Technology Management

Why MOT?
Rapidly changing technology which is

changing every industry and every business Rapidly increasing competition which will eventually envelop every market niche, no matter how sheltered. Increasingly efficient financial markets requiring ever shorter term returns.

Rate of Technological change

Interdisciplinary Nature of MOT

Technology
Technology consists of three components
Hardware The physical structure and logical

layout of the equipment or machinery that is to be used to carry out the required tasks Software The knowledge of how to use the hardware in order to carry out the required tasks Brainware the reasons for using the technology in a particular way. This is referred to as know-why.

Technology
The fourth component Know-how
It encompasses all levels of technological

achievements The learned or acquired knowledge regarding how to do things well It may be result of experience, transfer of knowledge or hands-on-practice

Technology is
driving changes in the business landscape no longer limited to supporting business

decisions breaking down traditional industrial boundaries redefining a new era of competition But still people have been and will continue to express disbelief here is how..,

Radio and Television

Television 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

Communication
Well 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

Computers
There 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
8

640 K (internal memory) ought to be enough for anybody - Bill Gates, Microsoft, 1981

Management
Art of getting people together to

accomplish the desired goals Management comprises

Planning Organizing Staffing Directing Controlling

Manages deployment and manipulation

of human resources, financial resources, technological resources and natural resources

Management of Technology
A discipline of management wherein an

organization leverages the technological fundamentals to create competitive advantage An integrated application of engineering, science and management capabilities Process of MOT includes
Identification of technologies Selecting Procurement Assimilation Exploitation of technologies for production of

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goods and services

Evolution of Management of Technology

1950 R&D Management 1970 Management of Innovation 1980 Technology Strategy 1990s Value Based Management

Era of Plentiful Resources New venture divisions Allocation of Innovation Mgmt. Funds to projects Scientists & Engineers Leadership
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Era of Accountability Linking to business Different org. arrangements Broader vision of technology Outsourcing Tools to assess values Internal Markets Chief Technology officer

R & D Manager

Perspectives in Management
Market Based Resource Based

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Market Based Vs Resource Based

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Key concepts of MOT

To develop ideas about the management of

technology within an open system, four major concepts are employed: Firms as value chain
Industries as competitive domains
Capacity driven Customer driven Knowledge driven Primary activities Support activities

Forms of technological change Value creation and competitive

Product technology Process / production technology

advantages

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Porters Model of Value Chain

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Classification of Industries

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Forms of Technological Change

Process Technology / Production

Technology
Product Technology

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Evolution by Ages

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Evolution of Production Technology

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Product Techology

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Value Creation and Competitive Advantage

Competitive advantage is the ability of the

firm to outperform rivals on profitability It depends on the how the firm is able to create for its customers value that exceeds the cost of creating a product Value is what the customers are willing to pay, and superior value stems from offering

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Levels of Development
Descriptive
First level -

Flow chart

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Individual develops tacit knowledge Second level tacit knowledge is codified Finally there is a level of development where the knowledge is put to

Classification of technology
New Technology Emerging Technology High Technology Medium Technology Low Technology Appropriate Technology Codified Vs Tacit Technology

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Four Characteristics of MOT

Opportunity: The art of perceiving the

triggering event for technology development; it is truly a human activity.

Appropriability: Where the technology

development is due to economic motives, individuals will pursue development only to the extent that there is a reasonable assurance that the fruits of their labor will flow back to the developers.

Transferability: Technology or knowledge

transfer is not smooth; knowledge is sticky.

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Resources: Technology development

The Creation-Application Spectrum

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Spinning out technology

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Core Knowledge needed for MOT

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S C O P E OF M O T
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Research Development

Research Development Design Manufacturin g

Research Development Design Manufacturin g Marketing Sales Physical Distribution Customer service

Research Development Design Manufacturin g Marketing Sales Physical Distribution Customer service Information systems Human Resources Finance Purchasing Patent and Legal Public Relations General Administratio n

Research Development Design Manufacturin g Marketing Sales Physical Distribution Customer service Information systems Human Resources Finance Purchasing Patent and Legal Public Relations General Administratio n Customers Suppliers Other influences (Internal;

Managerial function of MOT

Business Strategy Technology forecasts Knowledge Management Information Management Identifi cation and selecti on
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Technology Strategy Technology Development and utilization Technology acquisition Acqu and transfer isitio n R&D Product and Process Technology NPD

Commercialization Expl Value chain Management oitati on Product Life cycle management

