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Bateman Snell

Management Competing
in the
New Era

5th
Edition
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved
17-2

Part Five
Chapter 17 - Managing Technology and Innovation

Chapter Outline
Technology and Innovation
Technological Innovation in a Competitive
Environment
Assessing Technology Needs
Framing Decisions about Technological
Innovation
Sourcing and Acquiring New Technologies
Technology and Managerial Roles
Organizing for Innovation
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved
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Learning Objectives
After studying Chapter 17, you will know:
 the process involved in the development of new technologies
 how technologies proceed through a life cycle

 how to manage technology for competitive advantage

 how to assess technology needs

 where new technologies originate and the best strategies for

acquiring them
 how people play a role in managing technology

 how to develop an innovative organization

 the key characteristics of successful development projects

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved


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Technology And Innovation


Technology
 themethods, processes, systems, and skills used to transform
resources into products
Innovation
a change in technology
 process innovations - changes that affect the methods of

producing outputs
 product innovations - changes in the actual outputs

themselves

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved


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Steps In Technology Emergence,


Development, And Replacement

Entrepreneurial
initiate needed
to pull elements
Required
together
resources are
Able to convert available
the knowledge
Knowledge to into practice
meet the demand
is available
Demand for
the technology

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved


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Technology And Innovation


The technology life cycle
a predictable pattern followed by a technological innovation
starting from its inception and development to market saturation
and replacement
 cycle begins with the recognition that applied science can satisfy a

need
 knowledge and ideas brought together, culminating in a

technological innovation
 rate of product innovation tends to be highest in early years

 dominant design emerges when early problems are solved

 technology reaches upper limits of performance capabilities

 the technology remains in mature stage until it is replaced

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved


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The Technology Life Cycle


Theoretical Development slows
maximum as a limit is approached
Performance

Emergence of a
dominant design

Early
problems

Time
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved
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Technology And Innovation (cont)


Diffusion of technological innovations
 spread in the use of new technology over time follows an S-
shaped pattern
 adopters of new technology fall into five groups

innovators - adventurous
early adopters - critical to the success of a new technology

 include well-respected opinion leaders


early majority - take longer to decide to use something new
late majority - approach innovation with great caution

 adopt out of economic necessity or increasing social pressure


laggards - isolated and highly conservative
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved
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Technology Dissemination
Pattern And Adopter Categories
100

90

80
Percentage of adopters

Cumulative
70 S-shaped curve

60
Early
50 adopters
13.5% Bell-shaped
40 frequency curve

30 Innovators
Early Late
2.5%
majority majority
20 34% 34%
Laggards
10
16%

Time
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved
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Technological Innovation In A
Competitive Environment
Technology leadership
 can be used to support low-cost and differentiation strategies
 imposes costs and risks

 not the best approach for every organization

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved


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Advantages And Disadvantages


Of Technology Leadership
Advantages Disadvantages
•First mover advantage •Greater risks
•Little or no competition •Cost of technology development
•Greater efficiency •Costs of market development and
•Higher profit margin customer education
•Sustainable advantage •Infrastructure costs
•Reputation for innovation •Costs of learning and eliminating
•Establishment of entry barriers defects
•Occupying of best market niches •Possible cannibalization of
•Opportunities to learn existing products

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved


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Technological Innovation In A
Competitive Environment (cont.)
Technology followership
 can be used to support low-cost and differentiation strategies
 adoption timing is dependent on the organization’s strategic

needs and technology skills


 potential benefits of the new technology also a consideration

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved


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Dynamic Forces Of A
Technology’s Competitive Impact
Gradual
diffusion

Ongoing Innovation/dynamic
development competitive impact

Complementary
innovations

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved


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Assessing Technology Needs


Measuring current technologies
 technology audit - process of clarifying the key technologies upon
which an organization depends
 most important dimension of a new technology is its competitive

value
emerging technologies - still under development and unproven
 may alter rules of competition in the future
pacing technologies - yet to prove full value
 have potential to alter the rules of competition
key technologies - proven effective and provide a strategic advantage
base technologies - are commonplace in the industry

 offer little competitive advantage

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved


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Assessing Technology Needs


(cont.)
Assessing external technological trends
 Benchmarking - process of comparing the organization’s
technologies with those of other companies
important to consider practices of overseas competitors
focus is what is currently being done

 Scanning - focus is what can be done and what is being


developed
emphasizes identifying and monitoring the sources of
technology in an industry
extent of scanning determined by the importance of staying at

the cutting edge of technology

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved


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Framing Decisions About


Technological Innovation
Anticipated market receptiveness
 in the short run, there should be an immediate application that
demonstrates the value of the new technology
 in the long run, a set of applications must show the technology

is the proven means to satisfy a market need


Technological feasibility
 visionscan stay unrealized for a long time
 technical obstacles may represent barriers to progress

