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TECHNOLOGY TECHNOLOGY MANAGEMENT 1: MANAGEMENT 1: THE BASICSTHE BASICS
CP Beukman FIPENZCP Beukman FIPENZ
Engineering Management ProgrammeEngineering Management Programme
University of CanterburyUniversity of Canterbury
Issue 5.2 October 2000Issue 5.2 October 2000
The industrialist who rejects the aid of The industrialist who rejects the aid of science is about to be weighed in the science is about to be weighed in the balance.balance.
He will then be found wanting, and his He will then be found wanting, and his business will soon pass to other hands. business will soon pass to other hands.
The wise investor will avoid him and his The wise investor will avoid him and his companies.companies.
- - Arthur Dehon LittleArthur Dehon Little The Handwriting on the The Handwriting on the
WallWall
ScopeScope
Topics covering:Topics covering:
• Philosophical backgroundPhilosophical background
• Definition of technologyDefinition of technology
• InnovationInnovation
• Technology analysisTechnology analysis
• Technology ForecastingTechnology Forecasting
• Technology transferTechnology transfer
Growth accrues in the absence of Growth accrues in the absence of
weakness - not in the presence of weakness - not in the presence of
strength.strength.
- John L Walley- John L Walley
CEO - Canterbury Manufacturers’ CEO - Canterbury Manufacturers’ AssociationAssociation
New wealthNew wealth
NewNew wealth is either: wealth is either:
1. Grown - farming1. Grown - farming
2. Found - mining, fishing, hunting2. Found - mining, fishing, hunting
3. 3. Created by Created by adding valueadding value– invention, manufacturing, intellectual effortinvention, manufacturing, intellectual effort
Forty Year Trend In Wool Price
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Wool Price Clean Real cents
SpeculationSpeculation
Speculation does not add value & Speculation does not add value & wealth in the long runwealth in the long run• remember the crash of 1987?remember the crash of 1987?• Share value is a perception that can Share value is a perception that can
overheatoverheat
Accountants record wealthAccountants record wealth
Lawyers (re)distribute wealthLawyers (re)distribute wealth
Employment profilesEmployment profiles
Lawyers/10,000 popLawyers/10,000 pop• USA 60USA 60• NZ 40NZ 40• Germany 10Germany 10• Japan 3Japan 3
Accountants/10,000 Accountants/10,000 • Australia 110Australia 110• NZ 100NZ 100• Germany 15Germany 15• Japan 3Japan 3
Engineers/10,000 popEngineers/10,000 pop• Sweden 310Sweden 310• Japan 220Japan 220• IsraelIsrael 135 135• USA USA 85 85• NZ 15NZ 15
““Management” thinkingManagement” thinking
What has developed, in the business community, as What has developed, in the business community, as
in academia, is a preoccupation with a false and in academia, is a preoccupation with a false and
shallow concept of the professional manager, a shallow concept of the professional manager, a
“pseudo professional” really - an individual “pseudo professional” really - an individual
having no special expertise in any particular having no special expertise in any particular
industry or technology who nevertheless can step industry or technology who nevertheless can step
into an unfamiliar company and run it successfully into an unfamiliar company and run it successfully
through strict application of financial controls, through strict application of financial controls,
portfolio concepts, and a market driven strategy.portfolio concepts, and a market driven strategy.
Hayes, R.H. and W.J. AbernathyHayes, R.H. and W.J. Abernathy
Managing Our Way into Economic Managing Our Way into Economic DeclineDecline
HBRHBR
July-August 1980July-August 1980
The Failure of Economic The Failure of Economic Theory : 1Theory : 1
Production is a process of combination Production is a process of combination
rather than transformation of inputsrather than transformation of inputs
• rational response to price (or preference) rational response to price (or preference)
shifts in allocating capital and setting shifts in allocating capital and setting
optimal capital-labour ratiooptimal capital-labour ratio
The Failure of Economic The Failure of Economic Theory: 2Theory: 2
An equilibrium rather than a An equilibrium rather than a
dynamic systemdynamic system
• technology changes the nature of the technology changes the nature of the
equilibrium - very rapidlyequilibrium - very rapidly
The Failure of Economic The Failure of Economic Theory: 3Theory: 3
Assumption of reversibilityAssumption of reversibility
• the skill base can be expanded and the skill base can be expanded and
contracted to match the marketcontracted to match the market
• no recognition is given to accumulated no recognition is given to accumulated
knowledge and scarcity /sourcing of skills in knowledge and scarcity /sourcing of skills in
times of growthtimes of growth
To what extent does To what extent does technology contribute to technology contribute to economic growth?economic growth?