Managerial functions of MOT

Identification
Technology assessment Pre selection Framework Technology / Market scanning Information Management

Selection
Technology forecasting Benchmarking Decision criteria and Process Monitoring / Improvement

Protection

Exploitation
Incremental Development Product Management Complementary Assets
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Identify options Establish strategy Monitor effectiveness

Acquisition
Internal R & D Licensing and Joint ventures Organizational change Project Management Technology Insertion

Customer supplier Network

Source: Gregory : 1995

Audit Assess utilization of existing technology* Identify the gaps Priorities areas for new inputs in technology from: Incremental Improvement Schemes* Modernization Program Major Technology Development Program*
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Forecasting Assess the development trends of all the technologies available* Analyze competing alternatives; Costs; TechnoEconomic; Adaptability; and Environmental Compatibility* Compare technology from in-house (R&D) and external sources *

Selection & Plan Analyze Cost; TechnoEconomics; Adaptability; Flexibility; Time Frame; and Competitors Strategy, for the competing alternative technologies Match the Corporate Needs with the Technologies available and identify the gaps to be bridged* Prepare a comprehensive Strategic Technology

Acquisition Obtain and comprehend: Detail Project Report Contract Manuals Training Commissioni ng Assimilate the technology procured through use; and Improve Standard Operating Practice*

Exploitation Upgrade Technology after Induction* Document; modify Standard Operating Practice Transfer to market or in house it after up gradation

The Framework for Technology

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System Model: Resources. Infrastructure and Activities

Resources People Intellectual Property Information Organizational characteristics Infrastructure Purposes Objectives Strategies Organizational structure Guiding principles Policies and practices Management attitudes Management expertise Activities Business Management System Project Functional Group Individual External

Technology
Time Customers Suppliers

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Plant and equipment Support for innovation Facilities Acceptance of risk

Goals and strategies of a Firm

A firms goals and strategies represent the

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aggregate of its products, technologies, and services For such goals to be credible they must be linked directly to the set of development projects the firm intends to undertake (referred to business architecture) A business architecture in MOT identifies what business parameters to address to make a good business decision regarding key problems encountered in achieving objectives and goals of the strategies of a new development project

Development Chain
The development of any product or service

includes the following chain of acceptance steps:

The research and development of an idea or invention The competitive evaluation of the idea The research required in technologies to develop the

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idea The transfer or purchase of a selected technology for support of a process, a component of a product, or a further development of the technology for its own marketability The acceptance of a proposal to develop the product The acceptance of the design of the product and/ or technology The acceptance of the products manufacturability i.e. at the volumes and specific quality levels required

Business Architecture
It is necessary to look at the general

development steps and identify key check points in decision making that relate to business parameters These steps have a business assessment criteria associated with them for which there must be a payoff

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MOT Flowchart
The flowchart shows

the practice of technology management in responding to the business. The model shows a process that identifies major development steps starting with technology research leading to an ultimate customer payoff
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Business Architecture
There are two phases of architecture
Research and technology phase Product development phase

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Research and Technology Phase

Technology Transfer Technology Research Creativity and Innovation Competitive Analysis Research / Development Analysis
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Transfer Pricing Make Vs Buy Technology Forecasting

Funding Customer Requirements Risk Analysis Competitive Advantage Industry Analysis Business Goals

Reverse Engineering Productivity Invention

Technology Goals

Payoff

Product Development Phase

Market Acceptance Software and Manufacturing Acceptance Design / Tech Acceptance Market Driven Proposal Acceptance Product Goals Market Segmentation Parts, CIM, CFM CAD / Packaging Opportunity Analysis Payoff Revenue Return on Assets Customer Requirement Business Case Business Goals

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Changing trends in Industry

Factor Innovatio ns Competit ion Traditional Few Expected competition Competitors are the enemy Cooperation non allowed Expected market Local market Quality is desirable New Short life cycles Continuous Stronger competition Alliance with competitors accepted Uncertain market Global market Imperative Customized production Produce in small lots Suppliers are partners Reduce inventories Flexible manufacturing Smaller plants; outsourcing, Life cycle Long life cycles

Market Quality

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Productio Mass production n Produce in large lots No commitment to suppliers Large inventories Fixed manufacturing Organiza Large corporations

Old Reducing the direct costs of production should be primary focus of management concern

New Trends The indirect costs of the firm should be reduced while improving competitiveness is viewed as a major challenge

