technology facilitators, who may provide the
resources for financing and executing the innovationefforts
3.Customers who are interested in the fruits of
technology development and who will shape thedirection of development
4.Regulatory agents, the governmental bodies andothers who shape the form of products and processes byestablishing standards or specifications and
5.Other stakeholders, who may be the beneficiaries or95
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Implications for the MOT
1.Innovation, imitation and adoption
2.The role of technology and market factors
3.The centrality of learning
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Innovation, Imitation and
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Adoption
When a firm innovates,two different groups ofplayers respond to theinnovation
Customers makesdecisions to adopt ornot to adopt theinnovation
Competitors maydecide to copy theinnovation. This is
referred as imitation
Innovation andImitation are supply-side concepts
Diffusion is a demand-97
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The centrality of learning
Three major mechanisms of learningEnvironmental surveillance through technical
and market intelligence.
Experimentation within firms whereby firms
can learn problem solving by simulation andby trial and error.Imitation through competitive intelligence.
Multifaceted Learning lies at the core ofTechnological change
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h l i l h
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Technological Change
Technological change consists oftwo closely linked processes:
Innovation
Diffusion
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Wh i I i
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What is Innovation
Innovation includes both:A technological change new to both
enterprise and the economy.
A change that has diffused into the economy
and is adopted by the firm
Innovation refer both to the output andthe process of arriving at atechnologically feasible solution to aproblem triggered by a technologicalopportunity or customer need
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Process and Output:I ti
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Innovation
Process
Innovation refers to the process by whichindividuals or organizations arrive at a
technical solution.Output
Innovation to refer to a product or service i.e.the output of the innovation process
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C t f I ti
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Components of Innovation
As outputs all technological innovationshave three components:
A hardware component consisting of thematerial or physical aspects of the
innovationA software component consisting of the
information base that is needed to use theinnovation
An evaluation information componentconsisting of the information that is usefulfor decisions related to the adoption of theinnovation
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C t f I ti
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Components of Innovation
The components form a system.If any component of a specific innovation is changed,
other components will need to be changed also so asto render the innovation user friendly.
The hardware and software components are
intrinsic to the technological innovation.Domination of the component: Hardware
dominant/ Software Dominant
Third component is not intrinsic and refers to
the information accompanying an innovationthat enables firms or individuals to evaluate itsusefulness.
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Fi l l i ti
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Firm level innovation
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D i f I ti
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Drivers of Innovation
Environmental FactorsMarket factorsAppears to have a primary influence on innovation.
Input factors
Rising costs of inputs, trigger innovations aimed atreducing the use of the expensive inputs
Autonomous factorsIntellectual curiosityTechnological possibility
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D fi iti
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Definitions
Technical innovations Are about improvedproducts, services, or processes or completelynew ones
Administrative innovations Pertain toorganizational structure and administrativeprocesses and may or may not affect technicalinnovation
Radical innovations Provide a brand newfunctional capability, which is a discontinuity in
the current technological capabilitiesIncremental innovations Improve the existing
functional capability of an existing technologyby improving performance and quality and
lowering cost108
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Definitions
Architectural innovations - Use the firmsexisting knowledge of components butrevolutionize when those component parts areput together
Modular innovations - Build on that knowledgeof how to link components but change thecomponents themselves
Product innovations Are new products orservices introduced to meet an external and
market needProcess innovations Are new elements
introduced into an organization's production orservice operations used to produce a product
or render a service109
D fi iti
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Definitions
Autonomous innovations Are those, whichcan be introduced without modifying othercomponents or items of equipment
Systemic innovations Are those, which
require significant readjustment to otherparts of the system
Systems innovations Provide newfunctional capabilities but are based on
reconfiguring existing technologiesRegular innovations Preserve production
competencies and market competencies
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Definitions
Niche-creation innovations Preserveproduction competencies but disruptmarket competencies
Revolutionary innovations Obsolete
(phase out) production competencies butpreserve market competencies
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Process of Innovation
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Process of Innovation
Two types of innovation process1.Market pullIs the advancement of technology oriented
primarily toward a specific market need,
and only secondarily toward increasedtechnical performance.