Re-investment of profitsRe-investment of profits• rapid obsolescence from competitive rapid obsolescence from competitive
pressurespressures• innovation and growthinnovation and growth
Paradigm shiftParadigm shift• the costs of major changes are risingthe costs of major changes are rising
Measurement problemsMeasurement problems• what are we measuring with classic indices? what are we measuring with classic indices?
(like GDP which even (like GDP which even includesincludes cost of crime!) cost of crime!)
Agriculture’s share of exports
0
10
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80J
ap
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Ire
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19751980198519901995 est
%
Ref: OECD Economies at a glance - 1996CHART 4
Sources of Economic Sources of Economic Growth - towards 2000+Growth - towards 2000+
LABOUR27%
CAPITAL24%
TECHNOLOGY49%
The need for changeThe need for change
There is a need for a major change There is a need for a major change
throughout the economy towards throughout the economy towards
more investment in productive more investment in productive
enterprise and away from enterprise and away from
speculative investment in property.speculative investment in property.
Economic attributes of Economic attributes of TechnologyTechnology
Technology makes labour & capital Technology makes labour & capital
more productive.more productive.
What should you invest in?What should you invest in?
Economic attributes of Economic attributes of TechnologyTechnology
Technology makes labour & capital Technology makes labour & capital more productive.more productive.
What should you invest in?What should you invest in?• that which stays in the countrythat which stays in the country
= people= people
= infrastructure= infrastructure
= a climate which stimulates R&D and = a climate which stimulates R&D and technology developmenttechnology development
Which are the future Which are the future issues?issues?
ElectronicsElectronics SoftwareSoftware ComputersComputers RoboticsRobotics MaterialsMaterials BiotechBiotech
– Source Prof Lester Thurow, MIT, March 2000Source Prof Lester Thurow, MIT, March 2000
New Zealand’s productivity growthcompared
0123456789
N Z
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Au
str
alia
U K
Ire
lan
d
Fin
lan
d
Jap
an
1960 - 19731979 - 1993
Ref: OECD Economies at a glance - 1996
% per annum
CHART 3
Wage and skill differentials inmanufacturing
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High wageMedium WageLow wage
OECD = 100
Ref: OECD Economies at a glance - 1996CHART 5
To really grow we need:To really grow we need:
EntrepreneursEntrepreneurs
TechnologyTechnology
Pathways to marketsPathways to markets
Venture capitalVenture capital
The saving grace?The saving grace?
We need to get off the sheep’s We need to get off the sheep’s back/stop relying on digging holes back/stop relying on digging holes and think…….and think…….
TECHNOLOGYTECHNOLOGY
So, what is technology?So, what is technology?
We use the term every day.We use the term every day.
But first, let us think about business….But first, let us think about business….
– Ratbert slideRatbert slide
But first….But first….
So, what is the primary So, what is the primary activity of a businessactivity of a business
??
So, what are businesses So, what are businesses there for?there for?
Distinguish between business outcomes Distinguish between business outcomes and the cause of the outcomesand the cause of the outcomes
We produce a product or serviceWe produce a product or service
To do this (successfully) we need what is To do this (successfully) we need what is called called Competitive Capability or a Competitive Capability or a Distinctive CompetenceDistinctive Competence
– Wizard of Id slideWizard of Id slide
Distinctive CompetenceDistinctive Competence
A distinctive competence is something A distinctive competence is something
a firm does especially well in a firm does especially well in
comparison to rival companiescomparison to rival companies– Thompson & Strickland (1990)Thompson & Strickland (1990)
Competitive advantage Competitive advantage – PorterPorter
Competence “resources”Competence “resources”
Knowledge, skills & experienceKnowledge, skills & experience
Systems & proceduresSystems & procedures
ExperienceExperience
Values & cultureValues & culture
Tangible assetsTangible assets
Change potentialChange potential
Strategic resourcesStrategic resources
Resources which are/could be a source Resources which are/could be a source
of advantage.of advantage.
To be truly strategic a resource must be:To be truly strategic a resource must be:
• valuablevaluable
• sustainablesustainable
• versatileversatile
Strategic Strategic capabilities/competenciescapabilities/competencies
Activities which are important to the Activities which are important to the
business, offer a performance business, offer a performance
advantage over competitors and advantage over competitors and
which are built around the firm’s which are built around the firm’s
strategic resources.strategic resources.
