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Chapter
Chapter
Managing Technology and Innovation
Managing Technology and Innovation
1717
McGraw-Hill/IrwinMcGraw-Hill/IrwinManagement, 7/eManagement, 7/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
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Learning Objectives After Studying Chapter 17, You will know
The processes involved in the development of new technologies
How technologies proceed through a life cycle How to manage technology for competitive
advantage How to assess technology needs The key factors to consider when making
decisions about technological innovation The roles different people play in managing
technology How to develop an innovative organization The key characteristics of successful
development projects
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Technology and Innovation
Technology is the methods, processes, systems, and skills used to transform resources into products
Innovation is a change in method or technology – a positive, useful departure from previous ways of doing things Process innovations are changes that affect
the way outputs are produced Product innovations are changes n the actual
outputs themselves
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Technology and Innovation Managers must understand the forces driving
technological developments so then can anticipate, monitor, and manage technologies more effectively There must be a need, or demand for the technology Meeting the need must be theoretically possible, and
the knowledge to do so must be available from basic science
We must be able to convert the scientific knowledge into practice in both engineering and economic terms
The funding, skilled labor, time, space, and other resources needed to develop the technology must be available
Entrepreneurial initiative is needed to identify and pull all the necessary elements together
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The Technology Life Cycle
The technology life cycle is a predictable pattern followed by a technological innovation, from its inception and development to market saturation and replacement
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Diffusion of Technological Innovations
The percentage of people using the technology is small in the beginning but increases dramatically as the technology succeeds and spreads through the population
Adopters of a new technology fall into one of five groups Innovators are the first group representing
approximately 2.5% of adopters Early adopters represent 13.5 % of the adopters Early majority represent 34% of the adopters Late majority represent 34% of the adopters Laggards are the final group representing 16% of the
adopters
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Diffusion of Technological Innovations
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Diffusion of Technological Innovations
The speed with which an innovation spreads depends largely on five attributes Has a great advantage over its predecessor Is compatible with existing systems,
procedures, infrastructures, and ways of thinking
Has less rather than greater complexity Can be tried ore tested easily without
significant cost or commitment Can be observed and copied easily
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Technological Innovation in a Competitive Environment
Decisions about technology and innovation are very strategic and managers need to approach them in a systematic way.
Two generic strategies a company can use include Low-cost leadership can drive innovation as
companies try to gain cost advantages through pioneering lower-cost product designs
Differentiation strategy can drive innovation as companies seek the advantages that come from having a unique product or service that customers pay a premium price for
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Technology Leadership
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Technology Followership
Following the technology leader can support both low-cost and differentiation strategies The follower learns from the leader’s
experience The follower can avoid the costs and risks of
technology leadership The follower can adapt the products or
delivery systems to fit buyers’ needs more closely
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Technology Followership
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Assessing Technology Needs
In today’s increasingly competitive environment failure to correctly assess the technology needs of the organization can fundamentally impair the organization’s effectiveness
Assessing the technology needs of the organization involves: measuring current technologies Measuring external trends affecting the
industry
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Measuring Current Technologies
A technology audit helps clarify the key technologies on which an organization depends
One technique for measuring competitive value categorizes technologies as: Emerging technologies are still under development
and thus are unproved Pacing technologies have yet to prove their full value
but have the potential to alter the rules of competition by providing significant advantage
Key technologies have proved effective, but they also provide a strategic advantage
Base technologies are those that are common place in the industry
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Assessing External Technological Trends
There are several techniques that managers use to better understand how technology is changing within an industry Benchmarking is the process of comparing
the organization’s practices and technologies with those of other companies
Scanning focuses on what can be done and what is being developed, placing a great emphasis on identifying and monitoring the sources of new technologies for an industry
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Key Factors to Consider in Technology Decisions
The most effective approach to technology depends not only on the technology’s potential to support the organization’s strategic needs but also on the organization’s skills and capabilities to exploit the technology successfully
The organization’s competitive strategy, the technical abilities of its employees to deal with the new technology, the fit of the technology with the company’s operations, and the company’s ability to deal with the risks and ambiguities of adopting a new technology all must be timed to coincide with the dynamic forces of a developing technology
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Key Factors to Consider in Technology Decisions
Anticipated market receptiveness is one of the first considerations that management should make Is there an immediate application that
demonstrates the value of the new technology
Is there a set of applications that show the technology is the proven means to satisfy a market need
Managers must also consider the feasibility of technological innovations
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Key Factors to Consider in Technology Decisions
Closely related to technological feasibility is economic viability Managers must consider whether there is a
good financial incentive in pursuing a technology
What is the anticipated competency development
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Key Factors to Consider in Technology Decisions
Is the organization stable enough for the new technology Prospector firms develop and exploit technological
expertise are usually early adopters Defender firms tend to deepen their capability base
thorough complementary technologies that extend rather than replace their current ones
Analyzer firms are a hybrid that needs to stay technologically competitive but tends to allow others to demonstrate solid demand in new arenas before it responds
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Sourcing and Acquiring New Technologies
The primary question of how to acquire new technology is a whether the organization should make or buy the technology This is known as the make or buy decision
Some of the more common options for technological development are Internal development Purchase Contracted development Licensing Technology trading Research partnerships Acquisitions
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Sourcing and Acquiring New Technologies
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Technology and Managerial Roles
Technology has traditionally been the responsibility of vice presidents for research and development
Today companies are creating the position of Chief Technology Officer (CTO) Also known as a CIO Senior position at the corporate level with broad,
integrative responsibilities Responsibilities include coordinating the technological
efforts of various business units; supervising new-technology development; assessing the technological implications of major strategic initiatives
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Technology and Managerial Roles
Key roles in acquiring and developing new technologies are: The technical innovator is a person who
develops a new technology or has the key skills to install and operate the technology
The product champion is a person who promotes a new technology throughout the organization in an effort to obtain acceptance of and support for it
The executive champion is an executive who supports a new technology and protects the product champion of the innovation
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Organizing for Innovation
Create an organizational culture that encourages innovation A culture that permits failure is crucial for
fostering the creative thinking and risk taking required for innovation
Bureaucracy is an enemy of innovation Bureaucracy is useful to maintain orderliness
and gain efficiencies Developing radically different technologies
requires a more fluid and flexible structure that does not restrict thought and action
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Organizing for Innovation
A powerful tool for managing technology and innovations is the development project A development project is a focused
organizational effort to create a new product or process via technological advances
Adopting a new technology typically requires changes in the way jobs are designed The sociotechnical systems approach to work
redesign will redesign tasks in a manner that jointly optimizes the social and technical efficiency of work
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Looking Ahead
After Studying Chapter 18, You will know What it takes to be world class How to manage change effectively How to create a successful future