Production economies require large volume Single critical technology-based product lines will have long product life cycles World markets can be divided on a national basis, with national firms dominant in domes Multi-core technology product lines will have shorter product life cycle World markets are technology are now global and enterprise should be globally

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Strategic, Operational and Management Issues

Strategic Issues 1. 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 and results 6. Precursors to technology strategy 7. Including technology in business strategy 8. Rationalizing strategy and operations 9. 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 advantage

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Strategic Issues
Understanding the role of technology in the

business
A business, not technical responsibility Integrating resources, infrastructure and

activities
Including Technology in business strategy
Research Development Design Manufacturing Marketing
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Administration

Strategic Issues
Managing Technology different levels Globally Corporate, sector, group, division, strategic business unit Research, development, design, manufacturing, marketing, sales, physical distribution, customer service, all administrative and support functions Managing project at the project level, team level Managing technology by scientists, engineers and other professionals Technology Managers Who manages

technology?
At different levels from executive to individual
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decision make Description of role

Strategic Issues
Adding value with technology leveraging available

sources
Internal and worldwide External and worldwide

Developing a technology policy Bridging the gap between technology policy and

results
Transforming the thinkers into thinkers and doers Transforming the doers into doers and thinkers

Managing the decision making process Practices

and models
Consensus Quantitative and qualitative Intuitive
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Balanced

Operational Issues
1. 2. 3. 4. 5. 6. 7. 8. 9.

Idea and concept generation Forecasting Evaluating Justifying Investments Planning management Managing the project management process Managing discontinuities Descriptions how, where and why? 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 Integration 17. 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 effective

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management of technology 31. Developing and using business unit technology plans 32. Organizing and allocating resources 33. Developing as-is profiles 34. Closing the gaps from competence to capability to competitive advantage 35. Implementing activity based management 36. Implementing the project approach at all levels 37. Auditing research, development, technologies and potential new products and processes

Operational Issues
Idea and concept generation Forecasting Technologies Products Markets Productivity and Performance
Technological Intelligence
Developing a process: Internal and external Recognizing emerging technologies Using technological intelligence for technology

leadership

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Operational Issues
Innovation
Description and scope Organizational environment Role of creativity In all business functions not just science and

enginering Innovating on schedule

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Technology Transfer Within the organization, business units, functions, individuals Academia and industry Government agency and industry Global opportunities Consortium

Operational Issues
Investing in Research
Corporate or operational Internal and external

Organizing for effective product

development
Requirement total system The process Limitations of formalized structure Need for flexibility Balancing freedom and constraints Balancing stability and change
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Creating an appropriate environment

Management Issues
People related Developing 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 Technology

Management
Automation of work in all functions Computer-integrated manufacturing Computer aided design, engineering, manufacturing

and others Concurrent and simultaneous engineering Information systems that provide information Using technology and business models and simulations Using other computer-aided technologies such as artificial intelligence, expert systems, chaos theory etc. Business related processes
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Further Classification of Technologies

State of the art technologies : Those technologies that equal or surpass the competitors Proprietary technologies: those technologies protected by patents or secrecy agreements that provide a measurable competitive advantage Known technologies: those technologies that may be common to many organizations but are used in unique ways Core technologies: those technologies that are essential to maintain a competitive position Leveraging technologies: those technologies that support several products, product line, or classes of products
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Further Classification of Technologies

Supporting technologies: technologies that support the core technology Pacing technologies: technologies whose rate of development controls the rate of product or process development Emerging technologies: technologies that are currently under consideration for future products or processes Scouting technologies: formal tracking of potential product and process technologies for future study or application Idealized unknown basic technologies: technologies that, if available, would provide a significant benefit in some aspect of life

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Technology Environment

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Introduction
1. Technological environment can be viewed as a network of organizations consisting of developers and facilitators. 2. Technology development occurs in stages. Each stage then provides the basis for development in ensuing stages. 3.The way in which technology develops is not determined solely by a developer. National and often international, political considerations will drive technological development.
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Scope
1. What is meant by environment and

technological environment in particular? 2. Who are the main actors in the technological environment? 3. How do changes occur in the technological environment? 4. What are some of the major current developments in the technological environment?

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Technology Environment
What is meant by environment and technological environment in particular?