Discussion - McDonald’s Discussion - McDonald’s Corp.Corp.
Imagine the McDonald’s corporation at a Imagine the McDonald’s corporation at a
time when top management is trying to time when top management is trying to
decide how to diversify. Three decide how to diversify. Three
businesses have made the shortlist:businesses have made the shortlist:
1. Frozen foods1. Frozen foods
2. Theme parks2. Theme parks
3. Photo processing3. Photo processing
Which business will allow Which business will allow
McDonald’s to maximise the value McDonald’s to maximise the value
of its core competencies?of its core competencies?
McDonald’s core McDonald’s core competenciescompetencies
Picking good real estate locationsPicking good real estate locations providing family entertainmentproviding family entertainment providing quick serviceproviding quick service providing consistency in product offeringproviding consistency in product offering having an excellent distribution networkhaving an excellent distribution network having knowledge of the food businesshaving knowledge of the food business having knowledge of food retailinghaving knowledge of food retailing having good supplier relationshipshaving good supplier relationships
McDonald’s core McDonald’s core competenciescompetencies
Note that diversification may “force” the Note that diversification may “force” the breakup of the set of core competencies.breakup of the set of core competencies.
Do not deny the existence of synergiesDo not deny the existence of synergies A core competence in isolation may not be A core competence in isolation may not be
as valuable as it is when coupled with other as valuable as it is when coupled with other competencies.competencies.
All these fit & balance & support one anotherAll these fit & balance & support one another They fit the requirements of the fast-food They fit the requirements of the fast-food
marketmarket
McDonald’s core McDonald’s core competenciescompetencies
The very act of unbundling McDonald’s The very act of unbundling McDonald’s
core competencies so as to apply them in core competencies so as to apply them in
different markets, actually destroys their different markets, actually destroys their
fitness and may also weaken the value of fitness and may also weaken the value of
the individual competencies.the individual competencies.
What makes McDonald’s successful is not What makes McDonald’s successful is not
the individual competencies, but the the individual competencies, but the
uniqueness of their combination.uniqueness of their combination.
Strategic Strategic capabilities/competenciescapabilities/competencies
To be of real strategic value, a resource To be of real strategic value, a resource
must be:must be:
ValuableValuable
SustainableSustainable
VersatileVersatile
Value of a resourceValue of a resource
What is its effect on the organisation’s What is its effect on the organisation’s costs and/or revenues?costs and/or revenues?
What is its effect on the organisation’s What is its effect on the organisation’s ability to defuse threats and/or ability to defuse threats and/or capitalise on opportunities?capitalise on opportunities?
Do competitors already have it?Do competitors already have it? What level of performance does it offer What level of performance does it offer
compared to competitors?compared to competitors?
Sustainability of a Sustainability of a resourceresource
Can competitors recognise it?Can competitors recognise it?
How long would it take to imitate?How long would it take to imitate?
How costly would it be to imitate?How costly would it be to imitate?
Without investment of time or money Without investment of time or money
how quickly does its value decline?how quickly does its value decline?
Can its advantages be substituted?Can its advantages be substituted?
Versatality of a resourceVersatality of a resource
How deeply is it tied to its surroundings?How deeply is it tied to its surroundings?
How well is it understood?How well is it understood?
Could it be used in other parts of the Could it be used in other parts of the
business?business?
Could it be used in other markets? Could it be used in other markets?
Competitive AdvantageCompetitive Advantage
Competitive advantage is at the heart of a Competitive advantage is at the heart of a
firm’s performance in competitive marketsfirm’s performance in competitive markets
It grows fundamentally out of the It grows fundamentally out of the value a value a
firm is able to create for its customersfirm is able to create for its customers
through the application of the strategies through the application of the strategies
of the firmof the firm
Competitive Advantage Competitive Advantage (cont…)(cont…)
A firm gains competitive advantage A firm gains competitive advantage
when its position gives it an edge when its position gives it an edge
in coping with competitive forces in coping with competitive forces
and in attracting customersand in attracting customers
Words on capabilityWords on capability
Capability =Capability =
COMPETENCE =COMPETENCE =
++
CAPACITY =CAPACITY =
SKILL & KNOWLEDGE+
EXPERIENCE
ASSETS+
RESOURCES
Where does the Core Where does the Core Competence come from?Competence come from?
Recap - what is core competence?Recap - what is core competence?
