Technology Management

Course PlanHour Topic

Module I 1 Defining Science, engineering and Technology, Introduction to TM,

Defining Management of Technology2 Scope of TM, Concepts of TM, components of TM, Interdisciplinary nature

of TM3 Classification of Technology, Evolution of TM4 Concepts of TM – Firms as value chain, Industries as competitive domain5 Concepts of TM – Forms of technological change6 Value creation and competitive advantage, Characteristics of TM7 Managerial function of TM8 Implications / Issues of TM9 Environmental Issues10 Technological Change

Module II 11 Dynamics of Technological Change 12 Approach to TM 13 & 14 Technology Cycle 15 & 16 Technology flow Process 17 & 18 Tenets of TM 19 & 20 Invention and Innovation

Course PlanModule III

21&22 Technology intelligence 23 Technology Strategy: An overview24 Technology acquisition25 Technology Transfer26 Transfer of technology from Research to Development27 Cisco Systems Inc.: Acquisition Integration for

Manufacturing28 & 29 Technology Appropriation

Module IV 30 & 31 Technology Absorption32 Process of Technology Change : Diffusion33 Dynamics of Diffusion33 A model of innovation adoption34 Factors that drive the process of diffusion 35 & 36 Technology evaluation and assessment: Techniques and Tools37 Intellectual Property Rights38 & 39 Case discussions40 Comprehensive discussions

Dr. Pepper / Seven up Bottling Group

There are many other firms from mature Industries that are leading examples of success in managing technological change. For example, the Dr. Pepper / Seven up Bottling Group developed the Deja Blue product line. This is the most basic product imaginable bottled water. The bottling group has been able to employ technology to become the low cost producer in the Industry. Each step of the production process uses all the technology possible to lower costs.

For example, they designed the production process to take out curves in the production line that reduces something as simple as products falling off the line. Similarly, the production process is such that the machinery that fills bottles has ninety different heads that never have to stop. The conveyor technology when the bottle is full is at a slight angle so the bottles stay upright as they are placed on pallets. The result is a lower cost product that has experienced 25% sales growth per year

Dr. Pepper / Seven up Bottling Group

Reference Books Gerard H. Gaynor, Handbook of Technology

Management, McGraw Hill, 1996 V.K. Narayanan, Managing Technology and

Innovation for Competitive Advantage, Pearson Education, 2008

Tarek Khalil, Management of Technology: the Key to Competitiveness and Wealth Creation, McGraw Hill (1999)

Burgelman et.al “Strategic Management of Technology and Innovation” Tata McGraw Hill (2001).

Definition of Science Knowledge attained through study or practice Knowledge covering general truths of the

operation of general laws, esp. as obtained and tested through scientific method [and] concerned with the physical world

Organized knowledge underlying the practice is an enterprise that builds and organizes knowledge in the form of testable explanations and Predictions about the natural world.

Definition of Science Science refers to a system of acquiring

knowledge. This system uses observation and experimentation to describe and explain natural phenomena.

The term science also refers to the organized body of knowledge people have gained using that system.

Less formally, the word science often describes any systematic field of study or the knowledge gained from it.

Definition of Engineering Engineering is the discipline, art and

profession of acquiring and applying scientific, mathematical, economic, social, and practical knowledge to design and build structures, machines, devices, systems, materials and processes that safely realize solutions to the needs of society.

Definition of Engineering The 

American Engineers' Council for Professional Development (ECPD, the predecessor of ABET) has defined "engineering" as:

The creative application of scientific principles to design or develop structures, machines, apparatus, or manufacturing processes, or works utilizing them singly or in combination; or to construct or operate the same with full cognizance of their design; or to forecast their behavior under specific operating conditions; all as respects an intended function, economics of operation and safety to life and property.

Definition of Technology

Purposeful application of information in the design, production, and utilization of goods and services, and in the organization of human activities.

Technology is the means for accomplishing a task – it includes whatever is needed to convert resources into products or services

Technology, includes the knowledge and resources that are required to achieve an objective

Technology is the body of scientific and engineering knowledge which can be applied in the design of products and/or processes or in the search for new knowledge

Technology is… Process by which humans modify nature to

meet their needs and wants relationship of society with its crafts and tools,

and to extent to which society can control its environment

collection of techniques application of science, maths and arts

Technology Concept

Technology

Embodied in

Machines Skills

KNOW-HOW – KNOW-WHY

ProcessesDesigns – DrawingsProperty RightsTraining - information

Technology concept Technology is a combination of hardware and

software Hardware is any physical product, component or

means There are two types –End-use product and

production tools equipment and machinery Software is the know-how or, technique or

procedure There are two types: Know-how and Know-why

Know-how – is the technology such as process, techniques, methods

Know-why – is the type of technology such as knowledge, skills and experience

Technology Technology consists of three components

Hardware – The physical structure and logical layout of the equipment or machinery that is to be used to carry out the required tasks

Software – The knowledge of how to use the hardware in order to carry out the required tasks

Brainware – the reasons for using the technology in a particular way. This is referred to as know-why.