Economic viability
 must be a good financial incentive for the new technology
development results in costs patents help to recoup the costs
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved
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Framing Decisions About


Technological Innovation (cont.)
Anticipated competency development
 technological innovations are the tangible product of intangible
knowledge and capabilities that make up the organization’s core
competencies
 firm’s must have (or develop) the internal competencies needed

to execute their technology strategy


Organizational suitability
 assessthe fit of technological innovation with the organization’s
culture and managerial systems
proactive” technology-push” innovators
defender - have a more circumspect posture toward innovation

analyzer - allow others to prove the viability of the technology

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved


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Sourcing And Acquiring New


Technologies
Make-or-buy decision
 the question an organization asks itself about whether to acquire
new technology from an outside source or develop it itself
 Internal development - potentially advantageous to keep the

technology proprietary
 Purchase - most technology is available in products or

processes that can be openly purchased


 Contracted development - contract development to an outside

source
 Licensing - when technology is not easily purchased, may be

able to license it for a fee

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved


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Sourcing And Acquiring New


Technologies (cont.)
Make-or-buy decision (cont.)
 Technology trading - may be used between rival companies
becoming increasingly common because of the high cost of
developing advanced technologies independently
 Research partnerships - each member enters the partnership
with different skills or resources needed for successful new-
technology development
 Joint venture - have greater permanence

outcomes result in entirely new companies


 Acquisition of an owner of the technology
outrightpurchase of the entire company
acquiring a minority interest to gain access to the technology

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved


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Technology Acquisition Options


Yes Internal
development
Available skills
Yes and resources Acquisition of the technology
owner
Important to No Exclusive research contract
remain
proprietary Yes Purchase
License
No Trade
Available for
sale
Joint venture
No Research partnership

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved


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Technology And Managerial


Roles
Chief Technology Officer (CTO)
 senior position at the corporate level with broad, integrative
responsibilities
 coordinates technological efforts of the business units

 acts as a voice for technology

 supervises new-technology development

 assesses the technological implications of major strategic

initiatives
Entrepreneur
 inventsnew ways to produce old products as a way of
exploiting new technologies
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved
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Technology And Managerial


Roles (cont.)
Technical innovator
 person who develops a new technology or has the key skills
to install and operate the technology
Product champion
 personwho promotes a new technology throughout the
organization in an effort to obtain acceptance and support for
it
Executive champion
 anexecutive who supports a new technology and protects the
product champion of the innovation

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved


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Unleashing Creativity: 3M’s Rules


For An Innovative Culture
Set goals for innovation

Commit to research and development

Inspire intrapreneurship

Facilitate, don’t obstruct

Focus on the customer

Tolerate failure

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved


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Organizing For Innovation


Bureaucracy busting
 bureaucracy is an enemy of innovation
 establish special temporary project structures that are isolated

from the rest of the organization


allowed to operate under different rules
 angura - “underground research” policy that allows Japanese
scientists to pursue projects about which only their immediate
supervisor knows
 cross-functional teams - solve problems and create innovative

solutions
are flat structures that create an environment that encourages
collaboration and creativity
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved
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The Learning Laboratory

Own Present
Value:
and solve
Egalitarianism Integrate Value:
problems
internal Shared
Managerial system: knowledge knowledge
External Intellectual Managerial system:
Assets
Value: Openness Integrate Internal
to outside external
knowledge knowledge Value:
Experiment
Managerial system: continuously Positive risk
Future Managerial system:

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved


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Organizing For Innovation (cont.)


Implementing development projects
 developmentproject - focused organizational effort to create a
new product or process via technological advances
fall into one of four categories
 research or advanced development projects - designed to invent
new science for application in a specific project
 breakthrough development projects - designed to create the first

generation of a product or process


 platform development projects - establish the basic architecture for

a whole set of follow-on projects


 derivative development projects- designed to provide incremental

improvements to an existing product or process


development projects have multiple benefits
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved
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Organizing For Innovation (cont.)


Technology, job design, and human resources
 adopting a new technology typically requires changes in the way
jobs are designed
 sociotechnical systems - approach to job design that attempts to

redesign tasks to optimize operation of a new technology while


preserving employees’ interpersonal relationships and other human
aspects of the work
managerial choices on how to apply a new technology
 used to limit the tasks and responsibilities of workers
 used to achieve great accomplishments and improve the quality of

workers’ lives
 mustconsider the effect of technology on other human resource
systems
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved