TM583

Strategic Management of
Technology

March 2010

March 3, 2010 TM 583 1

 TM583 Class
 Strategy, Technology and the Manager
 Introductions
 Anita Kelley
 Class
 Name
 Major
 Class Expectations
 Class Overview
 Structure – Blended
 Assignments - In Class and Online

March 3, 2010 TM 583 2

 TM583 Grading

Quiz 200 points

Essay Questions Week 5, Online
Final 300 Points
Essay Questions Covers Entire Class
Threaded Discussion 140 Points
Course Project 200 Points
4 Cases 160 Points
Total 1000 Points

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 TM583 Grading - cont.
 eCompanion Group Project - Real or
Fictional Company
 Strategic Plan for Technologically Driven
Company
 200 Points
 Group Project 2-3 Students per Group
 All Group Members Need to Participate
 Peer Performance Evaluation 20 points of Project
Grade

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 TM583 Strategic Plan Grading -
cont.
 The Strategic Plan has 6 Sections each worth 30 points
for 180 points
 Team Participation is worth 20 points for 200 possible
points
 2-3 Written Pages per Section
1. Strategy (TCO F) -- Week 2

2. Core Competencies (TCO C) -- Week 3

3. Industry Dynamics (TCO A) -- Week 4

4. Technology Sourcing and Internal Innovation (TCO D) --

Week 5
5. Product Development Strategy (TCO E)-- Week 6

6. Strategy to Protect Innovations (TCO B) -- Week 7

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eCompanion Project
 Class Teams Will Analyze:
 Airlines
 Automotive
 Banks
 Computer Hardware
 Computer Software
 Healthcare
 Retail
 Telecom

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 TM583 Grading - cont.

 4 Cases = 160 Points

 Week 1 – Apple Computer
 Week 3 – Research in Motion
 Week 5 – Personal Navigation Devices
 Week 6 – Google
 1-2 Pages Each Write Up

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 Case Studies
 Relevant Environmental Factors (internal and
external)
 Extract all relevant data (hard data and soft
data)
 Turn data into information
 Apply relevant principles to arrive at
solution or to arrive at recommendation of
action to address the needs of the firm

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 Case Analysis
 Use tools methodically
 Carefully compare and contrast all of the facts that may be relevant to
analytical perspective
 Draw in theories and principles of your discipline
 Learn to apply principles
 Synthesize all disparate elements of the case
 No obvious answer
 Not searching for “correct answer” but
 Apply what you have learned in realistic situations in a competent,
considered manner
 Reaching a reasonable and supportable conclusion
 There is NOT One Right Answer

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Chapter 1

Introduction
Importance of Technological
Innovation
 Technological innovation now the single most
important driver of competitive success in
many industries
 Many firms earn over one-third of sales on
products developed within last five years
 Product innovations help firms protect margins by

offering new, differentiated features.

 Process innovations help make manufacturing

more efficient.

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Importance of Technological
Innovation
 Advances in information technology have enabled
faster innovation
 CAD/CAM systems enable rapid design and shorter
production runs

 Importance of innovation and advances in

information technology have lead to:
 Shorter product lifecycles (more rapid product
obsolescence)
 More rapid new product introductions
 Greater market segmentation

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Impact on Society

 Innovation enables a wider range of goods

and services to be delivered to people
worldwide
 More efficient food production, improved medical
technologies, better transportation,etc.
 Increases Gross Domestic Product by making

labor and capital more effective and efficient

 However, may result in negative externalities,

 E.g., pollution, erosion, antibiotic-resistant bacteria

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Impact on Society
 The majority of R&D funds spent in OECD countries
come from industry, and percentage has been
increasing.

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Innovation by Industry:
The Importance of Strategy
 Successful innovation requires carefully crafted strategies and
implementation processes.
 Innovation funnel
 Most innovative ideas do not become successful new products.