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Levels of Environments

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Task Environment
It refers to the set of customers, suppliers,

competitors and other environmental agencies directly related to the firm The task environment is more or less specific to a firm and is not necessarily shared by its competitors

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Competitive Environment
It comprises of the firm and its competitors New entrants, substitute products,

suppliers, customers and competition influence what happens in an industry The factors affect different competitors differently

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Macro Environment

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Technological Environment
Technology environment is the most visible

and pervasive macro-environmental segment in a society: 1.Brings new products, processes and material 2.Directly impacts every aspect of the society around us (entertainment, communications, health care, Transportation modes) 3.Alters the rules of global trade and competition

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Technology Environment
It comprises two institutions
New knowledge (Science) The application of the knowledge to develop

new products, processes and materials (Technology)

Thus, Technology Development consists of

two sets of activities

Creation of knowledge and Application of that knowledge

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Creation of Knowledge
The knowledge base of technology is

derived from basic research The basic research focuses on generating scientific knowledge and deal with fundamental question of science Scientific research is often cumulative
Research questions begin in some current

state of scientific knowledge; these questions stimulate research projects from which scientific results are published in scientific literature
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Application of Knowledge
Scientific knowledge is put into practice to

design an innovation that will solve a perceived need or problem. Researches involved in application are the main consumers of basic research The end result of their efforts is often a product prototype that may have commercial potential

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Application of knowledge
Activities of application knowledge: Applied Research: consists of scientific

investigations of known phenomena that do not typically advance scientific knowledge

Development: reduces the knowledge to

practice in workable prototype form

Engineering: defines the knowledge for

commercial exploitation or other practical end users

Commercialization: includes activities such as

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manufacturing that finally put the technology to use till it becomes adopted and used by others

Technology Environment
Who are the main actors in the technological environment?

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Types of actors in the environment

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Roles of corporations
1.As technology developers, they are drivers of change in the technology environment 2.Beneficiaries of technology change initiated by others. 3.Facilitate technology development by others external to the firm through investments in their research projects. 4.Corporations may also be the victims of technology change created by others.

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Innovation Networks
In the technological environment, inter-

linkages develop between numerous organizations.

Interconnections among technology

developers
Industry-university linkages Alliances

Interconnections among technology

developers and facilitators

Incubation Government agencies

Cross National differences among networks

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Innovation Networks
Networks facilitate the flow of information,

resources, personnel and other inputs necessary for technology development and diffusion Networks speed technology development for several reasons
Assist in the diffusion of technology Create a critical mass of skill that speed

knowledge development Provide a social safety net for individuals. Because technology development in risky
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Technology Environment
3. How do changes occur in the technological environment?

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Changes in Technological Environment

Changes in the technological environment

often come about in two interrelated ways: Induced changes

Represents the technological consequences

created by social, political, or economic forces.

Autonomous changes
These changes are initiated by technology

developers but are largely independent of the forces in other macro-environmental segments.
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Influence of Regulatory Environment

The influence of the political/regulatory

environment is felt in at least three ways: 1.It influences the thrust of major basic research 2.It can facilitate or impede every phase of technology development 3.It can act as a facilitator of private sector technology development

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Autonomous Changes
Autonomous changes in technology are

drivers of fundamental social and economical change Social change

The first stage corresponds to agriculture The second stage corresponds to machine

production The third stage refers to the information revolution triggered by advances in computer technology.

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Long wave theory of Economic change

A reciprocal linkage exists between

technological and economic segments Long wave theory works as follows

First, discoveries in science trigger technological

innovation Second, new industries are formed around these markets, and continued innovations in these newly formed industries expand the markets Third, as technology matures, many competitors enter internationally, eventually creating excess capacity that in turn decreases profitability Finally, business failures, unemployment, and attendant economic turmoil in financial markets may lead to depressions
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A Comparison of Tofflers Three Waves

Technological Development 80

Technology Environment
4. What are some of the major current developments in the technological environment?

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Overview of Trends in Technology Environment

Globalization
Resource allocated to technology development Changing location of manufacturing facilities Rise of multinationals Comparative advantage of nations

Time Compression
Shortened product life cycles Shortened development times Decreasing payback periods

Technology Integration
Combining technologies to develop new products Combining technologies to commercialize
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products

The Impact of Trends on Institutions

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The Technology Cycle

Need driven expectations TECHNOLOGY ABANDONMENT Obsolescencing Demolition TECHNOLOGY ADVANCEMENT Innovation involving major modifications of acquired technology
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TECHNOLOGY AWARENESS Of marketable inventions justificati on External and Internal Environment TECHNOLOGY ACQUISITION by self-generation or transfer Installation TECHNOLOGY ADAPTATION Minor modifications of acquired technology

Promotion

Process of Technology Change

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Technology Change
Technology change consists of two closely

linked processes:
Innovation Diffusion

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Focus of Technology change

What are the different types of innovation? What are the dynamics of technology

evolution?
What are the characteristics of innovative

firm?