2.Technology pushIs the advancement of technology oriented
primarily toward increased technicalperformance, and only secondarilytoward specific market needs.
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Types of Innovation outputs
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Types of Innovation outputs
Two dimensions to classify an innovation1.Degree to which specific technologies in
an innovation depart from earlier ones, orwhat we will call component knowledge
2.Degree to which configurations amongtechnologies in an innovation depart fromearlier one, or what we will callcomponent configuration
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Four major types ofinnovation
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innovation
Incremental innovations: Requires only minorimprovements to the existing system
Modular innovations: refer to significant changes inelements of products. The implementation requireswould require an understanding of the new components
of the systemArchitectural innovations: It requires the new
knowledge on how existing components can beconfigured into a new system. No significant knowledgeis required concerning the components themselves
Radical innovations:They are non-aligned withorganizational skills and capabilities of the firm
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Classification of Innovations
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Classification of Innovations
Process
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for Products, process andservices
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services
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Innovation
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Innovation
The process of innovationLong term vs. short term, inside vs. outside
the organization
The economic impact of innovation
Potential for wealth creationThe role of a manager in the Innovation
processLong term technological vision vs. planned
and managed
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Models of Innovation
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Models of Innovation
Two classificationsBased on Iterativeness and AdoptionIterativeness : Linear model &Interactive
model
Adoption: Static model & dynamic modelIterative models look at the interactions of
the people involved in the innovationprocess
Adaptive models examine the feedbackafter the innovation is accepted in themarket
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Adaptation Models
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Adaptation Models
Static modelsAbernathy-Clark ModelHenderson-Clark Model
Value added chain ModelDynamic modelsUtterback-Abernathy ModelTushman-Rosenkopf Model
S Curve models
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Iterative models
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Iterative models
Novicks functional modelBrights 8 process model
Technology push v/s market pull
Vijay Jollys integrated model
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The Process of TechnologyInnovation
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Innovation
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Technology Evolution
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Characteristics ofTechnological Change
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Technological Change
S-curve of technological evolution
Technology progression
Level of technology development
Technology change agent
Evolutionary characteristic of technologicalchange
Uncertainty and technological insularity
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S Curve of technologyevolution
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evolution
Technology evolution refers to the changesin the performance characteristics of aspecific technology over time
Phases of S-curve
Emergence when the technology has come intoexistence but shows little improvement in itsperformance characteristic
Rapid improvement when the performancecharacteristic improves at an accelerating pace
Declining improvement when the pace ofimprovement declines
Maturity when further improvements become verydifficult to achieve
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The Industry LifeCycle as an S curve
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y
Performance
Takeoff
Maturity
Time125
Why S-curve for evolution?
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Why S-curve for evolution?
Learning ProcessesIn the first stage, the learning generates a
more or less reliable design and productionprocess
In the second stage, the learning curveeffects produce rapid improvement in theperformance characteristics
Technology LimitsTechnology is constrained by physical limits
Improvements beyond physical (technology)limits are harder to come by
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The S-curve Maps MajorTransitions
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Transitions
Time
Ferment
Takeoff
Maturity
Discontinuity
Performance
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existing organizationsseverely
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severelyCumulate share of sales of photolithographic alignment
equipment, 1962-1986, by generation
Contact Proximity Scanner S&R (1) S&R (2)
Cobilt 44
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opportunity
Corning glassCookware to optical fiber
HPInstrumentation to computers
IBMMainframes to PCs to Services
Eli LillyRandom drug discovery to genetics and
genomics
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Technology Progression
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Technology Progression
Technology progression describes theprocess by which new technologies emergeto make existing technologies obsolete.