A set of abilitiesA set of abilities• it goes beyond just the technical abilityit goes beyond just the technical ability
• management abilitymanagement ability
• marketing abilitymarketing ability
• ability to forecastability to forecast
• etcetc
CORE COMPETENCE
&ABILITIES
CREATE
PRODUCTS AND
SERVICES
WHICH THE MARKET BUYS AND PAYS FOR
FEED-IN
?
The building blocks of The building blocks of competency and abilitiescompetency and abilities
TECHNOLOGY:TECHNOLOGY:• The complex of knowledge and skills The complex of knowledge and skills
that people may employ to create, that people may employ to create, use, maintain and dispose of items of use, maintain and dispose of items of utilityutility
CORE COMPETENCE
&ABILITIES
CREATE
PRODUCTS AND
SERVICES
WHICH THE MARKET BUYS AND PAYS FOR
FEED-IN
SKILL, KNOWLEDGE (KNOW-HOW)
Technology is created Technology is created capabilitycapability
It is manifested in artifacts, the It is manifested in artifacts, the
purpose of which is to augment purpose of which is to augment
human abilityhuman ability
Technology is created Technology is created capabilitycapability
CreatedCreated
• Technology is not a free gift of nature:Technology is not a free gift of nature:
• It does not come about by itselfIt does not come about by itself
• It is the product of deliberate actionIt is the product of deliberate action
• If technology is to be employed as a If technology is to be employed as a
resource, it has to be cultivated, resource, it has to be cultivated,
nurtured and supported.nurtured and supported.
Technology is created Technology is created capabilitycapability
CapabilityCapability
• This concept refers to a particular This concept refers to a particular
type of handiness, namely that of type of handiness, namely that of
manipulating aspects of the physical manipulating aspects of the physical
world.world.
Technology is created Technology is created capabilitycapability
ArtifactsArtifacts
• This is the generic term for all devices, This is the generic term for all devices,
tools, instruments, or machines.tools, instruments, or machines.
• Artefacts are the repositories of capability.Artefacts are the repositories of capability.
• They are to the study of technology what They are to the study of technology what
organisms are to the study of biology.organisms are to the study of biology.
Technology is created Technology is created capabilitycapability
AugmentAugment
This concept is used to convey how This concept is used to convey how
technology:technology:
• on the one hand enhances ability such as on the one hand enhances ability such as
adding instrumentation to human activity,adding instrumentation to human activity,
• on the other hand replaces human ability, on the other hand replaces human ability,
by substituting it with competent artifactsby substituting it with competent artifacts
Technology growth in Technology growth in history: 1history: 1
FireFire ToolsTools Metallurgy (bronze, iron)Metallurgy (bronze, iron) ArrowsArrows StirrupsStirrups GunpowderGunpowder PrintingPrinting Tacking against the windTacking against the wind Sextant & chronometerSextant & chronometer
Technology growth in Technology growth in history: 2history: 2 Spinning by machineSpinning by machine Steam power Steam power (pumps - mine dewatering, locomotive, (pumps - mine dewatering, locomotive,
stationary engines and changes in work & urbanisation)stationary engines and changes in work & urbanisation) Internal combustion engine - motor carsInternal combustion engine - motor cars ElectricityElectricity TelephoneTelephone FlightFlight AntibioticsAntibiotics TransistorTransistor ComputerComputer
Largest contribution of the Largest contribution of the milennium?milennium?
What technology has contributed the What technology has contributed the
most towards “civilisation” over most towards “civilisation” over
the last 1000 years?the last 1000 years?
Largest contributions of Largest contributions of the last milennium?the last milennium?
Waterborne sewage = WCWaterborne sewage = WC
Electricity distributionElectricity distribution
??
Technological abilityTechnological ability
Ability to learnAbility to learn
Ability to operateAbility to operate
Ability to upgradeAbility to upgrade
Ability to designAbility to design
Ability to create the whole systemAbility to create the whole system
Ability to manage the processAbility to manage the process
Learning ability:Learning ability:Bloom’s TaxonomyBloom’s Taxonomy
1. To Know1. To Know• be aware of somethingbe aware of something
• take notetake note
2. To Understand2. To Understand• form an understanding of function, structure, form an understanding of function, structure,
etc.etc.
3. To Apply3. To Apply• in a similar or related situationin a similar or related situation
Learning ability:Learning ability:Bloom’s Taxonomy Bloom’s Taxonomy (cont...)(cont...)