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Invention and innovation

Invention is a new combination of

preexisting knowledge Innovation includes:

A technological change new to both

enterprise and the economy A change that has diffused into the economy and is adopted by the firm

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Dynamics of Technological Change

Firm Level Technology Level

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Firm Level
Technological change may be described as

a process of problem solving. Four stages in the process of problem solving 1.Problem Recognition 2.Technology Selection 3.Solution Development 4.Commercialization / implementation

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A model of problem solving

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Technology Level
Technological change displays evolutionary dynamics that are not controlled by a single firm Actors of these changes 1.Technology developers, which typically are firms involved in innovation in their pursuit of competitive advantage 2.Technology facilitators, who may provide the resources for financing and executing the innovation efforts 3.Customers who are interested in the fruits of technology development and who will shape the direction of development 4.Regulatory agents, the governmental bodies and others who shape the form of products and processes by establishing standards or specifications and 5.Other stakeholders, who may be the beneficiaries or

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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 Adoption

When a firm innovates,

two different groups of players respond to the innovation Customers makes decisions to adopt or not to adopt the innovation Competitors may decide to copy the innovation. This is referred as imitation
Innovation and

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Imitation are supplyside concepts Diffusion is a demand-

The role of technology and market factors

For a technological

change to be successful the firm has to manage two related processes Finding effective solutions to a problem and Gaining acceptance of the solution in the market place
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The centrality of learning

Three major mechanisms of learning
Environmental surveillance through technical

and market intelligence. Experimentation within firms whereby firms can learn problem solving by simulation and by trial and error. Imitation through competitive intelligence.

Multifaceted Learning lies at the core of Technological change

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Technological Change
Technological change consists of two closely linked processes:
Innovation Diffusion

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Innovation
What is innovation? What are the different types of innovation? What are the dynamics of technology

evolution? What are the characteristics of innovative firms?

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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 and

the process of arriving at a technologically feasible solution to a problem triggered by a technological opportunity or customer need
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Process and Output: Innovation

Process

Innovation refers to the process by which individuals 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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Components of Innovation
As outputs all technological innovations

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have three components: A hardware component consisting of the material or physical aspects of the innovation A software component consisting of the information base that is needed to use the innovation An evaluation information component consisting of the information that is useful for decisions related to the adoption of the innovation

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 as to 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 innovation that enables firms or individuals to evaluate its usefulness.
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Firm level innovation

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Drivers of Innovation
Environmental Factors
Market factors Appears to have a primary influence on innovation. Input factors
Rising costs of inputs, trigger innovations aimed at

reducing the use of the expensive inputs

Autonomous factors
Intellectual curiosity Technological possibility

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Definitions
Technical innovations Are about improved

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products, services, or processes or completely new ones Administrative innovations Pertain to organizational structure and administrative processes and may or may not affect technical innovation Radical innovations Provide a brand new functional capability, which is a discontinuity in the current technological capabilities Incremental innovations Improve the existing functional capability of an existing technology by improving performance and quality and lowering cost

Definitions
Architectural innovations - Use the firms

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existing knowledge of components but revolutionize when those component parts are put together Modular innovations - Build on that knowledge of how to link components but change the components themselves Product innovations Are new products or services introduced to meet an external and market need Process innovations Are new elements introduced into an organization's production or service operations used to produce a product or render a service

Definitions
Autonomous innovations Are those, which

can be introduced without modifying other components or items of equipment Systemic innovations Are those, which require significant readjustment to other parts of the system Systems innovations Provide new functional capabilities but are based on reconfiguring existing technologies Regular innovations Preserve production competencies and market competencies
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Definitions
Niche-creation innovations Preserve

production competencies but disrupt market competencies Revolutionary innovations Obsolete (phase out) production competencies but preserve market competencies

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Process of Innovation
Two types of innovation process 1.Market pull
Is the advancement of technology oriented

primarily toward a specific market need, and only secondarily toward increased technical performance.
2.Technology push
Is the advancement of technology oriented

primarily toward increased technical performance, and only secondarily toward specific market needs.
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Types of Innovation outputs