Technology evolution represents the
incremental evolution of technology overtime.
Technology progression represents theradical breakthroughs that significantly
replace current technologyTechnology progression may be described
using a series of S-curves
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Technology Progression
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Technology Progression
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Levels of TechnologyManagement
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Management
Basic research conducted without apractical application or a problem at hand
Applied research basic research resulthave to age before they can be packaged
into a useful innovationDevelopment Major technological advances
required a cluster of innovations
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Technology change agents
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Technology change agents
Innumerable
Vary significantly across the levels oftechnological change
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Evolutionary characteristicsof technical change
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of technical change
Simultaneous development of innovationsat multiple levels by numerous changeagent present evolutionary characteristics
on technological developmentThose who are involved in technology
development the so called radical changeswill be seen as an accumulations ofincremental innovations
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Uncertainty andtechnological insularity
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technological insularityGreat degree of uncertainty
They cope with this uncertainty by engaging in a processof learning, gathering information, experimentation andimitation. Innovation development requires informationconcerning:The performance of innovation they are seeking to create or
adoptMaterials and components they are fabricating into the
innovation
Competitors innovations, the nature of existing patents, andgovernment policies affecting their proposed innovation; and
The problems faced by consumers in the market and howthe proposed innovation might solved certain of theseperceived problems
Innovation process is driven by the exchange oftechnological, market and other environmental
information in the face of hi h uncertaint
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Technical Insularity
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Technical Insularity
The search for or dissemination of technicalinformation embedded in an innovation isgoverned by the principle of technologicalinsularity
The principle of technological insularitysuggest that a characteristic feature oftechnical know-how is that it is not easilytransmitted
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Reasons for TechnicalInsularity
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Insularity
Technology evolves evolves because ofaccumulated experience of the individuals.Thus first hand knowledge is crucial to theevolution of performance characteristics.Knowledge is not easily transferred
Technical know-how is not easily acceptedby individuals not involved in itsproduction. Such know-how requires
abandoning of old concepts or conceptsthat have not been proved useful
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Uncertainty andtechnological insularity
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technological insularity
Technology insularity leads to
Spatial clustering
Temporal clustering
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Characteristics of innovationfirms
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firms
Entrepreneurial innovationOccurs when new technologies and
scientific development yield economicopportunities for proactive
entrepreneursManaged innovation
Large firm vs. small firm who is more
innovative?
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process of innovation inorganizations
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organizations
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Summary of factorsstimulating innovation
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stimulating innovation
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Integrating Technology Push andMarket pull to Stimulate Innovation
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Market pull to Stimulate Innovation
Opportunities forTechnology Push
Opportunities forMarket Pull
Innovation
Scientific discoveries Applied KnowledgeRecognized needsIntellectual capital
(scientists and
engineers)
Market demandProliferation of
application areasRecognized needs
Opportunities forincreased profitability,
quality, productivityEntrepreneurs
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Influence of environmentaltrends on innovation
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trends on innovation
Three environmental trendsGlobalizationTime compression
Technology integration
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Three key managerialimplications
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p ca o sSuccessful management of technology
requires that the problem solving within thefirm should take into account bothtechnical and market considerations.
Learning through environmentalintelligence, innovation and imitation arecentral to effective problem solving.
Development of problem solutions can be
accomplished either in-house, incollaboration with other or simply byadopting innovations from outside.
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Critical factors in managingtechnology
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gyThe creativity factor
The link between science and technology
Types of innovation
Creativity and innovation
Bringing innovation to marketTechnology-price relationship
The timing factor
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Diffusion
Process of Technology Change
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Diffusion
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What is diffusion?
What are the dynamics of diffusion?
What attributes of an innovation facilitate
or hinder diffusion?What factors drive the process of diffusion?
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T-M Matrix
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What is diffusion
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Diffusion is the process by which
an innovation is propagatedthrough certain channels overtime among the units of asystem.
