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Chapter

17
Managing Technology and Innovation

McGraw-Hill/Irwin Management, 7/e

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 leaders 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 todays increasingly competitive

environment failure to correctly assess the technology needs of the organization can fundamentally impair the organizations 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

Assessing External Technological Trends

There are several techniques that managers

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use to better understand how technology is changing within an industry Benchmarking is the process of comparing the organizations 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 technologys potential to support the organizations strategic needs but also on the organizations skills and capabilities to exploit the technology successfully The organizations competitive strategy, the technical abilities of its employees to deal with the new technology, the fit of the technology with the companys operations, and the companys 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

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 newtechnology 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