Strategic Issues in Managing Technology and Innovation

Prof. Rushen Chahal

Executive fear over loss of innovation

Technology and Innovation

The Role of Management
Innovation Management of technology
Research conducted by Forbes, Ernst & Young, Wharton Business School found that innovation is the most important driver of corporate value

How generate an overall enthusiasm for innovative behavior and risk taking?


One way is to include innovation in corporations mission statement:

At&T: We believe innovation is engine that keep us vital and growing. Gillette: We will invest in and master the key technologies vital to category success. Hallmark: We believe that creativity and quality in our concept, products and services are essential to our success.

Key questions of innovative management (Gary Hamel)

Old management Innovative management

How to do things with perfect How do you build replicability, at everorganizations that are as increasing scale and steadily nimble as change itself? increasing efficiency? How do you get people to serve the organizations goals? How do you build organizations that merit the gifts of creativity and passion and initiative?

Role of management

The key to success for Sony, and to everything in business, science, and technology for that matter, is never to follow the others Akio Morita, Chairman of Sony Corporation

Role of management

Management has obligation to not only encourage new product development, but also to develop a system to ensure that technology is being used most effectively with the consumer in mind. Between 33% and 60% of all new products that reach the market fail to make a profit.

Technology and Innovation



Environmental Scanning
External Scanning


New developments in technology Motorolas intelligence department monitors the latest technology developments introduced at scientific conferences, journals and in trade gossip.

Technology and Innovation

Impact of Stakeholders on Innovation to
look at customers, suppliers, and distributors, for source of product and service improvements.

Lead Users Process

   

Lay the foundation Determine the trends Identify lead users Develop the breakthrough

Impact of Stakeholders on Innovation

Market Research - to survey current users regarding what they would like in a new product. New Product Acquisition instead of using lead users and market research to test the potential of innovative products, some companies are using speed and flexibility to gain market information.

Strategic Innovation by Costas Markides

Strategic innovation occurs when a company identifies gaps in the industry positioning map, decides to fill them, and the gaps grow to become the new mass market. Gaps are:
New emerging customer segment or existing customer segments that other competitors have neglected New emerging customer needs or existing customer needs not served well by other competitors New ways of producing, delivering, or distributing existing or new products or services to existing or new customer segments

Environmental Scanning
Internal Scanning
 

Has the company developed the resources needed to try new ideas? Do the managers allow experimentation with new products or services? Does the corporation risk taking and tolerate mistakes? Are people more concerned with new ideas or with defending their turf? Is it easy to form autonomous project teams?

Environmental Scanning
Resource Allocation Issues


R&D intensity companys spending on R&D as a percentage of sales revenue. For example, 11-13% of sales revenue are spent for R&D in computer software and drug industries. Time to market issues is an important as 60% of patented innovations are generally imitated within 4 years at 65% of the cost of innovation.

Product and Process R&D Innovation Life Cycle

Technology Sourcing


Outsourcing Technology
Low significant to competitive advantage Supplier has proprietary technology Suppliers better and/or cheaper Strategy based on design not development Requires special expertise Requires new people and resources

Technology and Innovation

Technological Competence
Absorptive capacity is a firms ability to value, assimilate, and utilize new external knowledge. Those corporations that do purchase an innovative technology must have the technological competence to make good use of it.

Categories of Innovation

Product/Market Evolution Portfolio Matrix

Stages of new product development

Technology and Innovation



Innovative Organizations
Positive attitude toward change Decentralized decision making Informal structure Interconnectedness Organizational slack Large size System openness

Designs for Corporate entrepreneurship

Evaluation and Control

Index of R&D effectiveness is calculated by dividing the percentage of total revenue spent on R&D into new product by profitability, which is expressed as percentage.
When applying to 45 large electronics manufactures, only 9 companies scored 1.0 or higher, indicating that only 20% received a positive payback from their R&D spending.

How to make a firm more innovative

Change your culture be more playful and entrepreneurial. Change your attitudes be more risk-taking and more welcoming of change. Change your processes make your strategy process democratic. Change your incentives allow people to experiment and dont punish failure.