AP/ADMS 4940Technology Management

Session 1

Today’s Agenda

Administrative issues

Course outline review

Course expectation

Overview of technological innovation

Administrative Issues

Contact Info:You-Ta Chuang, ychuang@yorku.ca

Office: RM233, Atkinson Building

Course materials:All materials are available on e-Resources

Cases can be purchased through Ivey School of Business

Course Outline Review

Learning Objectives

To develop an awareness of the range, scope, and complexity of the phenomena, issues, and problems related to managing technological change.

To develop understanding of "state of the art" concepts for managing technological change and the relationship between technological change and strategy.

To develop a conceptual framework for assessing and auditing the technological capabilities

EvaluationMidterm exam 30%

Oct 22, in class, close bookCoverage – readings from Sessions 1-6, excluding cases

Final exam 20%Date: TBACoverage – readings from Session 8 – 11, including group projects; excluding cases

Participation 15%Your performance relative to class average; York’s 9-point scale

Group work 35%

Group work

Session summary (5%)

Lead discussion (5%)

Group project (25%)Three progress reports (5%)

Group presentation (20%)

OverviewTechnology:

This refers to the theoretical and practical knowledge, skills and artifacts that can be used to develop products and services as well as their production and delivery systems.

Technology can be embodied in people, materials, cognitive and physical processes, plant, equipment and tools

Technological Innovation:

This can be technology-based or facilitated by technology. We define successful technological innovation as that which returns the original investment plus some additional returns

Technological innovation is 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 yearsProduct innovations help firms protect margins by offering new, differentiated features.Process innovations help make manufacturing more efficient.

BUT…..

Technological innovation can lead to

Shorter product lifecycles (more rapid product obsolescence)More rapid new product introductionsGreater market segmentation

And…return on investment???

Biopharmaceutical Companies’ Investment in R&D

Total Biopharmaceutical Company R&D and PhRMA Member R&D: 1995–20091

Sources: 1Burrill & Company, analysis for PhRMA, 2005–2010 (Includes PhRMA research associates and nonmembers) in PhRMA, “Profile 2010, Pharmaceutical Industry;” PhRMA, “PhRMA Annual Membership Survey,” 1996-2010; 2CBO, Research and Development in the Pharmaceutical Industry, 2006.

The pharmaceutical industry is one of the most research-intensive industries in the United States. Pharmaceutical firms invest as much as five times more in research and development, relative to their sales, than the average U.S. manufacturing firm.2

— Congressional Budget Office

““

Sources: 1J. DiMasi and H. Grabowski, "The Cost of Biopharmaceutical R&D: Is Biotech Different?," Managerial and Decision Economics, 2007; J. DiMasi et al., “The Price of Innovation: New Estimates of Drug Development Costs,” Journal of Health Economics, 2003.

The Cost of Developing a New Drug Has Greatly Increased

Cost to Develop One New Drug1

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Source: 1Tufts Center for the Study of Drug Development, “New drugs entering clinical testing in top 10 firms jumped 52% in 2003-05,” Impact Report, 2006.

Probability of Success for Investigational Drugs Is Small

Approximately 20% of self-originated new drugs that enter clinical testing will

receive U.S. marketing approval.1Clinical Approval Success Rates by Therapeutic Class1

Roadmap of topics

What is innovation

Source of innovation/Types of innovation

How to measure innovation performance

Strategy and competition

Choosing innovation projects

Collaboration strategies

How to protect innovation

Organizing for innovation

What’s on next weekTopics: Nature and Importance of Innovation; Sources of Innovation

Readings:

The Council of Canadian Academies, 2009. Innovation and Business Strategy: Why Canada Falls Short: Chapter 2

Birkinshaw, J., Bouquet, C., & Barsoux, J. (2011). The 5 myths of innovation. MIT Sloan Management Review, 52(2), 43-50.

Davenport, T. H., Prusak, L., & Wilson, H. J. (2003), Who's bringing you hot ideas and how are you responding? Harvard Business Review, 81(2), 58-64