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Ch

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Ch

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Managing Technology and

Innovation

17

McGraw-Hill/Irwin

Management, 7/e Copyright 2007 The McGraw-Hill Companies, Inc. All rights reserved.

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Learning Objectives

After Studying Chapter 17, You will know The processes involved in the development of new

technologies

How technologies proceed through a life cycle

How to manage technology for competitiveadvantage

How to assess technology needs

The key factors to consider when making decisionsabout technological innovation

The roles different people play in managingtechnology

How to develop an innovative organization The key characteristics of successful development

projects

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Technology and Innovation

Technology is the methods, processes,

systems, and skills used to transform

resources into products

Innovation is a change in method ortechnologya positive, useful departure from

previous ways of doing things

Process innovations are changes that affect

the way outputs are produced Product innovations are changes n the actual

outputs themselves

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Technology and Innovation

Managers must understand the forces drivingtechnological developments so then can anticipate,monitor, and manage technologies more effectively

There must be a need, or demand for the technology

Meeting the need must be theoretically possible, andthe knowledge to do so must be available from basicscience

We must be able to convert the scientific knowledgeinto practice in both engineering and economic terms

The funding, skilled labor, time, space, and otherresources needed to develop the technology must beavailable

Entrepreneurial initiative is needed to identify andpull all the necessary elements together

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The Technology Life Cycle

The technology life cycle is a predictable pattern

followed by a technological innovation, from itsinception and development to market saturation

and replacement

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Diffusion of Technological Innovations

The percentage of people using the technology is smallin the beginning but increases dramatically as thetechnology succeeds and spreads through thepopulation

Adopters of a new technology fall into one of fivegroups

Innovators are the first group representingapproximately 2.5% of adopters

Early adopters represent 13.5 % of the adopters

Early majority represent 34% of the adopters Late majority represent 34% of the adopters

Laggards are the final group representing 16% of theadopters

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Diffusion of Technological Innovations

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Diffusion of Technological Innovations

The speed with which an innovation spreads

depends largely on five attributes

Has a great advantage over its predecessor

Is compatible with existing systems,procedures, infrastructures, and ways of

thinking

Has less rather than greater complexity

Can be tried ore tested easily without

significant cost or commitment

Can be observed and copied easily

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Technological Innovation in a Competitive

Environment

Decisions about technology and innovationare very strategic and managers need toapproach them in a systematic way.

Two generic strategies a company can useinclude

Low-cost leadership can drive innovation ascompanies try to gain cost advantages throughpioneering lower-cost product designs

Differentiation strategy can drive innovation ascompanies seek the advantages that comefrom having a unique product or service thatcustomers pay a premium price for

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Technology Leadership

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Technology Followership

Following the technology leader can support

both low-cost and differentiation strategies

The follower learns from the leaders

experienceThe follower can avoid the costs and risks of

technology leadership

The follower can adapt the products or delivery

systems to fit buyers needs more closely

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Technology Followership

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Assessing Technology Needs

In todays increasingly competitive

environment failure to correctly assess the

technology needs of the organization can

fundamentally impair the organizations

effectiveness

Assessing the technology needs of the

organization involves:

measuring current technologies Measuring external trends affecting the

industry

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Measuring Current Technologies

A technology audit helps clarify the key technologieson which an organization depends

One technique for measuring competitive valuecategorizes technologies as:

Emerging technologies are still under development andthus are unproved

Pacing technologies have yet to prove their full value buthave the potential to alter the rules of competition byproviding significant advantage

Key technologies have proved effective, but they alsoprovide a strategic advantage

Base technologies are those that are common place inthe industry

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Assessing External Technological

Trends

There are several techniques that managers

use to better understand how technology is

changing within an industry

Benchmarking is the process of comparing theorganizations practices and technologies with

those of other companies

Scanning focuses on what can be done and

what is being developed, placing a greatemphasis on identifying and monitoring the

sources of new technologies for an industry

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Key Factors to Consider in Technology

Decisions

The most effective approach to technology dependsnot only on the technologys potential to support theorganizations strategic needs but also on theorganizations skills and capabilities to exploit thetechnology successfully

The organizations competitive strategy, the technicalabilities of its employees to deal with the newtechnology, the fit of the technology with thecompanys operations, and the companys ability todeal with the risks and ambiguities of adopting a new

technology all must be timed to coincide with thedynamic forces of a developing technology

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Key Factors to Consider in Technology

Decisions

Anticipated market receptiveness is one of

the first considerations that management

should make

Is there an immediate application thatdemonstrates the value of the new technology

Is there a set of applications that show the

technology is the proven means to satisfy a

market need Managers must also consider the feasibility of

technological innovations

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Key Factors to Consider in Technology

Decisions

Closely related to technological feasibility is

economic viability

Managers must consider whether there is a

good financial incentive in pursuing atechnology

What is the anticipated competency

development

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Key Factors to Consider in Technology

Decisions

Is the organization stable enough for the new

technology

Prospector firms develop and exploit technological

expertise are usually early adopters

Defender firms tend to deepen their capability basethorough complementary technologies that extend

rather than replace their current ones

Analyzer firms are a hybrid that needs to stay

technologically competitive but tends to allow othersto demonstrate solid demand in new arenas before it

responds

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Sourcing and Acquiring New Technologies

The primary question of how to acquire newtechnology is a whether the organization should makeor buy the technologyThis is known as the make or buy decision

Some of the more common options for technological

development are Internal development

Purchase

Contracted development

Licensing

Technology trading Research partnerships

Acquisitions

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S i d A i i N

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Sourcing and Acquiring New

Technologies

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Technology and Managerial Roles

Technology has traditionally been the responsibility of

vice presidents for research and development

Today companies are creating the position of Chief

Technology Officer (CTO)

Also known as a CIO Senior position at the corporate level with broad,

integrative responsibilities

Responsibilities include coordinating the technological

efforts of various business units; supervising new-technology development; assessing the technological

implications of major strategic initiatives

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Technology and Managerial Roles

Key roles in acquiring and developing newtechnologies are:

The technical innovator is a person whodevelops a new technology or has the key

skills to install and operate the technologyThe product champion is a person who

promotes a new technology throughout theorganization in an effort to obtain acceptance

of and support for itThe executive champion is an executive who

supports a new technology and protects theproduct champion of the innovation

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Organizing for Innovation

Create an organizational culture thatencourages innovation

A culture that permits failure is crucial forfostering the creative thinking and risk taking

required for innovation Bureaucracy is an enemy of innovation

Bureaucracy is useful to maintain orderlinessand gain efficiencies

Developing radically different technologiesrequires a more fluid and flexible structurethat does not restrict thought and action

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Organizing for Innovation

A powerful tool for managing technology andinnovations is the development project

A development project is a focusedorganizational effort to create a new product or

process via technological advances Adopting a new technology typically requires

changes in the way jobs are designed

The sociotechnical systems approach to work

redesign will redesign tasks in a manner thatjointly optimizes the social and technicalefficiency of work

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Looking Ahead

After Studying Chapter 18, You will know

What it takes to be world class

How to manage change effectively

How to create a successful future