why strategic technology management matters? rev: sep, 2012 euiho (david) suh, ph.d. postech...
TRANSCRIPT
Why Strategic Technology Management
Matters?Rev: Sep, 2012
Euiho (David) Suh, Ph.D.
POSTECH Strategic Management of Information and Technology Laboratory(POSMIT: http://posmit.postech.ac.kr)
Dept. of Industrial & Management EngineeringPOSTECH
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Importance of Technological In-novation• Technological innovation now the single
most important driver of competitive success in many industries• Many firms earn over one-third of sales on prod-
ucts developed within last five years• Product innovations help firms protect margins
by offering new, differentiated features.• Process innovations help make manufacturing
more efficient.
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Product Development Life Cycle
Raw Idea Conceptualization(Scientific Approach)
R&D Produc-tion
Pilot Delivery to Cus-tomers
Full-Scale Produc-tion
Logis-tics
A Traditional View of Product Cy-cle
Life-Cycle Phases
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Importance of Technological In-novation
• Advances in information technology have en-abled faster innovation• CAD/CAM systems enable rapid design and shorter
production runs
• Importance of innovation and advances in infor-mation technology have lead to: • Shorter product lifecycles (more rapid product obsoles-
cence)• More rapid new product introductions• Greater market segmentation
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Impact on Society
• Innovation enables a wider range of goods and services to be delivered to people worldwide• More efficient food production, improved medi-
cal technologies, better transportation, etc.• Increases Gross Domestic Product by making la-
bor and capital more effective and efficient• However, may result in negative externalities,
• E.g., pollution, erosion, antibiotic-resistant bacteria
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Impact on Society• Timeline of some of the most important technologi-
cal innovations in the last 200 yearsYear Technological innovations
1800 - 1820
• Electric battery• Steam locomotive• Internal combustion engine• Telegraph• Bicycle
1821 - 1840
• Dynamo• Braille writing system• Hot blast furnace• Electric generator• Five-shot revolver
1841 - 1860
• Bunsen battery (voltaic cell)• Sulfuric ether-based anesthesia• Hydraulic crane• Petroleum refining• Aniline dyes
1861 – 1880
• Gatling gun• Typewriter• Telephone• Phonograph• Incandescent light bulb
1881 - 1900
• Light steel skyscrapers• Internal combustion automobile• Pneumatic tire• Electric stove• X-ray machine
Year Technological innovations
1901 - 1920
• Air conditioner (electric)• Wright biplane• Electric vacuum cleaner• Electric washing machine• Rocket
1921 - 1940
• Insulin (extracted)• Television• Penicillin• First programmable computer• Atom fission
1941 – 1960
• Aqua lung• Computer• Nuclear reactor• Transistor• Satellite• Integrated circuit
1961 – 1980
• Portable hadheld calculator• ARPANET (precursor to Internet)• Microprocessor• Mobile (portable cellular) phone• Supercomputer
1981 - 2000
• Space shuttle (reusable)• Disposable contact lenses• High-definition television• World Wide Web protocol• Wireless Internet
2001 - 2020 • Map of human genome• Smart phone / Tablet PC• Electric car
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Impact on Society
• GDP per Capita for the world, US, etc. from 1970 to 2008
• The average of GDP per capita has risen steadily Because of Technological Innovation (By Economist Robert Merton Solow)
GDP (Gross domestic Product): The total annual output of an economy as measured by its final purchase price
※ GDP converted into U.S. dollars and adjusted for inflation
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Innovation by Industry: The Importance of Strategy
• Successful innovation requires carefully crafted strategies and implementation processes.
• Innovation funnel• Most innovative ideas do not become successful new prod-
ucts.
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How long does new product development take?
• Study administered by the Product Development and Management Association found:• Length of development cycle varies with innovative-
ness of project• Incremental projects took 6.5 months from concept to
market introduction• “More innovative” projects took just over 14 months.• New-to-the-world products took 24 months.• On average, firms reported 12% to 40% shorter cycle
times than they reported in 1995.
Research Brief
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INNOVATION + STRATEGY
■ Old:– God helps those who help them-
selves!
– INNOVATION alone works???
■ New: – God helps those who have strategies!
The VCR Battle (Betamax vs. VHS)
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SONY: The biggest loser of standards war?
≪SONY: Betamax,
1974JVC: VHS, 1976
95% of the VCR market, 1988
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■ Apple had better quality with a higher level of technology Due to its closed platform, less technical supports were provided
■ IBM made bigger profits than Apple, relying on the compatibilities with other software and hardware providers (e.g. Microsoft Windows) Even though Apple’s technology was better than IBM’s, IBM beat Apple because of their high compatibilities
PC - Apple vs. IBM
Open PlatformClosed Platform
VS.
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Game - Atari vs. Nintendo
■ Atari released the first successful video game consoleusing plug-in cartridges, instead of having built-in games Because Atari accepted both low-quality games and high-quality games, the Atari’s customers who played low-quality games were unsatisfied with their products
■ Nintendo controlled video game manufacturers and constructed library con-taining only qualified games This strategy insured that Nintendo remained profitable and achieved re-markable success in video game market
VS.
High quality games
Low quality games
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Game Console - Playstation vs. Wii
■ Playstation 3 has more excellent graphics and outstanding processing power over Nintendo Wii
■ The advantages (e.g. gesture based control, availability to everyone, lower price, family-friendly image) of Wii lead itself to a big success in the game market
VS.
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MP3 player - Zune vs. Ipod
■ Zune and iPod provide their own music management software;Zune: Zune player, iPod: iTunes
■ Zune player only supports the songs purchased in Zune marketwhile iTunes supports any songs Even though Zune’s spec is better than iPod’s, iPod have more compatibility and convenience iPod got an overwhelming victory over Zune
VS.
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■ Lotus 1-2-3 (1983) and Microsoft Excel (1985) have similar functions in both quality and efficiency perspectives
■ Lotus only focused on OS/2 while MS Excel could be compatible with Window As Window had became more and more popular, MS Excel beat Lotus 1-2-3, even though they have no big differences.
Spreadsheet - Lotus 1-2-3 vs. Excel
VS.
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Beverage - Pepsi vs. Coca-Cola
■ Pepsi Cola is a much sweeter beverage than Coca cola■ The popularity of Coke's brand image misleads people to think Coca-Cola itself
tastes better, even though it really doesn't taste very different from Pepsi First-mover Advantage
815 Cola (Released in 1998)– Customers didn’t tell 815 Cola from Coca-Cola in blind test– At first, it was successful, occupying 13.7% of market share– However, 815 Cola went bankrupt in 2007
because of major cola companies’ product flooding
VS.
VS.
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■ E-Mart developed VESS Cola with Cott, a beverage company in U.S. (OEM)*– Lower price than cola from major companies
(66% lower than convenience store price, 37% lower than supermarket price)
■ In domestic cola market, Coca-Cola occupies 75-80% of market shareand Pepsi cola occupies the remaining market share– Some brands have developed cola products but they failed due to the reputation of
Coca-Cola
■ VESS Cola is developed through about 40 times of blind tests
What would be the result?* OEM: Original Equipment manufacturer
VESS Cola vs. Coca-Cola
VS.