4. To Analyse4. To Analyse• distinguish elements and componentsdistinguish elements and components• explain principlesexplain principles
5. To Synthesize5. To Synthesize• combine new or other componentscombine new or other components• new applicationnew application
6. To Evaluate6. To Evaluate• distinguish applicability, acceptabilitydistinguish applicability, acceptability• new conceptsnew concepts
Learning ability:Learning ability:Bloom’s Taxonomy Bloom’s Taxonomy (cont...)(cont...)
1. To Know1. To Know
2. To Understand2. To Understand
3. To Apply3. To Apply
4. To Analyse4. To Analyse
5. To Synthesize5. To Synthesize
6. To Evaluate6. To Evaluate
IncreasingAbility
Ability checklistAbility checklist
Formulate requirementFormulate requirement Develop specificationsDevelop specifications DesignDesign Develop modelsDevelop models ProduceProduce Test & evaluateTest & evaluate Manage the processManage the process Provide servicesProvide services
• DocumentationDocumentation• Design reviewsDesign reviews
Train participantsTrain participants Use the productUse the product Support the productSupport the product Improve the productImprove the product Repeat the processRepeat the process
• maintain capabilitymaintain capability• career planningcareer planning• retrainingretraining
System abilitySystem ability
Define the needDefine the need Translate need and allocate requirements Translate need and allocate requirements
- - • the ability to specifythe ability to specify
Translate specifications into productsTranslate specifications into products• designdesign• manufacturemanufacture
Develop the design via optimisationDevelop the design via optimisation Test and evaluate result Test and evaluate result
System ability (cont…)System ability (cont…)
Operate the system effectivelyOperate the system effectively
Support and maintain the system Support and maintain the system
effectively at all levels effectively at all levels
Technology-related Technology-related ConceptsConcepts
Fundamental researchFundamental research
Research and Research and development (R&D)development (R&D)
Tooling upTooling up
Industrial EngineeringIndustrial Engineering
Diffusion, marketingDiffusion, marketing
Technology transferTechnology transfer
ManagementManagement
Skills & trainingSkills & training
Co-operation, Co-operation, networkingnetworking
Intellectual PropertyIntellectual Property
Implications of the role of Implications of the role of R&D in the SMER&D in the SME
1. Restructuring1. Restructuring
• ““Lean and mean” leaves little resources for Lean and mean” leaves little resources for
R&DR&D
• Lost/losing cumulative investment in Lost/losing cumulative investment in
knowledgeknowledge
• Value of past knowledge not recognisedValue of past knowledge not recognised
• Financial institutions do not invest in Financial institutions do not invest in
intangibles (knowledge)intangibles (knowledge)
Implications of the role of Implications of the role of R&D in the SME (cont)R&D in the SME (cont)
2. Inability to absorb mistakes2. Inability to absorb mistakes
• Corollary of “lean and mean”Corollary of “lean and mean”
• Short-term focusShort-term focus
• Risk-averse focusRisk-averse focus
• Mistakes are inevitable consequences Mistakes are inevitable consequences
of embarking on a technology pathof embarking on a technology path
Implications of the role of Implications of the role of R&D in the SME (cont)R&D in the SME (cont)
3. Recognise the source of innovation3. Recognise the source of innovation
• Perceptions of the innovation process Perceptions of the innovation process
is woefully simplistic and inadequateis woefully simplistic and inadequate
• Five stages or generations of models Five stages or generations of models
for the innovation process (for the innovation process (see latersee later))
MANAGEMENTOF
TECHNOLOGY
SYSTEMS THINKING
BUSINESSSTRATEGY
LEAD&
MANAGEPEOPLE
TECHNOLOGYANALYSIS
SCIENCE&
ENGINEERING
In summary:
Aspects of TechnologyManagementRequired
CORE COMPETENCE
&ABILITIES
CREATE
PRODUCTS AND
SERVICES
WHICH THE MARKET BUYS AND PAYS FOR
SELECTIVEFLOW
TECHNOLOGY:SKILL, KNOWLEDGE
(KNOW-HOW)
SELECTIVE FLOW INNOVATION
CORE COMPETENCE
&ABILITIES
CREATE
PRODUCTS AND
SERVICES
WHICH THE MARKET BUYS AND PAYS FOR
SELECTIVEFLOW
TECHNOLOGY:SKILL, KNOWLEDGE
(KNOW-HOW)
SELECTIVE FLOW INNOVATION
CHANGEPROCESS