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Research Brief
How long does new product development
take?
 Study by Abbie Griffin of 116 firms found:
 Length of development cycle varies with innovativeness
of project
 Incremental improvements took 8.6 months from concept
to market introduction
 Next generation improvements took 22 months.
 New-to-the-firm product lines took 36 months
 New-to-the-world products took 53 months.
 Half of the companies had reduced their cycle time by an
average of 33% over last five years.

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 The Strategic Management of
Technological Innovation
 Part One: The foundations of technological
Innovation
 Sources of innovation
 Types and patterns of innovation

 Standards battles and design dominance

 Timing of Entry

Part I: Industry Dynamics of

Technological Innovation

Chapter 2 Chapter 3 Chapter 4 Chapter 5

Sources of Innovation Types and Patterns of Standards Battles and Timing of Entry
Innovation Design Dominance

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The Strategic Management of
Technological Innovation
 Part Two: Formulating Technological Innovation
Strategy
 Defining the organization’s strategic direction
 Choosing innovation projects

 Collaboration strategies

 Protecting innovation

Part II: Formulating Technological

Innovation Strategy Chapter 6
Defining the Organization’s
Strategic Direction

Chapter 7 Chapter 8 Chapter 9

Choosing Collaboration Protecting
Innovation Projects Strategies Innovation

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The Strategic Management of
Technological Innovation
 Part Three: Implementing Technological
Innovation Strategy
 Organizing for innovation
 Managing the new product development process

 Managing new product development teams

 Crafting a deployment strategy

Part III: Implementing Technological

Innovation Strategy

Chapter 10 Chapter 11 Chapter 12 Chapter 13

Organizing for Managing the New Managing New Crafting a
Innovation Product Development Product Development Deployment
Process Teams Strategy

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Discussion Questions

1. Why is innovation so important for firms to

compete in many industries?

2. What are some of the advantages of

technological innovation? Disadvantages?

3. Why do you think so many innovation

projects fail to generate an economic return?

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Part One: Industry Dynamics of
Technological Innovation
 The sources from which innovation arises, including
the role of individuals, organizations, government
institutions, and networks,
 Types of innovations, and common industry patterns
of technological evolution and diffusion,
 The factors that determine whether industries
experience pressure to select a dominant design, and
what drives which technologies dominate others,
 Effects of timing of entry, and how firms can identify
(and manage) their entry options.

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 Chapter 2

SOURCES OF INNOVATION
Getting an Inside Look:
Given Imaging’s Camera Pill
 The Camera Pill: A capsule that is swallowed by patient
that broadcasts images of the small intestine
 Invented by Gavriel Iddan & team of scientists

 Iddan was a missile engineer – no medical background

 Project initiated by Dr. Scapa, a gastroenterologist
 Iddan applied guided missile concept to problem of viewing
the small intestine
 Developing the Camera Pill
 Many hurdles to overcome: size, image quality, battery life
 Formed partnership with Gavriel Meron (CEO of Applitec) for
capital to commercialize
 Formed partnership with team of scientists lead by Dr. C. Paul
Swain to combine complementary knowledge
 Resulted in highly successful, revolutionary product.
March 3, 2010 TM 583 23
Getting an Inside Look:
Given Imaging’s Camera Pill
Discussion Questions:
 1. What factors do you think enabled Iddan, an engineer
with no medical background, to pioneer the
development of wireless endoscopy?
 2. To what degree would you characterize Given’s
development of the camera pill as “science-push”
versus “demand-pull”?
 3. What were the advantages and disadvantages of Iddan
and Meron collaborating with Dr. Swain’s team?

March 3, 2010 TM 583 24

Overview
 Innovation can arise from many different sources
and the linkages between them.

March 3, 2010 TM 583 25

Creativity

 Creativity: The ability to produce work that is

useful and novel.
 Individual creativity is a function of:
 Intellectual abilities (e.g., ability to articulate ideas)
 Knowledge (e.g., understand field, but not wed to paradigms)
 Style of thinking (e.g., choose to think in novel ways)
 Personality (e.g., confidence in own capabilities)
 Motivation (e.g., rely on intrinsic motivation)
 Environment (e.g., support and rewards for creative ideas)

March 3, 2010 TM 583 26

Creativity
 Organizational Creativity is a function of:
 Creativity of individuals within the organization
 Social processes and contextual factors that shape how
those individuals interact and behave
 Methods of encouraging/tapping organizational
creativity:
 Idea collection systems (e.g., suggestion box)
 Creativity training programs
 Culture that encourages (but doesn’t directly pay for)
creativity.

March 3, 2010 TM 583 27

Transforming Creativity into
Innovation
 Innovation is the implementation of creative ideas into
some new device or process.
 Requires combining creativity with resources and
expertise.
 Inventors
 One ten-year study found that inventors typically:
1. Have mastered the basic tools and operations of the field in which they
invent, but they will have not specialized solely on that field.
2. Are curious, and more interested in problems than solutions.
3. Question the assumptions made in previous work in the field.
4. Often have the sense that all knowledge is unified. They will seek global
solutions rather than local solutions, and will be generalists by nature
 Such individuals may develop many new devices or processes
but commercialize few.

March 3, 2010 TM 583 28

Theory in Action

Dean Kamen
 The Segway HT: A self-balancing, two-wheeled
scooter.
 Invented by Dean Kamen

 Described as tireless and eclectic

 Kamen held more than 150 U.S. and foreign patents
 Has received numerous awards and honorary degrees
 Never graduated from college
 To Kamen, the solution was not to come up with a new
answer to a known problem, but to instead reformulate
the problem

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Transforming Creativity into
Innovation
 Innovation by Users
 Users have a deep understanding of their own
needs, and motivation to fulfill them.
 E.g., Laser sailboat developed by Olympic sailors

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Theory In Action

The Birth of the Snowboarding Industry

 First snowboards not developed by sports
equipment manufacturers; rather they were
developed by individuals seeking new ways of
gliding over snow
 Tom Sims made his first “ski board” in wood shop class.
 Sherman Poppen made a “snurfer” as a toy for his
daughter – later held “snurfing” contests
 Jake Burton added rubber straps to snurfer to act as
bindings
 By 2001 there were approximately 5.3 million
snowboarders in the United States
March 3, 2010 TM 583 31
Transforming Creativity into
Innovation
 Research and Development by Firms
 Research refers to both basic and applied
research.
 Basic research aims at increasing understanding of a
topic or field without an immediate commercial
application in mind.
 Applied research aims at increasing understanding of a
topic or field to meet a specific need.
 Development refers to activities that apply
knowledge to produce useful devices, materials, or
processes.
March 3, 2010 TM 583 32
Transforming Creativity into
Innovation
 Research and Development by Firms
 Most firms consider in-house R&D to be their most
important source of innovation.

March 3, 2010 TM 583 33

Transforming Creativity into
Innovation
 Research and Development by Firms
 Science Push approaches suggest that innovation
proceeds linearly:
Scientific discovery  inventionmanufacturing  marketing
 Demand Pull approaches argued that innovation
originates with unmet customer need:
Customer suggestions  invention  manufacturing
 Most current research argues that innovation is not so
simple, and may originate from a variety of sources and
follow a variety of paths.

March 3, 2010 TM 583 34

Transforming Creativity into
Innovation
 Firm Linkages with Customers, Suppliers,
Competitors, and Complementors
 Most frequent collaborations are between firm and their
customers, suppliers, and local universities.

March 3, 2010 TM 583 35

Transforming Creativity into
Innovation
 FirmLinkages with Customers, Suppliers,
Competitors, and Complementors
 External versus Internal Sourcing of Innovation
 External and internal sources are complements
 Firms with in-house R&D also heaviest users of external
collaboration networks
 In-house R&D may help firm build absorptive capacity that
enables it to better use information obtained externally.