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Diffusion Vs Imitation
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Misconceptions about newtechnology
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gy1. Best Possible determines the choice of
technology
2. Choice of technology results from rationalanalysis
3. Technological advances or discoveries usuallyare adopted eventually
4. The biggest hurdle is making the originaldiscoverythe downstream development is just a matter of applying
the necessary effort
1. Technology have intrinsic value
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Misconceptions about newtechnology
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6. Radically new advances will win7. The power of new technologydetermines its success
8. Progress in technology comes
principally from continuing to improveperformance
9. A new technology can be grafted onto
an existing business
gy
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Realities
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1. Good enough is the basis for choice
2. Choice is strongly influenced by convention and pastpractice
3. Most dont succeed and shouldnt
4. Most of what is not yet known about a new discovery is
probably bad and requires creativity to overcome5. The customer determines value
6. New is not necessarily better
7. The infrastructure required to support it is often thedetermining factor
8. Progress requires establishing standards, imposingconstraints and achieving routine
9. The new product and the business system developedto produce it should be created together
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Dynamics of Diffusion
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yS-curve of diffusionRate of diffusionPotential set of adopters
Reinvention during diffusion
Mechanisms of diffusionTechnology substitutionBandwagon effect
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Four Phases of diffusion
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1.Emergence characterized by a slow advance inthe beginning, suggesting that adoptionproceeds slowly at first when there are fewadopters.
2.A rapid growth phase, when adoption rate
accelerates until half of the individuals in thesystem have adopted.
3.A slow growth phase, where the rate of growthdeclines, but adoption continues.
4.Maturity, the final stage, where the diffusionalmost comes to a halt, either as a result ofmarket saturation or the introduction of a newproduct, process, or service into the market
that replaces the existing innovation
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Differences in diffusion speed
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p
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Formulation of S-curve Bass Model
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S-curve diffusion
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Reinvention
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Reinvention refers to the dynamics by which aninnovation is changed or modified by the usersas they adopt and use it.
Four ways in which reinvention occurs:Improvement in the design and performance
characteristics of an innovation may be necessity forits further adoption by adopters (dominant design)
As an innovation diffuses, a standard model mayemerge and speed the adoption process (standardprocess)
Requirement for complementary products/process forwidespread diffusion
Possible new applications: adoption beyond theoriginally conceived scope of its application
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Mechanisms of Diffusion
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Two mechanisms by which an innovationpropagates through an adopter population
Technology substitutionBandwagon effect
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Technology Substitution
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Explains why an innovation is adopted
Technology substitution is key that unlocksthe doors of an adopter population for thepropagation of an innovation.
Technology substitution refers to actualsubstitution of a new technique for the old.
A new technology or an innovationdisplaces an already existing technology
during the process of being adopted
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Bandwagon Effect (BE)
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BE is useful for explaining the speed ofdiffusion.
BE refers to the strategy of informationcollection employed by adopters
It focuses on the dynamics by which lateradopters, in their decision to adopt aninnovation, imitate the behavior of earlieradopters.
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Mechanisms of Diffusion
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Technology Substitution and Bandwagoneffect underscore the roles ofKnowledge and learning in the diffusion
processUncertainty and information
Tech Substitution and Bandwagon effectrefers to the different facets of learning
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A Model of Innovation adoption
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Steps involved in innovation
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Awareness
Attitude formation
Decision
ImplementationConfirmation
165
Stages in decision to adopt
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Trialability
Observability
166
the stages of AdoptionDecision
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Shifting characteristics ofadopters over time
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Adopters categories depending on theirspeed of adoption:
1.Innovators: very eager to try newideas
2.Early adopters: Opinion leadership3.Early majority: deliberate in its
decision to adopt new ideas
4.Late majority: adopts new ideas just
after the average member of a system5.Laggards: last among a population to
adopt an innovation168
Selected differences amongadopter categories
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Relative importance ofdecision stage
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Adoption is difficult in organizationsA number of individuals are usually
involved in the innovation-decisionprocess, and the implementers areoften a different set of people from the
decision makers.The organization structure that gives stability
and continuity to an organization oftenresists the implementation of an
innovation.