Technology and Science compared

Technology Science

Involved with our human created world

Concerned with “how to? Knowledge created and being

created

More directly involved Guided by trial and error or skilled

approaches derived from the concrete

Used in combination with such words as : Application, Instrumental principles, response to perceived needs, effectiveness, invention, innovation etc.

Involved with our natural world / universe

Concerned with “what is? Knowledge discovered and

being discovered Detached. Generates

knowledge for its own sake Guided by hypothesis deduced

from theory Used in combination with such

words as : Theory, theoretical principles, Research, generalization from theory a

Technology and Engineering Compared

Technology Engineering

Involved with our human created and controlled world

Guided by trial and error or skilled approaches derived from the concrete

Involved with utilizing the materials and forces of nature for the benefit of mankind

Guided by a more theoretical study with specific solutions recommended

Management Art of getting people together to

accomplish the desired goals Management comprises

Planning Organizing Staffing Directing Controlling

Manages deployment and manipulation ofhuman resources, financial resources,technological resources and naturalresources

Management of Technology

TechnologyTechnological innovation

Technology is an application of knowledge that leads to production and marketing of goods and services

Implies new technology, creating new products and services – hence new business opportunities

Innovation is the fundamental to economic development

Management of Technology Managing technology means using new

technology to create competitive advantages (Technology development, technology adoption

and adaptation, technology transfer etc – will be discussed during technology cycle)

Successful business use of technology requires strategic decisions about technology by personnel in other areas, such as production, marketing, sales, finance and so on.

Thus, two cultures – technical and financial need to be bridged, and management should integrate technology strategy with business strategy

Management of Technology A discipline of management wherein an

organization leverages the technological fundamentals to create competitive advantage

An integrated application of engineering, science and management capabilities

Process of MOT includes Identification of technologies Selecting Procurement Assimilation Exploitation of technologies for production of

goods and services

Why Technology Management now?

… driving changes in the business landscape … no longer limited to supporting business

decisions … breaking down traditional industrial

boundaries … redefining a new era of competition

But still …… people have been and will continue to express

disbelief – here is how..,

Radio and TelevisionTelevision will not be able to hold on to any market it captures after the first six months. People will soon get tired of staring at a plywood box every night.- Daryl F. Zanuck, Head of 20th Century-Fox, 1946

CommunicationWell informed people know it is impossible to transmit the voice over wires and that were it possible to do so, the thing would be no practical value- Editorial in the Boston Post, 1865

ComputersThere is no reason for any individual to have a computer in their home- Ken Olson, President of Digital Corporation , 1977

I think there is a world market of may be of five computers- Thomas Watson, Chairman, IBM, 1943

640 K (internal memory) ought to be enough for anybody- Bill Gates, Microsoft, 1981

Rate of Technological change

Why MOT?

Rapidly changing technology which is changing every industry and every business

Rapidly increasing competition which will eventually envelop every market niche, no matter how sheltered.

Increasingly efficient financial markets requiring ever shorter term returns.

Evolution of Management of Technology

1950 1970 1980 1990s

R & D Management of Technology Value BasedManagement Innovation StrategyManagementEra of Plentiful Resources Era of Accountability

New venture Linking to Broader visiondivisions business

of technologyAllocation of Innovation Mgmt. Different org.OutsourcingFunds to projects arrangements

Scientists & Tools to assessEngineers values

Leadership Internal Markets

R & D Manager Chief Technology officer

Classification of Technology Technology is generally divided into five

categories Tangible: blueprints, models, operating manuals

, proto types Intangible: consultancy, problem solving, and

training methods  High: entirely or almost entirely automated and

intelligent' technology which manipulates ever finer matter and ever powerful forces.

Intermediate: semi-automated 'partially intelligent' technology that manipulates refined matter and medium level forces.

Low: labor intensive 'dumb' technology that manipulates only coarse or gross matter and weaker forces.