Two dimensions to classify an innovation 1.Degree to which specific technologies in

an innovation depart from earlier ones, or what we will call component knowledge 2.Degree to which configurations among technologies in an innovation depart from earlier one, or what we will call component configuration

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Four major types of innovation

Incremental innovations: Requires only minor improvements to the existing system Modular innovations: refer to significant changes in elements of products. The implementation requires would require an understanding of the new components of the system Architectural innovations: It requires the new knowledge on how existing components can be configured into a new system. No significant knowledge is required concerning the components themselves Radical innovations: They are non-aligned with organizational skills and capabilities of the firm

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Classification of Innovations

Process

115

Classification of Innovations for Products, process and services

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Innovation
The process of innovation
Long term vs. short term, inside vs. outside

the organization
The economic impact of innovation
Potential for wealth creation

The role of a manager in the Innovation

process
Long term technological vision vs. planned

and managed

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Models of Innovation
Two classifications Based on Iterativeness and Adoption
Iterativeness : Linear model &Interactive

model Adoption: Static model & dynamic model

Iterative models look at the interactions of

the people involved in the innovation process Adaptive models examine the feedback after the innovation is accepted in the market
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Adaptation Models
Static models
Abernathy-Clark Model Henderson-Clark Model Value added chain Model

Dynamic models
Utterback-Abernathy Model Tushman-Rosenkopf Model S Curve models

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Iterative models
Novicks functional model Brights 8 process model Technology push v/s market pull Vijay Jollys integrated model

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The Process of Technology Innovation

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Technology Evolution

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Characteristics of Technological Change

S-curve of technological evolution Technology progression Level of technology development Technology change agent Evolutionary characteristic of technological

change Uncertainty and technological insularity

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S Curve of technology evolution

Technology evolution refers to the changes

in the performance characteristics of a specific technology over time Phases of S-curve

Emergence when the technology has come into existence but shows little improvement in its performance characteristic Rapid improvement when the performance characteristic improves at an accelerating pace Declining improvement when the pace of improvement declines Maturity when further improvements become very difficult to achieve
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The Industry Life Cycle as an S curve

Performance Maturity

Takeoff

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Time

Why S-curve for evolution?

Learning Processes
In the first stage, the learning generates a

more or less reliable design and production process In the second stage, the learning curve effects produce rapid improvement in the performance characteristics
Technology Limits
Technology is constrained by physical limits Improvements beyond physical (technology)

limits are harder to come by

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The S-curve Maps Major Transitions

Maturity

Performance

Discontinuity Takeoff

Ferment

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Time

existing organizations severely

Cumulate share of sales of photolithographic alignment equipment, 1962-1986, by generation Contact 44 17 Proximity Scanner <1 8 67 21 78 S&R (1) 7 9 10 55 81 S&R (2)

Cobilt Kasper Canon P-Elmer GCA Nikon Total 61

75

99+

<1 12 70 82+

128

But they also create major opportunity

Corning glass
Cookware to optical fiber

HP
Instrumentation to computers

IBM
Mainframes to PCs to Services

Eli Lilly
Random drug discovery to genetics and

genomics

129

Technology Progression
Technology progression describes the

process by which new technologies emerge to make existing technologies obsolete. Technology evolution represents the incremental evolution of technology over time. Technology progression represents the radical breakthroughs that significantly replace current technology Technology progression may be described using a series of S-curves
130

Technology Progression

131

Levels of Technology Management

Basic research conducted without a

practical application or a problem at hand Applied research basic research result have to age before they can be packaged into a useful innovation
Development Major technological advances

required a cluster of innovations

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Technology change agents

Innumerable Vary significantly across the levels of

technological change

133

Evolutionary characteristics of technical change

Simultaneous development of innovations

at multiple levels by numerous change agent present evolutionary characteristics on technological development
Those who are involved in technology

development the so called radical changes will be seen as an accumulations of incremental innovations

134

Uncertainty and technological insularity

Great degree of uncertainty They cope with this uncertainty by engaging in a process

of learning, gathering information, experimentation and imitation. Innovation development requires information concerning:
The performance of innovation they are seeking to create or

adopt Materials and components they are fabricating into the innovation Competitors innovations, the nature of existing patents, and government policies affecting their proposed innovation; and The problems faced by consumers in the market and how the proposed innovation might solved certain of these perceived problems

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Innovation process is driven by the exchange of technological, market and other environmental

Technical Insularity
The search for or dissemination of technical

information embedded in an innovation is governed by the principle of technological insularity The principle of technological insularity suggest that a characteristic feature of technical know-how is that it is not easily transmitted

136

Reasons for Technical Insularity

Technology evolves evolves because of

accumulated experience of the individuals. Thus first hand knowledge is crucial to the evolution of performance characteristics. Knowledge is not easily transferred Technical know-how is not easily accepted by individuals not involved in its production. Such know-how requires abandoning of old concepts or concepts that have not been proved useful
137

Uncertainty and technological insularity

Technology insularity leads to Spatial clustering Temporal clustering

138

Characteristics of innovation firms

Entrepreneurial innovation Occurs when new technologies and

scientific development yield economic opportunities for proactive entrepreneurs Managed innovation Large firm vs. small firm who is more innovative?

139

Factors influencing the process of innovation in organizations

140

Summary of factors stimulating innovation

141

Integrating Technology Push and Market pull to Stimulate Innovation

Opportunities for Technology Push

Innovati on

Opportunities for Market Pull

Scientific discoveries Applied Knowledge Recognized needs Intellectual capital (scientists and engineers)

Market demand Proliferation of application areas Recognized needs Opportunities for increased profitability, quality, productivity Entrepreneurs

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Influence of environmental trends on innovation

Three environmental trends Globalization Time compression Technology integration

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Three key managerial implications

Successful management of technology

requires that the problem solving within the firm should take into account both technical and market considerations. Learning through environmental intelligence, innovation and imitation are central to effective problem solving. Development of problem solutions can be accomplished either in-house, in collaboration with other or simply by adopting innovations from outside.
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Critical factors in managing technology

The creativity factor The link between science and technology Types of innovation Creativity and innovation Bringing innovation to market Technology-price relationship The timing factor

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Process of Technology Change

Diffusion

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Diffusion
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

Diffusion is the process by which

an innovation is propagated through certain channels over time among the units of a system.

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Diffusion Vs Imitation

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Misconceptions about new technology

Best Possible determines the choice of technology 2. Choice of technology results from rational analysis 3. Technological advances or discoveries usually are adopted eventually 4. The biggest hurdle is making the original discovery
1.
the downstream development is just a matter of applying the necessary effort

1.

Technology have intrinsic value

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Misconceptions about new technology

6. Radically new advances will win 7. The power of new technology determines its success 8. Progress in technology comes principally from continuing to improve performance 9. A new technology can be grafted onto an existing business

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Realities
1. 2. 3. 4. 5. 6. 7. 8. 9.
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Good enough is the basis for choice Choice is strongly influenced by convention and past practice Most dont succeed and shouldnt Most of what is not yet known about a new discovery is probably bad and requires creativity to overcome The customer determines value New is not necessarily better The infrastructure required to support it is often the determining factor Progress requires establishing standards, imposing constraints and achieving routine The new product and the business system developed to produce it should be created together

Dynamics of Diffusion
S-curve of diffusion
Rate of diffusion Potential set of adopters

Reinvention during diffusion Mechanisms of diffusion

Technology substitution Bandwagon effect

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Four Phases of diffusion

1.Emergence characterized by a slow advance in the beginning, suggesting that adoption proceeds slowly at first when there are few adopters. 2.A rapid growth phase, when adoption rate accelerates until half of the individuals in the system have adopted. 3.A slow growth phase, where the rate of growth declines, but adoption continues. 4.Maturity, the final stage, where the diffusion almost comes to a halt, either as a result of market saturation or the introduction of a new product, process, or service into the market that replaces the existing innovation.

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Differences in diffusion speed

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Formulation of S-curve Bass Model

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S-curve diffusion

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Reinvention
Reinvention refers to the dynamics by which an

innovation is changed or modified by the users as they adopt and use it. Four ways in which reinvention occurs:
Improvement in the design and performance

characteristics of an innovation may be necessity for its further adoption by adopters (dominant design) As an innovation diffuses, a standard model may emerge and speed the adoption process (standard process) Requirement for complementary products/process for widespread diffusion Possible new applications: adoption beyond the originally conceived scope of its application
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Mechanisms of Diffusion
Two mechanisms by which an innovation

propagates through an adopter population

Technology substitution Bandwagon effect

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Technology Substitution
Explains why an innovation is adopted Technology substitution is key that unlocks

the doors of an adopter population for the propagation of an innovation. Technology substitution refers to actual substitution of a new technique for the old. A new technology or an innovation displaces an already existing technology during the process of being adopted

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Bandwagon Effect (BE)

BE is useful for explaining the speed of

diffusion. BE refers to the strategy of information collection employed by adopters It focuses on the dynamics by which later adopters, in their decision to adopt an innovation, imitate the behavior of earlier adopters.