March 3, 2010 TM 583 36

Transforming Creativity into
Innovation
 Universities and Government-Funded

Research
 Universities
 Many universities encourage research that leads to useful
innovations
 Bayh-Dole Act of 1980 allows universities to collect royalties
on inventions funded with taxpayer dollars
 Led to rapid increase in establishment of technology-transfer
offices.
 Revenues from university inventions are still very small, but
universities also contribute to innovation through publication
of research results.

March 3, 2010 TM 583 37

Transforming Creativity into
Innovation
 Universities and Government-Funded Research
 Governments invest in research through:
 Their own laboratories
 Science parks and incubators
 Grants for other public or private research organizations

March 3, 2010 TM 583 38

Transforming Creativity into
Innovation
 Private Nonprofit Organizations
 Many nonprofit organizations do in-house R&D,
fund R&D by others, or both.

March 3, 2010 TM 583 39

Innovation in Collaborative
Networks
 Collaborations include (but are not limited to):
 Joint ventures
 Licensing and second-sourcing agreements

 Research associations

 Government-sponsored joint research programs

 Value-added networks for technical and scientific exchange

 Informal networks

 Collaborative networks are especially important in

high-technology sectors where individual firms rarely
possess all necessary resources and capabilities

March 3, 2010 TM 583 40

Innovation in Collaborative
Networks
 Technology Clusters are regional clusters of
firms that have a connection to a common
technology
 May work with the same suppliers, customers, or
complements.
 Agglomeration Economies:
 Proximity facilitates knowledge exchange.
 Cluster of firms can attract other firms to area.
 Supplier and distributor markets grow to service the cluster.
 Cluster of firms may make local labor pool more valuable by
giving them experience.
 Cluster can lead to infrastructure improvements (e.g., better
roads, utilities, schools, etc.)

March 3, 2010 TM 583 41

Innovation in Collaborative
Networks
Likelihood of innovation activities being geographically
clustered depends on:
 The nature of the technology
 e.g., its underlying knowledge base or the degree to which it can be
protected by patents or copyright, the degree to which its
communication requires close and frequent interaction;
 Industry characteristics
 e.g., degree of market concentration or stage of the industry
lifecycle, transportation costs, availability of supplier and distributor
markets; and,
 The cultural context of the technology
 e.g., population density of labor or customers, infrastructure
development, national differences in how technology development is
funded or protected.

March 3, 2010 TM 583 42

Innovation in Collaborative
Networks
 Technological spillovers occur when the
benefits from the research activities of one
entity spill over to other entities.
 Likelihood of spillovers is a function of:
 Strength of protection mechanisms (e.g., patents,
copyright, trade secrets)
 Nature of underlying knowledge base (e.g., tacit,
complex)
 Mobility of the labor pool

March 3, 2010 TM 583 43

Research Brief

Knowledge Brokers
 Hargadon and Sutton point out that some firms (or
individuals) play a pivotal role in the innovation network –
that of knowledge brokers.
 Knowledge brokers are individuals or firms that transfer

information from one domain to another in which it can be

usefully applied. Thomas Edison is a good example.
 By serving as a bridge between two separate groups of

firms, brokers can find unique combinations of knowledge

possessed by the two groups.

March 3, 2010 TM 583 44

Discussion Questions
1. What are some of the advantages and disadvantages of a) individuals as
innovators, b) firms as innovators, c) universities as innovators, d)
government institutions as innovators, e) nonprofit organizations as
innovators?

2. What traits appear to make individuals most creative? Are these the same
traits that lead to successful inventions?

3. Could firms identify people with greater capacity for creativity or

inventiveness in their hiring procedures?

4. To what degree do you think the creativity of the firm is a function of the
creativity of individuals, versus the structure, routines, incentives, and
culture of the firm? Can you give an example of a firm that does a
particularly good job at nurturing and leveraging the creativity of its
individuals?

March 3, 2010 TM 583 45

Homework

 Week 1
 Read Chapter 1 & 2
 Participate in Online Activities
 Choose Project Teams
 Week 2
 Read Chapter 3 & 5
 Participate in Online Activities

March 3, 2010 TM 583 46