7. Technology Environments 1 L7 Technology Environments EC10: Innovation & Commercialisation...

7. Technology Environments7. Technology Environments 11

L7 Technology L7 Technology EnvironmentsEnvironments

EC10: Innovation & CommercialisationEC10: Innovation & CommercialisationConducting business in the global Conducting business in the global

economy and playing to wineconomy and playing to win

Marcus ThompsonMarcus [email protected]@stir.ac.uk

7. Technology Environments7. Technology EnvironmentsL7: L7:

Techn9ology EnvironmentsTechn9ology Environments 22

Outline to Technology Outline to Technology EnvironmentsEnvironments

The International Business EnviroThe International Business Environmentnment

Organisational & Supply Chain DOrganisational & Supply Chain Developmentevelopment

Drucker on InnovationDrucker on Innovation Changing the WorldChanging the World


1. 1. The International Business The International Business

EnvironmentEnvironment

EC10 Innovation & EC10 Innovation & CommercialisationCommercialisation


Technology Environments: Technology Environments: 44

International Business: Opportunity International Business: Opportunity and Conflictand Conflict

Globalization creates wealth and benefits Globalization creates wealth and benefits

Critics say it increases the wealth of Critics say it increases the wealth of corporations and investors at the expense of the corporations and investors at the expense of the poor and does other damage to society in poor and does other damage to society in general.general.

Failure to become part of the global market Failure to become part of the global market assures a nation of declining economic influence assures a nation of declining economic influence and a deteriorating standard of living.and a deteriorating standard of living.



MOTIVES FOR MOTIVES FOR INTERNATIONALIZATIONINTERNATIONALIZATION

INTERNAL DRIVERS:INTERNAL DRIVERS:– Search for GrowthSearch for Growth– Exploitation of opportunityExploitation of opportunity

EXTERNAL DRIVERSEXTERNAL DRIVERS– Technology’s effects on customers/firmsTechnology’s effects on customers/firms

– The industrial contextThe industrial context



1. Information Requirement1. Information RequirementPreliminary ScreeningPreliminary Screening– Estimating Market PotentialEstimating Market Potential

Income Elasticity of DemandIncome Elasticity of Demand

Market AuditMarket Audit

AnalogyAnalogy

Longitudinal AnalysisLongitudinal Analysis

Gap AnalysisGap Analysis

– Estimating Sales PotentialEstimating Sales PotentialIdentifying SegmentsIdentifying Segments

SelectionSelection– Concentration versus DiversificationConcentration versus Diversification

These same issues apply regardless of whether a study is

undertaken on or off-line.



2.2. Selection IssuesSelection Issues

Factors to take into AccountFactors to take into AccountMarket-Related FactorsMarket-Related Factors

Mix-Related FactorsMix-Related Factors

Company-Related FactorsCompany-Related Factors

Market MatchesMarket MatchesMarket-Related FactorsMarket-Related Factors

Mix-Related FactorsMix-Related Factors

Company-Related FactorsCompany-Related Factors



Innovation LinkagesInnovation Linkages

Science & Technology Base

Technological Developments

Needs ofMarket

“Innovation occurs through the interaction of the science base, dominated by the Universities, technological developments dominated by industry and the needs of the market. (Trott 2002)


2. Growth Options2. Growth OptionsEC10 EC10

Innovation & Innovation & CommercialisationCommercialisation


Strategy & Structure: Strategy & Structure: Chandler’s contributionChandler’s contribution

Key points from Chandler’s research:Key points from Chandler’s research:– Chandler concluded that strategy came Chandler concluded that strategy came beforebefore organisation structure organisation structure

– Increased decentralisation: Increased decentralisation: organisations that become more diverse organisations that become more diverse in their products and markets, need to in their products and markets, need to reorganise and probably devolve powerreorganise and probably devolve power

– Means the centre can no longer make Means the centre can no longer make the relevant decisions.the relevant decisions.


Strategy or Structure: Strategy or Structure: WilliamsonWilliamson

Williamson explored the role of the centre as Williamson explored the role of the centre as organisations became more diverse.organisations became more diverse.

His observations:His observations:– The role of the a firm’s senior managers The role of the a firm’s senior managers

(HQ) was to allocate resources between its (HQ) was to allocate resources between its various divisions and then monitor and various divisions and then monitor and control themcontrol them

– The strategy of the firm needed to be The strategy of the firm needed to be resolved first, with the organisational resolved first, with the organisational structure to followstructure to follow

According to Williamson, According to Williamson, strategy came strategy came before structure in a firm.before structure in a firm.


Fit between strategy & structure Fit between strategy & structure For a firm to be economically effective, there For a firm to be economically effective, there

needs to be a match between the firm’s strategy needs to be a match between the firm’s strategy and its structure: (the concept of strategic fit and and its structure: (the concept of strategic fit and or congruency)or congruency)

Firms need to adopt an internally consistent set of Firms need to adopt an internally consistent set of practices in order to undertake a proposed practices in order to undertake a proposed strategy.strategy.

Such practices go beyond organisation structure Such practices go beyond organisation structure into other related areas of the business.into other related areas of the business.

These areas include: the strategic planning These areas include: the strategic planning process, recruitment and training, reward process, recruitment and training, reward systems, knowledge, information systems and systems, knowledge, information systems and processes.processes.


Forms of OrganisationForms of Organisation

Bureaucratic, hierarchicalBureaucratic, hierarchical Flat structure, few management Flat structure, few management

layerslayers Team-oriented structureTeam-oriented structure Matrix structure with a combination Matrix structure with a combination

of vertical and horizontal authorityof vertical and horizontal authority Product or service-oriented Product or service-oriented

structuresstructures


The Functional StructureThe Functional StructureBoard

Production Sales & marketing Accountancy Personnel

Main featuresMain features– Organised around tasksOrganised around tasks– CentralisedCentralised

Situations where appropriateSituations where appropriate– Small companies, few plants, Small companies, few plants,

limited productslimited products– Relatively stable – repetitive tasksRelatively stable – repetitive tasks

AdvantagesAdvantages– Controlled by strategic leader/CEO]Controlled by strategic leader/CEO]– EfficientEfficient– Clearly delineated external Clearly delineated external

relationshipsrelationships– Specialist managersSpecialist managers– Simple line of controlSimple line of control– Can promote competitive Can promote competitive

advantage through functionsadvantage through functions

LimitationsLimitations– Succession problemsSuccession problems– Unlikely to be entrepreneurial or Unlikely to be entrepreneurial or

adaptiveadaptive– Profit responsibility exclusively with Profit responsibility exclusively with

CEOCEO– Become stretched by growthBecome stretched by growth– Functional Managers may concentrate Functional Managers may concentrate

on short term routine activities at on short term routine activities at expense of longer-term strategic expense of longer-term strategic developmentsdevelopments

– Problems of ensuring co-ordination Problems of ensuring co-ordination between functions – rivalry may between functions – rivalry may developdevelop

– Functional specialist may seek to build Functional specialist may seek to build mini-empiresmini-empires


The Entrepreneurial StructureThe Entrepreneurial Structure

Main FeaturesMain Features– Organised around the entrepreneurOrganised around the entrepreneur– Totally centralised; no division Totally centralised; no division

responsibilityresponsibility Situations where appropriateSituations where appropriate

– Simple companies in early stages of Simple companies in early stages of developmentdevelopment

AdvantagesAdvantages– Enables the founder, who logically Enables the founder, who logically

understands the business to control its understands the business to control its early growth and development.early growth and development.

LimitationsLimitations– The founder may not have sufficient The founder may not have sufficient

specialist knowledgespecialist knowledge– Only appropriate to a certain sizeOnly appropriate to a certain size

Entrepreneurial Manager

Employee Employee Employee


3. Organisational 3. Organisational DevelopmentDevelopment

EC10 EC10

Innovation & CommercialisationInnovation & Commercialisation


The Effective OrganisationThe Effective Organisation

The strategic purpose of the The strategic purpose of the organisationorganisation

Its mission, vision and valuesIts mission, vision and values Customer characterisation and Customer characterisation and

requirementsrequirements The culture and environment of the The culture and environment of the

organisationorganisation


Strategy & StructureStrategy & Structure

The organisation's mission and strategy The organisation's mission and strategy drive the structuredrive the structure

The culture and environment of the The culture and environment of the organisation plays a large role in organisation plays a large role in determining structure.determining structure.

Informal and formal structures need to be Informal and formal structures need to be alignedaligned


Strategy & Structure: Strategy & Structure: Chandler’s contributionChandler’s contribution Key points from Chandler’s research:Key points from Chandler’s research:

– Chandler concluded that strategy came Chandler concluded that strategy came beforebefore organisation structureorganisation structure

– Increased decentralisation: organisations that Increased decentralisation: organisations that become more diverse in their products and become more diverse in their products and markets, need to reorganise and probably markets, need to reorganise and probably devolve powerdevolve power

– Means the centre can no longer make the Means the centre can no longer make the relevant decisions.relevant decisions.


Strategy or Structure: Strategy or Structure: WilliamsonWilliamson

Williamson explored the role of the centre as Williamson explored the role of the centre as organisations became more diverse.organisations became more diverse.

His observations:His observations:– The role of the a firm’s senior managers (HQ) was The role of the a firm’s senior managers (HQ) was

to allocate resources between its various divisions to allocate resources between its various divisions and then monitor and control themand then monitor and control them

– The strategy of the firm needed to be The strategy of the firm needed to be resolved first, with the organisational resolved first, with the organisational structure to followstructure to follow

According to Williamson, According to Williamson, strategy came before strategy came before structure in a firm.structure in a firm.


Fit between strategy & structure Fit between strategy & structure

For a firm to be economically effective, there needs to For a firm to be economically effective, there needs to be a match between the firm’s strategy and its be a match between the firm’s strategy and its structure: (the concept of structure: (the concept of strategic fit and or strategic fit and or congruency)congruency)

Firms need to adopt an Firms need to adopt an internallyinternally consistent set of consistent set of practices in order to undertake a proposed strategy.practices in order to undertake a proposed strategy.

Such practices go Such practices go beyondbeyond organisation structure organisation structure into into other related areas of the business.other related areas of the business.

These areas include: the strategic planning process, These areas include: the strategic planning process, recruitment and training, reward systems, knowledge, recruitment and training, reward systems, knowledge, information systems and processes.information systems and processes.


To centralise

To professionalise

To balkanise

To s

tand

ardi

se

To collaborate

Six ‘pulls’ on organisationsSix ‘pulls’ on organisations

To evangelise


SITUATIONAL FACTORS DESIGN PARAMETERS

CONFIGURATION ENVIRONMENT INTERNAL KEY PART OFORGANISATION

KEY CO-ORDINATINGMECHANISM

Simple structure

Machinebureaucracy

Professionalbureaucracy

Simple / dynamicHostile

Simple /static

Complex / static

SmallYoungSimple taskCEO control

OldLargeRegulated tasksTechnocratcontrol

Simple systemsProfessionalcontrol

Strategic apex

Technostructure

Operating core

Directsupervision

Standardisationof work

Standardisationof skills

Mintzberg’s six organisational Mintzberg’s six organisational configurationsconfigurations


SITUATIONAL FACTORS DESIGN PARAMETERS

CONFIGURATION ENVIRONMENT INTERNAL KEY PART OFORGANISATION

KEY CO-ORDINATINGMECHANISM

Divisionalised

Adhocracy

Missionary

Simple / staticDiversity

Complex /dynamic

Simple / static

OldVery largeDivisible tasksMiddle-linecontrol

Often youngComplex tasksExpert control

Middle-agedOften ‘enclaves’Simple systemsIdeologicalcontrol

Middle line

Operating coreSupport staff

Ideology

Standardisationof outputs

Mutualadjustment

Standardisationof norms

Mintzberg’s six organisational Mintzberg’s six organisational configurationsconfigurations


The simple structureThe simple structure

Small firms run by one personoften highly informal with strategy made at the top. Simple structures existwhere the industry is fragmented and is comprised of small highly competitivefirms.

Simple technologies are used toproduce products or deliver servicesBarriers to entry are low leads to marketinstability, cost/price squeezes and firm vulnerability. Firms often have verylittle bargaining power over customers

The firm

The environment

The strategy?

Some form of differentiation strategy is needed for survival. A niche or marketing strategy is beneficial in targeting a market that is least competitive.


The Machine BureaucracyThe Machine Bureaucracy

Very rigid with co-ordination achieved viastandardisation of work. Firm highly specialisedas tasks are broken down. Very bureaucratic withmany rules and regulations with no real power at lower levels of the firm.

Such firms thrive only in stable settingsIndustries are often highly concentratedwith most firms of a large size. Little uncertaintyas competitor and customer behaviour predictable with stable demand and market share.

The firm

The environment

The strategy?

Strategic options limited due to their inflexibility and gearing towards efficiency. Innovation out of the question and markets not growing much. So market differentiation and cost leadership the only two option open to such firms.


The Divisionalised StructureThe Divisionalised Structure

Consists of divisions that are responsible forproducing and marketing a discrete product. Divisions may be driven to become bureaucratisedand formalised leading to standard products. Performance controls ensure a degree of conformityalthough divisions autonomous.

Varies from division to division. May needenvironment to be stable, but also operates in some turbulent sectors of the economy.

The firm

The environment

The strategy?

Due to the structure will require strategies based on the context of the divisions operating in different markets. Due to the control element it precludes strategies based upon business differentiation through innovation. However, marketing differentiation and cost leadership may be useful.


The AdhocracyThe Adhocracy

Performs unusual and complex tasks whichcan change constantly. Groups of highlytrained people working together to designand produce complex and rapidly changingproducts. Power decentralised to those withthe skills and based on expertise

Very complex and dynamic. Technologieschange rapidly as do product design and customerneeds. ‘Knowledge’ barriers to entry. Markets maybe unstable as firms ‘leapfrog’ each other with newcreative advances. Moderately competitive.

The firm

The environment

The strategy?

Because of flexible structure and collaborativeworking a strategy of differentiation throughinnovation is beneficial. Not too broad or toonarrow a focus due to the competition


4. Changing the 4. Changing the WorldWorld

EC10 EC10

Innovation & CommercialisationInnovation & Commercialisation


Consequences of ChangeConsequences of Change

Rogers identifies three consequences or Rogers identifies three consequences or changes: changes: Desirable versus undesirable consequences Desirable versus undesirable consequences Direct versus indirect consequences, and Direct versus indirect consequences, and Anticipated versus unanticipated Anticipated versus unanticipated

consequences. consequences.


4. Imperatives for 4. Imperatives for ScotlandScotland

SMEs need to be motivated in a way that is meaningful to them to spend SMEs need to be motivated in a way that is meaningful to them to spend scarce resources on R&D activity.scarce resources on R&D activity.

Universities and Research Institutes need incentivised to spend scarce Universities and Research Institutes need incentivised to spend scarce resources (people, money, and time) on creating meaningful interactions resources (people, money, and time) on creating meaningful interactions with SMEs.with SMEs.

Meaningful interaction between the worlds of business and academia will Meaningful interaction between the worlds of business and academia will only grow if there are people dedicated to building the links, through only grow if there are people dedicated to building the links, through actively engaging with the SME base face to face, assessing their needs, actively engaging with the SME base face to face, assessing their needs, and then matching these needs to where appropriate academic expertise and then matching these needs to where appropriate academic expertise lies. Such interactions need to happen coherently over a lengthy period of lies. Such interactions need to happen coherently over a lengthy period of time, probably a minimum of ten years.time, probably a minimum of ten years.

4. Ongoing growth will require links between technologically-aware local 4. Ongoing growth will require links between technologically-aware local businesses and academic institutions to be nurtured, in order to develop, businesses and academic institutions to be nurtured, in order to develop, and to exploit commercially, “orphan” Intellectual Property (IP)and to exploit commercially, “orphan” Intellectual Property (IP)

(Technology Ventures Scotland, 2005)(Technology Ventures Scotland, 2005)


The First Rule of The First Rule of Innovation Innovation

deal with failuredeal with failure


The Learning The Learning OrganisationOrganisation

An organisation that learns and An organisation that learns and encourages learning among its people. It encourages learning among its people. It promotes exchange of information promotes exchange of information between employees hence creating a between employees hence creating a more knowledgable workforce. This more knowledgable workforce. This produces a very flexible organisation produces a very flexible organisation where people will accept and adapt to where people will accept and adapt to new ideas and changes through a shared new ideas and changes through a shared vision.vision.


Generic Learning Organisation Generic Learning Organisation StrategiesStrategies

AccidentalAccidental Not initiated through awareness of the Learning Organisation concept. Not initiated through awareness of the Learning Organisation concept.

Company may already be taking steps to achieve their business Company may already be taking steps to achieve their business goals that, in hindsight, fit the framework for implementing a Learning goals that, in hindsight, fit the framework for implementing a Learning Organisation.Organisation.