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Mechanisms of Diffusion
Technology Substitution and Bandwagon

effect underscore the roles of

Knowledge and learning in the diffusion

process Uncertainty and information

Tech Substitution and Bandwagon effect

refers to the different facets of learning

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A Model of Innovation adoption

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Steps involved in innovation

Awareness Attitude formation Decision Implementation Confirmation

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Stages in decision to adopt

Trialability Observability

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Requisite Information over the stages of Adoption Decision

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Shifting characteristics of adopters over time

Adopters categories depending on their

speed of adoption: 1.Innovators: very eager to try new ideas 2.Early adopters: Opinion leadership 3.Early majority: deliberate in its decision to adopt new ideas 4.Late majority: adopts new ideas just after the average member of a system 5.Laggards: last among a population to adopt an innovation
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Selected differences among adopter categories

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Relative importance of decision stage

Adoption is difficult in organizations
A number of individuals are usually

involved in the innovation-decision process, and the implementers are often a different set of people from the decision makers. The organization structure that gives stability and continuity to an organization often resists the implementation of an innovation.

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Factors that drive the process of diffusion

Attributes of an innovation Community effects and network

externalities Characteristics of the population

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Attributes of an innovation
Five attributes of an innovation that influence

the process of diffusion 1.Relative advantage is the degree to which an

innovation is perceived as being better than the idea that it supercedes

2.Compatibility is the degree to which an innovation

is perceived as being consistent with existing values or past experiences and needs of potential adopters

3.Complexity is the degree to which an innovation is

perceived as being difficult to understand and use

4.Trialability is the degree to which an innovation may

be experimented with on a limited basis

5.Observability is the degree to which the results of

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an innovation are available to others

Components and Attributes of an innovation

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Community Effects
Community adoption level affect value and

risks of adoption. Increase in returns comes from Learning by using (means that a technologys performance ratio improves rapidly as a community of adopters) Network benefits (Positive Externalities) Technological interrelatedness (a large base of compatible products needed to make a technology worthwhile)
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Community effects
Major factors that drive community effects Prior technology drag Irreversibility of investments Sponsorship Expectations

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Characteristics of the population

Three facets of the system
Communications Opinion leaders Cultural norms

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Influence of environmental trends on diffusion

Globalization
Adopters are located all over the world

Time Compression
Swifter pattern of innovation Rapid response in redesign of information

component of innovation, adjustment in marketing strategies and adoption of innovations

Technology Integration
Institutionalization of organizational

mechanism for innovation

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INNOVATION PROCESS
INNOVATION STRATEGY

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Innovation Process
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

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Rules of Innovation
Integrating with Business Strategy Balancing creativity &value capture Neutralizing organizational antibodies Networking Devising metrics & rewards

INTERDEPENDENT

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How A Company
Creates Sells Delivers Value to Customers

Covers
Supply Chain Targeted Customer Segments Customers perception of delivered

value
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BUSINESS MODEL INNOVATION

3 Levers
Value proposition ( What) Supply Chain ( How) Target Customer ( Whom)

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SOURCES OF TECHNOLOGY INNOVATION

Product & Service Process Enabling Technologies

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INTEGRATING INNOVN MODEL

Business Model & Technologies Heavy emphasis on one Changes to BM & T managed at

separate locations

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6 LEVERS OF INNOVATION
3 in Business Model 3 in Technology Innovation involves changes in

one or more

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Innovation Levers

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3 TYPES OF INNOVATION
Incremental Semi-radical Radical

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INCREMENTAL INNOVN
Leads to small improvements No major investments. Clear goals Sustainable for long periods >80% of total investment Cornerstone. Provides protection from

competitive erosion Constrained creativity Spiral of rampant incrementalism

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SEMI-RADICAL INNOVATION
Asymmetric w r t BM & Technology Change in one linked to the other Innovation in one creates

opportunities in the other Huge potential. Big challenge Simultaneous management needed
WAL-MART, SOUTHWEST AIRLINES

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RADICAL INNOVATION
Results in new product/service Fundamental changes in competitive

env. Leads to series of cascading innovations Huge investments. Low probability Too much investment wasteful Balanced portfolio a key
DISPOSABLE BABY DIAPERS
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Summary

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