Technological
Forecasting
BPT 3113 – MANAGEMENT OF TECHNOLOGY
• Introduction• Definition• Forecasting Technology• Technological Forecasting Process• Forecasting Techniques• Current Status• Technology Discontinuity • Summary
Chapter Outline
• Explain the significance, concept and process of forecasting
• Describe the techniques of forecasting• Assess the current status of forecasting
Lesson Outcomes
Introduction Future may not behave like the past – depends
on characteristics and physical limits of the technology, the social and environmental factors influencing its development and market conditions
Predicting the future is more difficult with technology that is experiencing rapid change
The seeking of or anticipation of technological innovation has been called technology forecasting
TF Definition Provides visions of the future that can be used to
guide actions of the present in anticipation of future states
Forecast the character and role of technological advancement based on following established methodologies
A process of identifying the determinants of the direction and rate of technological change and establishing their relationship with the concerned technology to anticipate future trends
A process of predicting technology changes based on facts, assumptions and educated guesses with the help of a chosen technique
Forecasting is indispensable
Forecasting improves quality of decision-making
Scanning the technological environment
Anticipating emerging technological changes
Identifying suitable technologies by evaluating various alternatives
Planning for future technology needs
TF For Decision Making
Forecasting TechnologyForecasting Problem & Objectives
(data inputs)
Forecasting Process &
Techniques
Forecast(output)
Reviewmechanism
Performance
Time
Future
PresentGrowth Pattern &
Possible Future Stateof a Technology
Forecasting Model
Traditional forecasting methods depend to a great extent on projecting past performance
into the future
• A technology forecaster must have a good understanding of technology life cycles and the factors that influence technological development and the rate of innovation.
• A good forecast must have:– Credibility and utility– An accurate information base– Clearly described methods and models– Clearly defined and supported assumptions– Quantitative expression whenever possible– A stated level of confidence in the forecasted information
• The attributes of technology most often forecast are:– Growth in functional capability– Rate of replacement of an old technology by a newer one– Market penetration– Diffusion– Likelihood and timing of technological breakthroughs
Forecasting Technology
Common mistakes and pitfalls in forecasting & analysis:
1. Failure to use appropriate data– Use of unreliable data; failure to use valid data due to the
use of wrong technique2. Mistakes in selecting appropriate methodology
– Overemphasis on quantitative techniques; reliance on single expert
3. Lack of imagination in the form of– Failure to distinguish between signals and noises;
neglecting uncertainty4. Biases introduced by personal factors
– Vested interest of the forecaster; unwillingness to alter other previous commitments
Forecasting Technology
Make specifications of forecast
Identify variables
Select data sources
Employ forecasting technique
Use by application
Undertake reviews
TF Process
Specify ExpectationsTime period• The time period may be stated generally or precisely
Nature of technology• The technology being forecast may be narrowly defined or it may
encompass a very broad range
Characteristics to be exhibited by the technology• The characteristics may be stated only in general terms or may be
given precise quantitative values
Probability associated with the characteristics• The probability associated with the characteristics may be given
only generally, as high or low or it may be stated in precise quantitative terms
Exploratory Methods Normative MethodsTechnology Monitoring Dynamic Modeling
Trend Analysis Cross Impact AnalysisExpert Opinion Morphological Analysis
Delphi Technique Series IndicatorsScenario Development
Forecasting Techniques
Approach to be used depends on the following factors:a. Purpose for which the forecast is being madeb. Reliability needed for the forecastc. Precision of the available datad. The time frame for the forecast
5 Exploratory Methods:1.Monitoring
– Monitoring is the process of scanning the environment for information about the subject of a forecast
– It’s a method for gathering and organizing information; assessment is to be done carefully based on the data
2.Expert opinion– This method collects opinions of chosen experts in a
particular area and arrives at a forecast– This method is suitable when:
• Identifiable experts in an area exist• Data are lacking• Modelling is difficult or impossible
Forecasting Techniques
3.Trend Analysis– Uses mathematical and statistical techniques to extend
time series data into the future, it assume that past conditions and trends will continue in the future more
– Accurate over short time frames and less reliable for long time frames
4. Delphi Technique
– An attempt to arrive at a consensus in an uncertain area by questioning a group of experts repeatedly – process goes on till an agreement is reached in the forecast
– Presumes the following conditions : panellists must be wide knowledge and experience of the subject in their expertise and the method presupposes that its conductors are objective in their job
Forecasting Techniques
Forecasting Technology5. Scenarios
− Scenarios are sets of snapshots of some aspect of the future situation and most useful in forecasting and in communicating complex, highly uncertain situations to non-technical audiences
− A set of imaginative descriptions are developed based on quantitative and qualitative data
4 Normative Methods:1.Dynamic Modeling
– A model is a simplified representation of some part of the real world. A model can be used to forecast the behaviour of the system being model
– Model range from flow diagrams, simple equations and scale models to sophisticated computer simulations
2.Cross Impact Analysis– Researchers identify a set of key trends those with high
importance or probability– The question is then put: “if event A occurs, what will be
the impact on all other trends?”– The results are then used to build set of ‘domino chains’
Forecasting Techniques
3. Morphological Analysis– Developed by the well known Swiss astronomer Zwicky in
his work in the field of jet engines– Distinguishes 5 essential steps that constitute the
morphological method
4. Series Indicators– Each company establishes favourite indices of those
general economic conditions most relevant to its product / technology category
– These indices should be examined for any indicators that may affect the life of the technology. 3 general categories of indicators:a. Leading indicatorsb. Simultaneous (coincident) indicatorsc. Lagging indicators
Forecasting Techniques
Current StatusTrends that have contributed to the sophistication and wider application of technological forecasting are:
i. Emphasis on Strategic Approach More firms are adopting strategic approach and
preparing long range plans to gain competitive advantage
ii. Information Management Capabilities Have profoundly changes moved to computer driven
operationiii. Increased Sophistication in Toolsiv. Rise of Research Agencies
Technology Discontinuity• Example :
Transportation Technologies - Speed
• A technology forecaster predicts the natural performance limit of each mode of transportation technology
• Use this information to guide decisions about when to start using or abandon a technology before the competition renders it obsolete
• Besides that, the information can be use to make decisions about investing in a new technology, R&D or new products or about acquiring a new company that has the technological capability of the emerging mode of technology
The cumulative curve is used to forecast
maximum transportation speed
A forecaster may use the trend to extrapolate the
efficiency of white light into the future
But there is no guarantee that the trend will indeed continue
to hold in the future
At least the trend will give added information, permitting an educated guess and better
decision making
Management by data is much more effective than
management without adequate information
Technology Discontinuity
Summary• Technological forecasting helps managers in
improving decision making, by providing knowledge of future changes and provides basis for planning
• Forecasting problems are influenced by time period, nature of technology, characteristics to be exhibited by the technology and their probability
• Forecasting has gained significance in this knowledge era and it continues to be an important function in technology management of organizations