170
Factors that drive theprocess of diffusion
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Attributes of an innovationCommunity effects and network
externalities
Characteristics of the population
171
Attributes of an innovation
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Five attributes of an innovation that influence
the process of diffusion
1.Relative advantage is the degree to which aninnovation is perceived as being better than the ideathat it supercedes
2.Compatibility is the degree to which an innovationis perceived as being consistent with existing values orpast experiences and needs of potential adopters
3.Complexity is the degree to which an innovation isperceived as being difficult to understand and use
4.Trialability is the degree to which an innovation maybe experimented with on a limited basis
5.Observability is the degree to which the results ofan innovation are available to others172
Components and Attributesof an innovation
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Community Effects
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Community adoption level affect value andrisks of adoption.
Increase in returns comes from Learning byusing (means that a technologysperformance ratio improves rapidly as acommunity of adopters)
Network benefits (Positive Externalities)
Technological interrelatedness (a large
base of compatible products needed tomake a technology worthwhile)
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Characteristics of thepopulation
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Three facets of the systemCommunicationsOpinion leaders
Cultural norms
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Influence of environmentaltrends on diffusion
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GlobalizationAdopters are located all over the world
Time CompressionSwifter pattern of innovation
Rapid response in redesign of informationcomponent of innovation, adjustment inmarketing strategies and adoption ofinnovations
Technology IntegrationInstitutionalization of organizational
mechanism for innovation
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INNOVATION PROCESS
INNOVATION STRATEGY
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Innovation Process
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COMMERCIALLY SUCCESSFUL CHANGE
IN
TECHNOLOGY /
BUSINESS MODEL /
BOTH
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BUSINESS PERSPECTIVE
CUSTOMER CENTRIC
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INNOVATIVE
Vs
STATIC ORGANIZATION:
FAILURE vs INACTION
181
Rules of Innovation
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Integrating with Business Strategy
Balancing creativity &value capture
Neutralizing organizational antibodies
NetworkingDevising metrics & rewards
INTERDEPENDENT
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How A CompanyCreatesSells
Delivers Value to CustomersCoversSupply ChainTargeted Customer Segments
Customers perception of deliveredvalue
183
BUSINESS MODELINNOVATION
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3 Levers
Value proposition ( What)
Supply Chain ( How)
Target Customer ( Whom)
184
SOURCES OF TECHNOLOGYINNOVATION
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Product & Service
Process
Enabling Technologies
185
INTEGRATING INNOVNMODEL
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Business Model & Technologies
Heavy emphasis on one
Changes to BM & T managed atseparate locations
186
6 LEVERS OF INNOVATION
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3 in Business Model
3 in Technology
Innovation involves changes inone or more
187
Innovation Levers
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3 TYPES OF INNOVATION
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Incremental
Semi-radical
Radical
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190
INCREMENTAL INNOVN
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Leads to small improvements
No major investments. Clear goals
Sustainable for long periods
>80% of total investmentCornerstone. Provides protection from
competitive erosion
Constrained creativity
Spiral of rampant incrementalism
191
SEMI-RADICALINNOVATION
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Asymmetric w r t BM & Technology
Change in one linked to the other
Innovation in one creates
opportunities in the otherHuge potential. Big challenge
Simultaneous management needed
WAL-MART, SOUTHWEST AIRLINES
192
RADICAL INNOVATION
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Results in new product/service
Fundamental changes in competitiveenv.
Leads to series of cascadinginnovations
Huge investments. Low probability
Too much investment wasteful
Balanced portfolio a keyDISPOSABLE BABY DIAPERS
193
Summary
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