Classification of technology New Technology Emerging Technology Appropriate Technology Codified Vs Tacit Technology High Technology Medium Technology Low Technology

Levels of Development

Descriptive Flow chart

First level - Individual develops tacit knowledge

Second level – tacit knowledge is codified

Finally – there is a level of development where the knowledge is put to use – physically embodied in the products

Further Classification of Technologies

State of the art technologies : those technologies that equal or surpass the competitors

Proprietary technologies: those technologies protected by patents or secrecy agreements that provide a measurable competitive advantage

Known technologies: those technologies that may be common to many organizations but are used in unique ways

Core technologies: those technologies that are essential to maintain a competitive position

Leveraging technologies: those technologies that support several products, product line, or classes of products

Supporting technologies: technologies that support the core technology

Pacing technologies: technologies whose rate of development controls the rate of product or process development

Emerging technologies: technologies that are currently under consideration for future products or processes

Scouting technologies: formal tracking of potential product and process technologies for future study or application

Idealized unknown basic technologies: technologies that, if available, would provide a significant benefit in some aspect of life

Further Classification of Technologies

External technologies

Basic Technologies

Distinctive tehnologie

s

Core Knowledge needed for MOT

Interdisciplinary Nature of MOT

Management of Technology MOT implies managing the systems that

enable the creation, acquisition and exploitation of technology.

It involves assuming responsibility for creating, acquiring and spinning out technology to aid human endeavors.

Spinning out technology

Key concepts of MOTTo develop ideas about the management of

technology within an open system, four major concepts are employed:Firms as value chain

Primary activities Support activities

Industries as competitive domains Capacity driven Customer driven Knowledge driven

Forms of technological change Product technology Process / production technology

Value creation and competitive advantages

Porters Model of Value Chain

Classification of Industries

Value creation and competitive advantage Competitive advantage is the ability of the

firm to outperform its competitors on profitability

It depends on how the firm is able to create value for its customers that exceeds the firms cost of creating a product

Value is what the customers are willing to pay

Forms of Technological Change

Process Technology Techniques of producing and

marketing goods and services It includes work methods,

equipment, distribution and logisticsProduct Technology

Refers to the elements of technology embodied in the goods and services of a firm

Evolution by Ages

Evolution by Production Technology

Four Characteristics of MOT Opportunity: The art of perceiving the triggering event

for technology development; it is truly a human activity.

Appropriability: Where the technology development is due to economic motives, individuals will pursue development only to the extent that there is a reasonable assurance that the fruits of their labor will flow back to the developers.

Transferability: Technology or knowledge transfer is not smooth; knowledge is sticky.

Resources: Technology development consumes resources.

The Creation-Application Spectrum

SCOPE

OF MOT

ResearchDevelopment

ResearchDevelopmentDesign Manufacturing

ResearchDevelopmentDesign ManufacturingMarketing SalesPhysical DistributionCustomer service

ResearchDevelopmentDesign ManufacturingMarketing SalesPhysical DistributionCustomer serviceInformation systemsHuman ResourcesFinancePurchasingPatent and LegalPublic RelationsGeneral Administration

ResearchDevelopmentDesign ManufacturingMarketing SalesPhysical DistributionCustomer serviceInformation systemsHuman ResourcesFinancePurchasingPatent and LegalPublic RelationsGeneral AdministrationCustomers SuppliersOther influences(Internal; External)

Phase I Phase II Phase III Phase IV Phase V

Phase III Successful implementation of Phase

III depends on: An understanding for resource

capabilities An evaluation of the infrastructure A definition of the decision criteria A well defined statement of purpose A project specification And an evaluation and validation of

assumptions

System Model: Resources. Infrastructure and Activities

Resources Infrastructure Activities

People Purposes Business

Intellectual Property Objectives Management

Information Strategies System

Organizational characteristics

Organizational structure Project

Technology Guiding principles Functional

Time Policies and practices Group

Customers Management attitudes Individual

Suppliers Management expertise External

Plant and equipment Support for innovation

Facilities Acceptance of risk

Finance Communication

NIH Syndrom

e

Total timeCycle time and timing

Top down and Bottom up

Determine how people responds to

the org. purposes

Phase IV and V

Phase IV Adds the administrative functions. It includes functions such as human resources, finance, purchasing, patent and legal, public relations and general administration

Phase V adds customers, suppliers and other internal and external influencers

SMALL CASE ON LINUX Linux is an operating system created by

Linux Torvalds, a Finnish student. The operating system is offered free and has become the leading competitor to proprietary operating systems like UNIX and Microsoft.

The heart of the system is referred to as the Linux kernel, which is the code that forms the basis of any firm’s operating system. The firm is then able to take the code and build on it. This adaptability has led firms such as IBM and HP to use Linux as their operating system.

The development of Linux demonstrates a consistent themes in many technological areas. The predicted pattern of development is difficult to predict.

Firms must constantly scan the business horizon for changes that are occurring and look for the unexpected. A free operating system that becomes the back bone of many firm’s efforts would have been difficult to predict five years ago. Today, however the resource is widely used around the world.

SMALL CASE ON LINUX

What type of technology does Linux represent – continuous, disruptive or next generation?

Explain what such classification of type of technology would mean for competitors and consumers.

