MANAGEMENT

of
TECHNOLOGY
The Key to Competitiveness and Wealth
Creation
Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

Tarek Khalil | Ravi Shankar

Critical Factors
in Managing
Technology

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

THE CREATIVITY FACTOR

Invention

Innovation

Involves the creation of a product, service, or process

that is new to an organization. It is the introduction
into the marketplace, either by utilization or by
commercialization, of a new product, service, or
process

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

Is either a concept or the creation of a novel

technology. It could be a product, a process, or a
previously unknown system

THE LINK BETWEEN SCIENCE

AND TECHNOLOGY

and Technology are Linked

through the DiscoveryInvention-Innovation-Market
Sequence.)

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

Components of an
Innovation Cycle (Science

TYPES OF INNOVATION
Service innovation

Radical (revolutionary) innovation

Incremental (evolutionary) innovation
Routine innovation
Disruptive innovation

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

System innovation

CREATIVITY AND
INNOVATION
The essence of creativity is combining two or
more ideas to arrive at an entirely new one

Permits people to work in areas of their greatest interest

Encourages employees to have broad contact with
stimulating colleagues
Allows taking moderate risks
Tolerates some failures and nonconformity
Provides appropriate rewards and recognition

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

According to Jain and Triandis (1990), a creative

environment has the following characteristics:

CREATIVITY AND INNOVATION

(Contd.)
Barron (1969) found that the following characteristics exist
in creative people who can convert their thoughts into
innovation:

Conceptual fluency
The ability to produce a large number of ideas quickly
The ability to generate original and unusual ideas
The ability to separate source from content in evaluating
information
The ability to stand out and be a little deviant from others
Interest in the problem one faces
Perseverance in following problems wherever they lead
Suspension of judgment and no early commitment
The willingness to spend time analyzing and exploring
A genuine regard for intellectual and cognitive matters

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

BRINGING INNOVATION TO THE

MARKET

Example of speeding diffusion is: Microsofts strategy

of licensing its DOS operating system for use by many
computer companies and then making its Windows 95
program available on each PC, thus creating customer
commitment to the product

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

There are time lags between the different

stages of the innovation cycles sequence of
eventsscience, invention, innovation, and
market
The sooner an innovation reaches the
marketplace, the sooner a company can reap
its rewards
Exclusivity of technology provides higher
marginal returns

TECHNOLOGY-PRICE
RELATIONSHIP

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

Technology Gap/Price Relationship

THE TIMING FACTOR

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

Actions must be taken at the right time if an enterprise is

to succeed in a competitive marketplace
In the early 1980s, at the beginning of a new information
age, triggered the technological revolution
For manufacturing and service organizations, Time-Based
Competition (TBC) is an important competitive weapon
for achieving world-class status (Blackburn, 1991)
Manufacturing organizations have switched to Just-InTime (JIT) systems to compress time wasted in production
and facilitate quick response to customer demands

THE VISION TO CHANGE

STRATEGY
It is very common for managers to be drawn into the
routine day-to-day problems of running a business

In todays world of fast-paced technological change, this

can be a very dangerous posture to take, an attitude that
can lead to loss of competitiveness
Proper management of technology requires making tough
decisions and being willing to accept change, move where
new technologies are headed, and invest in the future

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

The old adage If its not broken, dont fix it may lead
management to maintain the status quo

MANAGING CHANGE

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

Thirty years ago the focus was on how to manage available

resources
Today the approach must be very different and much more
comprehensive
The tasks associated with generating new ideas, creating
new products, controlling production, and dealing with a
new breed of competitors and with demanding customers
are some of the challenges faced by todays managers
Survival is at risk if a company cannot forecast or foresee the
changes in the external environment
It is recognized that 60 to 80 per cent of small businesses fail
within five years of starting up. Even large, established firms
face the problem of staying power

PRODUCTIVITY,
EFFECTIVENESS, AND
COMPETITIVENESS

On a national level, productivity is a very important

factor in raising the standard of living. National
productivity can be expressed as output in terms of
Gross Domestic Product (GDP) over input in terms of
total hours worked:
Productivity = (Output, like GDP)/(Input, like total hours
worked) = $/hour worked

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

Differences between productivity and effectiveness and

their relationships to competitiveness need to be
understood in order to optimize the performance of
production systems

PRODUCTIVITY,
EFFECTIVENESS, AND
COMPETITIVENESS (Contd.)
Standard of living is often associated with a populations
per capita income. This relationship can be expressed as:

Productivity or efficiency in operation implies doing

things right
Effectiveness implies the ability to achieve desired goals,
such as increasing the market share of the company or
attaining an acceptable level of profit and is about
producing or being capable of producing results

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

Per capita income = GDP/Total population = $/person

PRODUCTIVITY,
EFFECTIVENESS, AND
COMPETITIVENESS (Contd.)

MOT Working at Time t1 and Planning for Time t2 and t3

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

The terms productivity and effectiveness are not

synonymous. A company can have very high productivity
indexes, yet its management may not be effective in achieving
desired goals
Competitiveness indicates the standing of a country or a
company in relation to a known group
MOT encourages managers to keep an eye on the future
without neglecting the need to continue optimizing current
operations

LEADERS VERSUS
FOLLOWERS
Three types of Firms Leader, Follower, and Laggard

Name recognition
Better market position
Chance to define the industry standard
Head start on the learning curve
Protective barriers
High profit
Delayed customer switching
Favorable response by outsiders

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

Advantages of being a leader in innovation:

LEADERS VERSUS FOLLOWERS

(Contd.)
Disadvantages of being a leader in innovation:
Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

The leader assumes the large cost associated with research,

prototyping, testing, and overall development
Must be able to sustain the lead
The initial investment in design, tooling, and production
may create difficulty in reversing the course of action
should a competitor introduce a better technology or an
improved design
There is market uncertainty associated with the
introduction of new technology
The leader is a target for competition

LEADERS VERSUS
FOLLOWERS (Contd.)
Innovation leaders can sustain
their leadership through a
combination of strategies
A follower firm does have some
advantages over a leader in that
it is not committed to any special
design, process, or technology
Teece (1987) introduced a
taxonomy of outcomes from the
innovation process and identified
some winners and some losers

Source: Teece, 1987

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

Outcome from the Innovation Process

WEBLINKS
http://www.biocon.com/biocon_aboutus.asp

http://articles.economictimes.indiatimes.com/2009-0102/news/27656069_1_innovation-new-drugs-generic-drug
http://www.wipo.int/ipadvantage/en/details.jsp?id=2602
http://www.infosysblogs.com/thinkflat/2008/01/nano_innov
ation_in_automobile.html

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

http://www.technologyreview.in/biomedicine/23610/page2/