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MANAGEMENT of

The Key to Competitiveness and Wealth Creation

TECHNOLOGY

Tarek Khalil | Ravi Shankar

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Critical Factors in Managing Technology

03

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THE CREATIVITY FACTOR

• Invention– Is either a concept or the creation of a novel

technology. It could be a product, a process, or a previously unknown system

• Innovation– Involves the creation of a product, service, or

process that is new to an organization. It is the introduction into the marketplace, either by utilization or by commercialization, of a new product, service, or process

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THE LINK BETWEEN SCIENCE AND TECHNOLOGY

Components of an Innovation Cycle (Science and Technology are Linked through the Discovery-Invention-Innovation-Market Sequence.)

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TYPES OF INNOVATION

• Service innovation

• System innovation

• Radical (revolutionary) innovation

• Incremental (evolutionary) innovation

• Routine innovation

• Disruptive innovation

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CREATIVITY AND INNOVATION

• The essence of creativity is combining two or more ideas to arrive at an entirely new one

• According to Jain and Triandis (1990), a creative environment has the following characteristics:– Permits people to work in areas of their greatest

interest– Encourages employees to have broad contact with

stimulating colleagues– Allows taking moderate risks– Tolerates some failures and nonconformity– Provides appropriate rewards and recognition

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CREATIVITY AND INNOVATION (Contd.)

• Barron (1969) found that the following characteristics exist in creative people who can convert their thoughts into innovation:– Conceptual fluency– The ability to produce a large number of ideas quickly– The ability to generate original and unusual ideas– The ability to separate source from content in evaluating

information– The ability to stand out and be a little deviant from others– Interest in the problem one faces– Perseverance in following problems wherever they lead– Suspension of judgment and no early commitment– The willingness to spend time analyzing and exploring– A genuine regard for intellectual and cognitive matters

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BRINGING INNOVATION TO THE MARKET

• There are time lags between the different stages of the innovation cycle’s sequence of events—science, invention, innovation, and market

• The sooner an innovation reaches the marketplace, the sooner a company can reap its rewards

• Exclusivity of technology provides higher marginal returns

Example of speeding diffusion is: Microsoft’s strategy of licensing its DOS operating system for use by many computer companies and then making its Windows 95 program available on

each PC, thus creating customer commitment to the product

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TECHNOLOGY-PRICE RELATIONSHIP

Technology Gap/Price Relationship

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THE TIMING FACTOR• Actions must be taken at the right time if an

enterprise is to succeed in a competitive marketplace• In the early 1980s, at the beginning of a new

information age, triggered the technological revolution

• For manufacturing and service organizations, Time-Based Competition (TBC) is an important competitive weapon for achieving world-class status (Blackburn, 1991)

• Manufacturing organizations have switched to Just-In-Time (JIT) systems to compress time wasted in production and facilitate quick response to customer demands

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THE VISION TO CHANGE STRATEGY

• It is very common for managers to be drawn into the routine day-to-day problems of running a business

• The old adage ‘If it’s not broken, don’t fix it’ may lead management to maintain the status quo

• In today’s world of fast-paced technological change, this can be a very dangerous posture to take, an attitude that can lead to loss of competitiveness

• Proper management of technology requires making tough decisions and being willing to accept change, move where new technologies are headed, and invest in the future

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MANAGING CHANGE• Thirty years ago the focus was on how to manage

available resources• Today the approach must be very different and much

more comprehensive• The tasks associated with generating new ideas,

creating new products, controlling production, and dealing with a new breed of competitors and with demanding customers are some of the challenges faced by today’s managers

• Survival is at risk if a company cannot forecast or foresee the changes in the external environment

• It is recognized that 60 to 80 per cent of small businesses fail within five years of starting up. Even large, established firms face the problem of staying power

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PRODUCTIVITY, EFFECTIVENESS, AND

COMPETITIVENESS• Differences between productivity and

effectiveness and their relationships to competitiveness need to be understood in order to optimize the performance of production systems

• On a national level, productivity is a very important factor in raising the standard of living. National productivity can be expressed as output in terms of Gross Domestic Product (GDP) over input in terms of total hours worked:

Productivity = (Output, like GDP)/(Input, like total hours worked) = $/hour worked

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PRODUCTIVITY, EFFECTIVENESS, AND

COMPETITIVENESS (Contd.)• Standard of living is often associated with a

population’s per capita income. This relationship can be expressed as:Per capita income = GDP/Total population = $/person

• Productivity or efficiency in operation implies doing things right

• Effectiveness implies the ability to achieve desired goals, such as increasing the market share of the company or attaining an acceptable level of profit and is about producing or being capable of producing results

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PRODUCTIVITY, EFFECTIVENESS, AND

COMPETITIVENESS (Contd.)• The terms ‘productivity’ and ‘effectiveness’ are not

synonymous. A company can have very high productivity indexes, yet its management may not be effective in achieving desired goals

• Competitiveness indicates the standing of a country or a company in relation to a known group

• MOT encourages managers to keep an eye on the future without neglecting the need to continue optimizing current operations

MOT Working at Time t1 and Planning for Time t2 and t3

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LEADERS VERSUS FOLLOWERS

• Three types of Firms – Leader, Follower, and Laggard

• Advantages of being a leader in innovation:– Name recognition– Better market position– Chance to define the industry standard– Head start on the learning curve– Protective barriers– High profit– Delayed customer switching– Favorable response by outsiders

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LEADERS VERSUS FOLLOWERS (Contd.)

• Disadvantages of being a leader in innovation:– The leader assumes the large cost associated with

research, prototyping, testing, and overall development

– Must be able to sustain the lead– The initial investment in design, tooling, and

production may create difficulty in reversing the course of action should a competitor introduce a better technology or an improved design

– There is market uncertainty associated with the introduction of new technology

– The leader is a target for competition

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LEADERS VERSUS FOLLOWERS (Contd.)

• Innovation leaders can sustain their leadership through a combination of strategies

• A follower firm does have some advantages over a leader in that it is not committed to any special design, process, or technology

• Teece (1987) introduced a taxonomy of outcomes from the innovation process and identified some winners and some losers

Outcome from the Innovation Process

Source: Teece, 1987

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WEBLINKS• http://www.biocon.com/biocon_aboutus.asp

• http://www.technologyreview.in/biomedicine/23610/page2/

• http://articles.economictimes.indiatimes.com/2009-01-02/news/27656069_1_innovation-new-drugs-generic-drug

• http://www.wipo.int/ipadvantage/en/details.jsp?id=2602

• http://www.infosysblogs.com/thinkflat/2008/01/nano_innovation_in_automobile.html