SMALL CASE ON LINUX

What is continuous technology? When there are no major changes

that occur at one time This progression is designed to

change an existing technology but not change its functionality

The innovation is aimed at improving performance, function, and/or quality at lower cost

Opposite is radical technology

If Linux is considered as continuous… Competitors –

Evaluation and control Planning Implementation

Consumers Bargaining power More variety Compare quality and performance

SUBSTITUTE PRODUCT

Topics discussed so far Definition of science, engineering and

technology Technology concept (know-how and know-

why) Interdisciplinary nature of MOT, Spinning out

technology Why technology management? Evolution of MOT Classification of MOT Levels of Development Key concepts of MOT Scope of MOT and the resources and

infrastructure

Managerial function of MOT

Technology Strategy

Business Strategy

Technology Development and utilization

Technology acquisition and transfer

R & D

Product and Process Technology

NPD

Knowledge Management

Information Management

Technology forecasts

Commercialization

Value chain Management

Product Life cycle management

Managerial functions of MOT

ProtectionIdentify options

Establish strategyMonitor effectiveness

Identification Technology assessment Pre selection Framework Technology / Market

scanning Information Management

Selection Technology forecasting Benchmarking Decision criteria and

Process Monitoring / Improvement

Acquisition Internal R & D Licensing and Joint

ventures Organizational change Project Management Technology Insertion

Exploitation Customer – supplier

Network Incremental

Development Product Management Complementary Assets

Source: Gregory : 1995

Audit Forecasting Selection & Plan Acquisition Exploitation

•Assess utilization of existing technology*

•Identify the gaps

•Priorities areas for new inputs in technology from:–Incremental Improvement Schemes*–Modernization Program–Major Technology Development Program*

•Assess the development trends of all the technologies available*

•Analyze competing alternatives; Costs; Techno-Economic; Adaptability; and Environmental Compatibility*

•Compare technology from in-house (R&D) and external sources *

•Analyze Cost; Techno-Economics; Adaptability; Flexibility; Time Frame; and Competitors’ Strategy, for the competing alternative technologies

•Match the Corporate Needs with the Technologies available and identify the gaps to be bridged*

•Prepare a comprehensive ‘Strategic Technology Plan’.

•Obtain and comprehend:•Detail Project Report

•Contract•Manuals•Training•Commissioning•Assimilate the technology procured through use; and•Improve Standard Operating Practice*

•Upgrade Technology after Induction*

•Document; modify Standard Operating Practice

•Transfer to market or in house it after up gradation

Technology Cycle

TECHNOLOGY AWARENESS

Of marketable inventions

TECHNOLOGY ACQUISITION

by self-generation or transfer

justification

TECHNOLOGY ADAPTATION

minor modifications of acquired technology for

specific needs

TECHNOLOGY ABANDONMENT

OBSELESCENCING

Installation

TECHNOLOGY ADVANCEMENT

Innovation involving major modifications

of acquired technology

Promotion

Demolition

Need driven expectations

EXTERNAL AND INTERNAL

ENVIRONMENTFactors

affecting the technology user

Technology Awareness Technical Intelligence

Technology Environment - definition, classification, …

Technology Change Technology Life cycle

Technology Acquisition STRATEGIC DECISION Technical feasibility – Definition, classification,

scope,... Economic feasibility

Technology Adaptation APPROPRIATION Relevance of particular technology to a company’s

present needs (minor modifications) Technology Advancement phase

DIFFUSION Major modifications to the technology

Four Characteristics of MOT Opportunity: The art of perceiving the triggering event

for technology development; it is truly a human activity.

Appropriability: Where the technology development is due to economic motives, individuals will pursue development only to the extent that there is a reasonable assurance that the fruits of their labor will flow back to the developers.

Transferability: Technology or knowledge transfer is not smooth; knowledge is sticky.

Resources: Technology development consumes resources.

The Framework for Technology

Goals and strategies of a Firm A firm’s goals and strategies represent the

aggregate of its products, technologies, and services

For such goals to be credible they must be linked directly to the set of development projects the firm intends to undertake (referred to business architecture)

A business architecture in MOT identifies what business parameters to address to make a good business decision regarding key problems encountered in achieving objectives and goals of the strategies of a new development project

Development Chain The development of any product or service

includes the following chain of acceptance steps: The research and development of an idea or invention The competitive evaluation of the idea The research required in technologies to develop the idea The transfer or purchase of a selected technology for

support of a process, a component of a product, or a further development of the technology for its own marketability

The acceptance of a proposal to develop the product The acceptance of the design of the product and/ or

technology The acceptance of the product’s manufacturability i.e. at

the volumes and specific quality levels required The acceptance by the customer of the product that is

marketed

Business Architecture It is necessary to look at the general

development steps and identify key check points in decision making that relate to business parameters

These steps have a business assessment criteria associated with them for which there must be a payoff

MOT Flowchart

The flowchart shows the practice of technology management in responding to the business.

