Chapter

17

Managing
Technology and
Innovation

Science
A Systematic study of natural phenomena in order to acquire
knowledge. Science is both a process(method) and a body of
knowledge.
The origin of Science is from Scientia (Latin) which literally
means knowledge.

Technology And Innovation

Technology
the

methods, processes, systems, and skills used to transform

resources into products
systematic application of scientific knowledge to a new
product, process, or service
Innovation
a

change in technology
process innovations - changes that affect the methods of
producing outputs
product innovations - changes in the actual outputs
themselves

Technology And Innovation

Following

are the perquisites for a technological innovation

First there must be a need or demand.

It should be theoretically possible to fulfill the need. i.e. the
related knowledge (science) is available.
The knowledge is convertible into practice in both engineering
and economic terms.
The resources are available(financial, skilled labor, time, space
etc.).
The entrepreneurial initiative should be there.

Technology And Innovation

The

technology life cycle

predictable pattern followed by a technological innovation

starting from its inception and development to market
saturation and replacement
cycle begins with the recognition that applied science can satisfy
a need
knowledge and ideas brought together, culminating in a
technological innovation
rate of product innovation tends to be highest in early years
dominant design emerges when early problems are solved
technology reaches upper limits of performance capabilities
the technology remains in mature stage until it is replaced

The Technology Life Cycle

Performance

Theoretical
maximum

Development slows
as a limit is approached

Emergence of a
dominant design

Early
problems

Time

Technology And Innovation (cont)

Diffusion

of technological innovations

spread

in the use of new technology over time follows an Sshaped pattern

adopters of new technology fall into five groups
innovators - adventurous
early adopters - critical to the success of a new technology

early majority - take longer to decide to use something new

typically not the leaders

late majority - approach innovation with great caution

include well-respected opinion leaders

adopt out of economic necessity or increasing social pressure

laggards - isolated and highly conservative

Technology Dissemination Pattern

And Adopter Categories
100
90

Cumulative
S-shaped curve

Percentage of adopters

80
70
60
50

Early
adopters
13.5%

40
30
20

Innovators
2.5%

Early
majority
34%

Late
majority
34%

Bell-shaped
frequency curve

Laggards
16%

10

Time

Technological Innovation In A
Competitive Environment
Decisions

about technology and innovation are very

strategic and need to be approached in a systematic way
technological

innovations can support either:

low-cost leadership strategy

differentiation strategy

new

technology can completely change the rules of

competition within an industry
key issue is not whether to adopt a new technology but when
to adopt it
Technology
not

leadership imposes costs and risks

the best approach for every organization

Advantages And Disadvantages Of

Technology Leadership
Advantages

First mover advantage

Little or no competition
Greater efficiency
Higher profit margin
Sustainable advantage
Reputation for innovation
Establishment of entry barriers
Occupying of best market niches
Opportunities to learn

Disadvantages
Greater risks
Cost of technology development
Costs of market development and
customer education
Infrastructure costs
Costs of learning and eliminating
defects
Possible cannibalization of
existing products

Technological Innovation In A
Competitive Environment (cont.)
Technology

followership

deciding

to be a leader or follower depends on how a company

positions itself to compete, the benefits gained through the use
of a technology, and the characteristics of the organization
can be used to support low-cost and differentiation strategies
adoption timing is dependent on the organizations strategic
needs and technology skills as well as the benefits of the new
technology
development of technology over time makes it easier to use
complementary products and technologies may be developed
that may make the technology easier to use

Assessing Technology Needs

Measuring

current technologies

technology

audit - process of clarifying the key technologies

upon which an organization depends
most important dimension of a new technology is its
competitive value

emerging technologies - still under development and unproven

may alter rules of competition in the future

pacing technologies - yet to prove full value

have potential to alter the rules of competition

key technologies - proven effective and offer strategic advantage

base technologies - are commonplace in the industry

offer little competitive advantage

Assessing Technology Needs (cont.)

Assessing

external technological trends

several

techniques used to better understand how technology is

changing within an industry

benchmarking - process of comparing the organizations

technologies with those of other companies

important to consider practices of overseas competitors

focus is what is currently being done

scanning - focus is what can be done and what is being

developed

emphasizes identifying and monitoring the sources of new

technologies in an industry
extent of scanning determined by the importance of staying at the
cutting edge of technology

Sourcing And Acquiring New

Technologies
Each

industry usually has specific sources for most of its

new technologies
in

many industries, however, the primary sources of new

technology are the organizations that use the technology
make-or-buy decision

the question an organization asks itself about whether to acquire

new technology from an outside source or develop it itself

Internal

development - potentially advantageous to keep the

technology proprietary
Purchase - most technology is available in products or
processes that can be openly purchased

Sourcing And Acquiring New

Technologies (cont.)
Contracted

development - contract development to an

outside source
e.g.,

other companies, independent research laboratories

Licensing

- when technology is not easily purchased, may

be able to license it for a fee
Technology trading - may be used between rival companies
becoming

increasingly common because of the high cost of

developing advanced technologies independently

Research

partnerships - each member enters the partnership

with different skills or resources needed for successful newtechnology development

Sourcing And Acquiring New

Technologies (cont.)
Joint

venture - have greater permanence

outcomes

Acquisition
outright

result in entirely new companies

of an owner of the technology

purchase of the company that owns the technology

acquiring a minority interest to gain access to the technology

Technology Acquisition Options

Yes

Yes

Available skills
and resources

Important to
remain
proprietary

Acquisition of the technology

owner
No Exclusive research contract
Yes

No

Internal
development

Available for
sale
No

Purchase
License
Trade
Joint venture
Research partnership

Technology And Managerial Roles

Chief

Technology Officer (CTO)

executive

in charge of technology strategy and development

senior position at the corporate level with broad, integrative
responsibilities
coordinates technological efforts of the business units
acts as a voice for technology
supervises new-technology development
assesses the technological implications of strategic initiatives

Technology And Managerial Roles

(cont.)
A variety

of critical roles in developing new technology

entrepreneur

- invents ways to produce old products to exploit

new technologies
technical innovator - person who develops a new technology
or has the key skills to install and operate the technology
product champion - person who promotes a new technology
throughout the organization in an effort to obtain acceptance
and support for it
executive champion - an executive who supports a new
technology and protects the product champion of the
innovation

Thank You