Critical Factors in Managing Technology

Chapter 6

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Introduction Technology is an expression of human

creativity. Managing technology is involves continuous

effort in creating technology, developing novel products and services, and successfully marketing them.

This requires great creativity along with a system designed to exploit it. It also required investment in R&D. R&D is a costly endeavor.

It is a risky investment and therefore needs to be well managed.

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Creativity factor Technology is an expression of human

creativity. Creativity:

Invention Creation of novel technology from scientific

discoveries Innovation

Creation of products, services, processes that are new to an organization.

To satisfy customer needs by integrating existing technology and invention.

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Link between science & technology

Invention

Scientific Discovery

Innovation

Market

Buying or ignoring the innovation

May never be developed into marketable products

Has no instantaneous

commercial valueAdopting invention

stimulate

time lags

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Types of innovation An innovation must contribute to the

creation of value. Radical breakthrough innovation

Usually based on an invention, e.g. semi-conductor, chips, …

Incremental or evolutionary innovationImportant improvement in products, process or services, e.g. portable PC in 1981, Windows technology

Routine innovationNew to the firm but very similar to what it had in the

past

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Creativity and innovation

Innovation – creation of value or satisfaction of a customer need.

Creativity – engine of innovation Combining two or more ideas to arrive at an

entirely new one. to fix a previous problem to adapt with new technology or new society to block customer switching cost...

Depends on both people and environment.

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Characteristics of creative environment in an organization 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 Provides appropriate rewards and

recognition.

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Bringing innovation to market

Manipulation of time span is an important and effective competitive weapon.

A company that owns a technological innovation may want either to delay or to speed up the diffusion of technology in market in order to fully exploit its benefits. E.g. Osborn Computer Company

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

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Technology-price relationship

Technology Gap between owner and customer

Pric

e

Technology gap , price ;

Technology gap , price

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Time or Diffusion

Tec

hnol

ogic

al K

now

ledg

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Gap

Owner knowledge

Customer knowledge

Customer can improve on the initial technology.

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Managing change

Management must be able to deal with both stability and change.

Managers of technology must be able to recognize and react to external change as early as possible.

Example: the failure of Kodak Company

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Changing Trends in Industry

Factor Traditional New

1 Life cycle Long life cycles Short life cycles

2 Innovation Few Continuous

3 Competition Expected;Competitors are the enemy;Cooperation not allowed

Stronger;Alliance with competitor accepted

4 Market Expected; Local Uncertain; Global

5 Quality Firm Desirable Customer Desirable

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6 Production Mass; no commitment to suppliers; large inventories; fixed manufacturing

Customerized; suppliers are partners; reduced inventories; flexible manufacturing

7 Organization Large corporations vertically; integrated companies; bureaucratic organizations; financial methods control the organization

Smaller plants; companies rely on outsourcing; nimble organizations; financial methods to serve the organization’s objective

Changing Trends in Industry (con-)

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Being a Technology leaders or followers

A leader is a firm that is the first to market an

innovation. A follower

This firm misses the initial wave of capitalization on the technology but recognizes the technology’s impact on its business. She follows closely behind the leader

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Advantages of being a leader innovation

Name recognition Better market position A chance to define the industry

standard A head start on the learning curve Protective barriers

(e.g. through patents) High profit

due to technology gap between customers and products

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Delayed customer switching Favorable response by outsiders

Supports from government, venture capitalists, other industrialists.

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Disadvantages of being a leader

Large cost associated with research, prototyping, testing and overall development

Costs associated with updating the technology

Initial investment in design and production may create difficulty, if a competitor introduce a better technology or an improved design

Market uncertainty As a target for competition

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Outcome from innovation process

- Pilkington (Float Glass)

- G.D. Searle (NutraSweet)

- Du Pont (Teflon)

- RC Cola (Diet Cola)

- EMI (Scanner)

- Bowmar (Calculator)

- Xerox (“Star”)

- DeHavilland (Comet)

- Kodak (Instant photography)

- Northrup (F20)

- DEC (PC)

- IBM (PC)

-Matsushita (VHS format for CR)

- Seiko (Quartz watch)

WIN

LOSE

INNOVATOR FOLLOWER

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How can innovation leaders sustain their leadership ?

To invest in R & D to continue the development of technology.

To build technological resources. To diffuse their own technology

while delaying competitors from getting into the technology.

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How can a follower firm do ?

To examine a leader’s product and to attack it at its weakest point.

To have lower initial investment in R & D.

To improve on what already exists.

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Introducing environmentally Friendly Technologies

Technology that not harm to the world and human.

Some fundamental principles are as follows: Reduce, Reuse, Recycle and Replace the use

of natural resources (the 4 R) The selecting technology consider Economic

Feasibility, Endowment Rationality and Environment Sustainable (the 3 E)

Green Technology

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Example: Using less polluting and less hazardous raw materialsIn October 1990 McDonald’s in US switched from plastic clamshell hamburger boxes to paper wrappers (Recyclable and biodegradable) Example : Modifying products to minimize

use of hazardous materials and processes Many pharmaceutical companies now try to

use water-based coating instead of solvent based coatings for tablets. This reduces solvents spray emissions into air.

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Discuss Questions

1-Identify a company that changed from being a follower to being a leader. What was its approach? How long did they take?