The model shows a process that identifies major development steps starting with technology research leading to an ultimate customer payoff

Development steps(Factors)

Key business

objectives (Parameters

)Technology Research

Customer requirement

s

Technology Transfer

Product Development Strategy

Market Segment

Ultimate Payoff

(Demand)

Funding

Business Strategy

Revenue Objectives

Business Architecture

There are two phases of architecture

Research and technology phase

Product development phase

Research and Technology Phase

Research / Development Analysis

Competitive Analysis

Creativity and Innovation

Technology Research

Technology Transfer

Industry Analysis

Competitive Advantage

Risk Analysis

Customer Requirements

FundingTransfer Pricing

Make Vs Buy

Technology Forecasting

Reverse Engineering Productivity

PayoffTechnology Goals Business Goals

Invention

Product Development Phase

Market Driven Proposal Acceptance

Design / Tech Acceptance

Software and Manufacturing Acceptance

Market Acceptance

Business Case

Customer Requirement

Return on Assets

RevenueMarket Segmentation

Parts, CIM, CFM

CAD / Packaging

Opportunity Analysis

PayoffProduct Goals Business Goals

Technology Awareness

Technology Awareness1. Technology Environment

1.1 Actors (Developers, Facilitators)1.2 Dynamics (Autonomous, Induced)1.3 Current Environmental Trends (Globalization,

Time compression, Technology Integration)

2. Technology Change2.1 Overview of the dynamics of technological

change (innovation)2.2 Technology Evolution2.3 Implications for the management of technology2.4 Dynamics of Diffusion2.5 A model of innovation adoption

3. Technology Intelligence

1. Technology Environment

Scope What is meant by environment and

technological environment in particular? Who are the main actors in the

technological environment? How do changes occur in the technological

environment? What are some of the major current

developments in the technological environment?

What are some of the major current developments in the technological environment facing firms?

Introduction

1. Technological environment can be viewed as a network of organizations consisting of developers and facilitators.

2. Technology development occurs in stages. Each stage then provides the basis for development in ensuing stages.

3.The way in which technology develops is not determined solely by a developer. National and often international, political considerations will drive technological development.

Levels of Environments

Task Environment It refers to the set of customers,

suppliers, competitors and other environmental agencies directly related to the firm

The task environment is more or less specific to a firm and is not necessarily shared by its competitors

Competitive Environment

It comprises of the firm and its competitors

New entrants, substitute products, suppliers, customers and competition influence what happens in an industry

The factors affect different competitors differently

Macro Environment

Technological Environment Technology environment is the most

visible and pervasive macro-environmental segment in a society:

1.Brings new products, processes and material

2.Directly impacts every aspect of the society around us (entertainment, communications, health care, Transportation modes)

3.Alters the rules of global trade and competition

Technology Environment It comprises two institutions

New knowledge (Science) The application of the knowledge to

develop new products, processes and materials (Technology)

Thus, Technology Development consists of two sets of activities Creation of knowledge and Application of that knowledge

Creation of Knowledge The knowledge base of technology is

derived from basic research The basic research focuses on generating

scientific knowledge and deal with fundamental question of science

Scientific research is often cumulative Research questions begin in some current state

of scientific knowledge; these questions stimulate research projects from which scientific results are published in scientific literature

Application of Knowledge Scientific knowledge is put into

practice to design an innovation that will solve a perceived need or problem.

Researches involved in application are the main consumers of basic research

The end result of their efforts is often a product prototype that may have commercial potential

Application of knowledge Activities of application knowledge: Applied Research: consists of scientific

investigations of known phenomena that do not typically advance scientific knowledge

Development: reduces the knowledge to practice in workable prototype form

Engineering: defines the knowledge for commercial exploitation or other practical end users

Commercialization: includes activities such as manufacturing that finally put the technology to use till it becomes adopted and used by others

1.1 Types of actors in the environment

Roles of corporations

1.As technology developers, they are drivers of change in the technology environment

2.Beneficiaries of technology change initiated by others.

3.Facilitate technology development by others external to the firm through investments in their research projects.

4.Corporations may also be the victims of technology change created by others.

Innovation Networks In the technological environment,

inter-linkages develop between numerous organizations. Interconnections among technology

developers Industry-university linkagesAlliances

Interconnections among technology developers and facilitators IncubationGovernment agencies

Innovation Networks Networks facilitate the flow of information,

resources, personnel and other inputs necessary for technology development and diffusion

Networks speed technology development for several reasons Assist in the diffusion of technology Crease a critical mass of skill that speed

knowledge development Provide a social safety net for individuals.