SubversiveSubversive Once an organisation has discovered the Learning Organisation Once an organisation has discovered the Learning Organisation

philosophy, they make a decision as to how to proceed. This is a philosophy, they make a decision as to how to proceed. This is a choice between a subversive and a declared strategy. The subversive choice between a subversive and a declared strategy. The subversive strategy differs from an accidental one in the level of awareness; but it strategy differs from an accidental one in the level of awareness; but it is not secretive! Thus, while not openly endorsing the Learning is not secretive! Thus, while not openly endorsing the Learning Organisation ideal, they are able to exploit the ideas and techniques. Organisation ideal, they are able to exploit the ideas and techniques.

DeclaredDeclared The principles of Learning Organisations are adopted as part of the The principles of Learning Organisations are adopted as part of the

company ethos, become company company ethos, become company "speak""speak" and are manifest openly in and are manifest openly in all company initiatives. all company initiatives.

Senge, 1990 Senge, 1990 Five Disciplines of Learning OrganisationsFive Disciplines of Learning Organisations


Risk Analysis Risk Analysis

to be effective, the change must be drastic and not introduced to be effective, the change must be drastic and not introduced slowly as time is money slowly as time is money

not all employees want to learn and will resist the change not all employees want to learn and will resist the change the openness created endangers the trust between employees the openness created endangers the trust between employees ignorance about learning; that is not following the proper ignorance about learning; that is not following the proper

learning cycle learning cycle `Over the top'`Over the top': too much emphasis on learning and not enough : too much emphasis on learning and not enough

on getting the job doneon getting the job donetoo much freedom and information can create too much freedom and information can create misunderstandings misunderstandings

information overload, too much to absorb at once information overload, too much to absorb at once "To love "To love knowing and not learning: shallowness"knowing and not learning: shallowness" , , ConfuciusConfucius

the culture of the country may be a disadvantage the culture of the country may be a disadvantage the perils of being a pioneer the perils of being a pioneer


10 Routes to Success 10 Routes to Success (1 of 5)(1 of 5)

1.1. Invest in TechnologyInvest in Technology Look inside and outside the businessLook inside and outside the business Existing technologies combines are as good as Existing technologies combines are as good as

new technologiesnew technologies The technology has to fulfil a need.The technology has to fulfil a need.

Invest in PeopleInvest in People People are long-termPeople are long-term Work culture & job content are more important Work culture & job content are more important

than share optionsthan share options Don’t employ portfolio careerist who hop from job Don’t employ portfolio careerist who hop from job

to jobto job

Source: Business 2.0, February 2001, pp19 -35


10 Routes To Success10 Routes To Success (2 of 5) (2 of 5)

Form alliancesForm alliances Choose partners strategicallyChoose partners strategically Leverage brandsLeverage brands Partner for tangible benefitsPartner for tangible benefits

Invest in Customer CareInvest in Customer Care CRM is not rocket scienceCRM is not rocket science Help customers, don’t smother themHelp customers, don’t smother them Past trend are not a guide to future ones.Past trend are not a guide to future ones.




Be prepared to FailBe prepared to Fail Adapting to changing conditions means reviewing Adapting to changing conditions means reviewing

business modelsbusiness models Lower burn rates through effective customer Lower burn rates through effective customer

acquisionacquision Learn from mistakesLearn from mistakes

Stretch Your BusinessStretch Your Business Explore new ways to do businessExplore new ways to do business Employ established brandsEmploy established brands Exploit synergies between on and off-line activityExploit synergies between on and off-line activity




Talk to your Competitor Talk to your Competitor Some projects are too good to go it alone.Some projects are too good to go it alone. Alliances minimise risk.Alliances minimise risk. Don’t put eggs in one basket.Don’t put eggs in one basket.

Share the PowerShare the Power Centralise guiding principles & decentralise Centralise guiding principles & decentralise

everything else.everything else. Looks outside for ideas & people.Looks outside for ideas & people. Empower individuals to make decisions.Empower individuals to make decisions.




Lead Your MarketLead Your Market Have a proposition that can be sold to Have a proposition that can be sold to

investorsinvestors Map out technical difficultiesMap out technical difficulties Stay focussed.Stay focussed.

Plan for a RevolutionPlan for a Revolution Take the long-term viewTake the long-term view

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