Because technology development in risky

1.2 Changes in Technological Environment Changes in the technological

environment often come about in two interrelated ways:

Induced changes Represents the technological

consequences created by social, political, or economic forces.

Autonomous changes These changes are initiated by

technology developers but are largely independent of the forces in other macro-environmental segments.

Influence of Regulatory Environment The influence of the political/regulatory

environment is felt in at least three ways:

1.It influences the thrust of major basic research

2.It can facilitate or impede every phase of technology development

3.It can act as a facilitator of private sector technology development

Autonomous Changes Autonomous changes in technology

are drivers of fundamental social and economical change

Social change The first stage corresponds to agriculture The second stage corresponds to

machine production The third stage refers to the information

revolution triggered by advances in computer technology.

Long wave theory of Economic change A reciprocal linkage exists between

technological and economic segments Long wave theory works as follows

First, discoveries in science trigger technological innovation

Second, new industries are formed around these markets, and continued innovations in these newly formed industries expand the markets

Third, as technology matures, many competitors enter internationally, eventually creating excess capacity that in turn decreases profitability

Finally, business failures, unemployment, and attendant economic turmoil in financial markets may lead to depressions

A Comparison of Toffler’s Three Waves

Technological Development

1.3 Overview of Trends in Technology Environment Globalization

Resource allocated to technology development Changing location of manufacturing facilities Rise of multinationals Comparative advantage of nations

Time Compression Shortened product life cycles Shortened development times Decreasing payback periods

Technology Integration Combining technologies to develop new products Combining technologies to commercialize products

The Impact of Trends on Institutions

Process of Technology Change

Technology Change Technology change consists of two

closely linked processes:

Innovation

Diffusion

Focus of Technology change What are the different types of

innovation?

What are the dynamics of technology evolution?

Invention and innovation Invention is a new combination of

preexisting knowledge Innovation includes:

A technological change new to both enterprise and the economy

A change that has diffused into the economy and is adopted by the firm

Dynamics of Technological Change

Firm Level

Technology Level

Firm Level Technological change may be described as

a process of problem solving.

Four stages in the process of problem solving1.Problem Recognition2.Technology Selection3.Solution Development4.Commercialization / implementation

A model of problem solving

Technology LevelTechnological change displays evolutionary dynamics

that are not controlled by a single firm

Actors of these changes

1.Technology developers, which typically are firms involved in innovation in their pursuit of competitive advantage

2.Technology facilitators, who may provide the resources for financing and executing the innovation efforts

3.Customers who are interested in the fruits of technology development and who will shape the direction of development

4.Regulatory agents, the governmental bodies and others who shape the form of products and processes by establishing standards or specifications and

5.Other stakeholders, who may be the beneficiaries or victims of the technology change

Implications for the MOT

1.Innovation, imitation and adoption

2.The role of technology and market factors

3.The centrality of learning

Innovation, Imitation and Adoption

When a firm innovates, two different groups of players respond to the innovation Customers – makes

decisions to adopt or not to adopt the innovation

Competitors – may decide to copy the innovation. This is referred as imitation

Innovation and Imitation are supply-side concepts

Diffusion is a demand-side concept

The role of technology and market factors

For a technological change to be successful the firm has to manage two related processes

Finding effective solutions to a problem and

Gaining acceptance of the solution in the market place

The centrality of learning Three major mechanisms of learning

Environmental surveillance through technical and market intelligence.

Experimentation within firms whereby firms can learn problem solving by simulation and by trial and error.

Imitation through competitive intelligence.

Multifaceted Learning lies at the core of Technological change

Technological Change Technological change consists of two

closely linked processes:

Innovation

Diffusion

Innovation

What is innovation? What are the different types of innovation? What are the dynamics of technology

evolution? What are the characteristics of innovative

firms?

What is Innovation Innovation includes both:

A technological change new to both enterprise and the economy.

A change that has diffused into the economy and is adopted by the firm

Innovation refer both to the output and the process of arriving at a technologically feasible solution to a problem triggered by a technological opportunity or customer need

Process and Output: Innovation

Process–Innovation refers to the process by which

individuals or organizations arrive at a technical solution.

Output–Innovation to refer to a product or service i.e. the

output of the innovation process

Components of Innovation As outputs all technological innovations have

three components: A hardware component consisting of the

material or physical aspects of the innovation A software component consisting of the

information base that is needed to use the innovation

An evaluation information component consisting of the information that is useful for decisions related to the adoption of the innovation

Components of Innovation The components form a system.

If any component of a specific innovation is changed, other components will need to be changed also so as to render the innovation user friendly.

The hardware and software components are intrinsic to the technological innovation.

Domination of the component: Hardware dominant/ Software Dominant

Third component is not intrinsic and refers to the information accompanying an innovation that enables firms or individuals to evaluate its usefulness.

Firm level innovation

Drivers of Innovation Environmental Factors

Market factors Appears to have a primary influence on innovation.

Input factors Rising costs of inputs, trigger innovations aimed at

reducing the use of the expensive inputs

Autonomous factors Intellectual curiosity Technological possibility

Process of Innovation Two types of innovation process 1.Market pull

Is the advancement of technology oriented primarily toward a specific market need, and only secondarily toward increased technical performance.

2.Technology push Is the advancement of technology oriented

primarily toward increased technical performance, and only secondarily toward specific market needs.

Types of Innovation outputs Two dimensions to classify an innovation 1.Degree to which specific technologies in an

innovation depart from earlier ones, or what we will call component knowledge

2.Degree to which configurations among technologies in an innovation depart from earlier one, or what we will call component configuration

Four major types of innovation Incremental innovations: Requires only minor

improvements to the existing system Modular innovations: refer to significant changes in

elements of products. The implementation requires would require an understanding of the new components of the system

Architectural innovations: It requires the new knowledge on how existing components can be configured into a new system. No significant knowledge is required concerning the components themselves

Radical innovations: They are non-aligned with organizational skills and capabilities of the firm

Classification of Innovations

Process

Pro

duct

Classification of Innovations for Products, process and services

Innovation The process of innovation

Long term vs. short term, inside vs. outside the organization

The economic impact of innovation Potential for wealth creation

The role of a manager in the Innovation process Long term technological vision vs. planned and

managed

The Process of Technology Innovation

Technology Evolution

Characteristics of Technological Change

S-curve of technological evolution Technology progression Level of technology development Technology change agent Evolutionary characteristic of technological

change Uncertainty and technological insularity

S Curve of technology evolution Technology evolution refers to the changes in

the performance characteristics of a specific technology over time

Phases of S-curve Emergence – when the technology has come into

existence but shows little improvement in its performance characteristic

Rapid improvement – when the performance characteristic improves at an accelerating pace

Declining improvement – when the pace of improvement declines

Maturity – when further improvements become very difficult to achieve

The Industry Life Cycle as an S curve

Performance

Takeoff

Maturity

Time

Why S-curve for evolution? Learning Processes

In the first stage, the learning generates a more or less reliable design and production process

In the second stage, the learning curve effects produce rapid improvement in the performance characteristics

Technology Limits Technology is constrained by physical limits Improvements beyond physical (technology) limits

are harder to come by

The S-curve Maps Major Transitions

Time

Ferment

Takeoff

Maturity

DiscontinuityPerformance

But they also create major opportunity Corning glass

Cookware to optical fiber HP

Instrumentation to computers IBM

Mainframes to PCs to Services Eli Lilly

“Random” drug discovery to genetics and genomics

Technology Progression Technology progression describes the process

by which new technologies emerge to make existing technologies obsolete.

Technology evolution represents the incremental evolution of technology over time.

Technology progression represents the radical breakthroughs that significantly replace current technology

Technology progression may be described using a series of S-curves

Technology Progression

Levels of Technology Management Basic research – conducted without a practical

application or a problem at hand Applied research – basic research result have

to ‘age’ before they can be packaged into a useful innovation

Development – Major technological advances required a cluster of innovations

Technology change agents

Innumerable Vary significantly across the levels of

technological change

Evolutionary characteristics of technical change

Simultaneous development of innovations at multiple levels by numerous change agent present evolutionary characteristics on technological development Those who are involved in technology

development the so called radical changes will be seen as an accumulations of incremental innovations

Uncertainty and technological insularity Great degree of uncertainty They cope with this uncertainty by engaging in a process of

learning, gathering information, experimentation and imitation. Innovation development requires information concerning: The performance of innovation they are seeking to create or

adopt Materials and components they are fabricating into the

innovation Competitors innovations, the nature of existing patents, and

government policies affecting their proposed innovation; and The problems faced by consumers in the market and how the

proposed innovation might solved certain of these perceived problems

Innovation process is driven by the exchange of technological, market and other environmental information in the face of high uncertainty

Technical Insularity The search for or dissemination of technical

information embedded in an innovation is governed by the principle of technological insularity

The principle of technological insularity suggest that a characteristic feature of technical know-how is that it is not easily transmitted

Reasons for Technical Insularity Technology evolves – evolves because of

accumulated experience of the individuals. Thus first hand knowledge is crucial to the evolution of performance characteristics. Knowledge is not easily transferred

Technical know-how is not easily accepted by individuals not involved in its production. Such know-how requires abandoning of old concepts or concepts that have not been proved useful

Uncertainty and technological insularity

Technology insularity leads to

Spatial clustering

Temporal clustering

Factors influencing the process of innovation in organizations

Summary of factors stimulating innovation

Integrating Technology Push and Market pull to Stimulate Innovation

Opportunities for Technology Push

Opportunities for Market Pull

Innovation

• Scientific discoveries

• Applied Knowledge• Recognized needs• Intellectual capital (scientists and engineers)

• Market demand• Proliferation of

application areas• Recognized needs• Opportunities for

increased profitability, quality, productivity

• Entrepreneurs

Influence of environmental trends on innovation

Three environmental trends Globalization Time compression Technology integration

Three key managerial implications Successful management of technology

requires that the problem solving within the firm should take into account both technical and market considerations.

Learning through environmental intelligence, innovation and imitation are central to effective problem solving.

Development of problem solutions can be accomplished either in-house, in collaboration with other or simply by adopting innovations from outside.

Critical factors in managing technology The creativity factor The link between science and technology Types of innovation Creativity and innovation Bringing innovation to market Technology-price relationship The timing factor

Diffusion

Process of Technology Change

Diffusion

What is diffusion? What are the dynamics of diffusion? What attributes of an innovation

facilitate or hinder diffusion? What factors drive the process of

diffusion?

T-M Matrix

What is diffusion

Diffusion is the process by which an innovation is propagated through certain channels over time among the units of a system.

Diffusion Vs Imitation

Dynamics of Diffusion S-curve of diffusion

Rate of diffusion Potential set of adopters

Reinvention during diffusion Mechanisms of diffusion

Technology substitution Bandwagon effect

Four Phases of diffusion1.Emergence characterized by a slow advance in

the beginning, suggesting that adoption proceeds slowly at first when there are few adopters.

2.A rapid growth phase, when adoption rate accelerates until half of the individuals in the system have adopted.

3.A slow growth phase, where the rate of growth declines, but adoption continues.

4.Maturity, the final stage, where the diffusion almost comes to a halt, either as a result of market saturation or the introduction of a new product, process, or service into the market that replaces the existing innovation.

Differences in diffusion speed

S-curve diffusion

Reinvention Reinvention refers to the dynamics by which an

innovation is changed or modified by the users as they adopt and use it.

Four ways in which reinvention occurs: Improvement in the design and performance

characteristics of an innovation may be necessity for its further adoption by adopters (dominant design)

As an innovation diffuses, a standard model may emerge and speed the adoption process (standard process)

Requirement for complementary products/process for widespread diffusion

Possible new applications: adoption beyond the originally conceived scope of its application

Mechanisms of Diffusion

Two mechanisms by which an innovation propagates through an adopter population

Technology substitution Bandwagon effect

Technology Substitution Explains why an innovation is adopted Technology substitution is key that unlocks

the doors of an adopter population for the propagation of an innovation.

Technology substitution refers to actual substitution of a new technique for the old.

A new technology or an innovation displaces an already existing technology during the process of being adopted

Bandwagon Effect (BE) BE is useful for explaining the speed

of diffusion. BE refers to the strategy of

information collection employed by adopters

It focuses on the dynamics by which later adopters, in their decision to adopt an innovation, imitate the behavior of earlier adopters.

Mechanisms of Diffusion Technology Substitution and

Bandwagon effect underscore the roles of Knowledge and learning in the diffusion

process Uncertainty and information

Tech Substitution and Bandwagon effect refers to the different facets of learning

A Model of Innovation adoption

Steps involved in innovation

Awareness Attitude formation Decision Implementation Confirmation

Stages in decision to adopt

TrialabilityObservability

Requisite Information over the stages of Adoption Decision

Shifting characteristics of adopters over time Adopters categories depending on their speed

of adoption:1.Innovators: very eager to try new ideas2.Early adopters: Opinion leadership3.Early majority: deliberate in its decision

to adopt new ideas4.Late majority: adopts new ideas just

after the average member of a system5.Laggards: last among a population to

adopt an innovation

Selected differences among adopter categories

Relative importance of decision stage Adoption is difficult in organizations

A number of individuals are usually involved in the innovation-decision process, and the implementers are often a different set of people from the decision makers.

The organization structure that gives stability and continuity to an organization often resists the implementation of an innovation.

Factors that drive the process of diffusion Attributes of an innovation Community effects and network

externalities Characteristics of the population

Attributes of an innovation Five attributes of an innovation that influence the

process of diffusion1.Relative advantage – is the degree to which an

innovation is perceived as being better than the idea that it supercedes

2.Compatibility – is the degree to which an innovation is perceived as being consistent with existing values or past experiences and needs of potential adopters

3.Complexity – is the degree to which an innovation is perceived as being difficult to understand and use

4.Trialability – is the degree to which an innovation may be experimented with on a limited basis

5.Observability – is the degree to which the results of an innovation are available to others

Components and Attributes of an innovation