Chapter: 2

The Management of
Technology and Innovation
A Strategic Approach
 Introduction

Strategy is a coordinated set of actions that fulfill a firm’s objectives, purposes

and goals.

Strategic Planning is the process that lays the groundwork and direction of the
firm over the next several years.

Strategic Management is an ongoing process in which the organization defines

the nature of the business in which the firm will be active, the kind of economic
and human organization it intends to be, and the nature of the contribution it
intends to make to its various constituents.
 Integrating MTI and Strategy

In Integrating MTI and Strategy the most important factor is Capabilities.

To be successful, there should be five or six capabilities in which the firm is superior
to its competitors. These capabilities are known as building blocks for the firm’s
strategy.

Classification of Capabilities:
•Technical Capabilities: Concern how the firm approaches technology it already has
or wishes to have in the future.
Technical Capabilities are further classified in three ways destroy, preserve or
develop
•Market Capabilities: The firm must only have direct technical capabilities; it must
also have market-relevant skills that will indirectly impact the technology of the firm
 Technology and Competitive
Advantage
Competitive Advantage: The ability to perform an activity better than
competitors will lead to a sustainable competitive advantage only if the
activity is something that the customer value and the other firm cannot
easily duplicate.
Continuous versus Radical Technology

Continuous Technology : The changes in the technology are not a sudden

progression; instead , they happen over relatively short period of time.
Eg: Personal computer: Initially the computers were in the size of the room
and later they came up with small size Desktop and now in laptops.

Radical Technology: The changes in the technology which takes place

suddenly and causes a dramatic change the way things are done.
Eg: introduction of automobile was a radical technology where there was
extreme change in modes of transportation.
 Maturing Process of Technology

Decline
High Profit
Technology Performance Parameter

Improvement

Embryonic Growth Maturity Aging

Invention

Time
 Offensive Versus Defensive Technology

Offensive Technology: Is used by firm in a way that it is not being used by

competitors so that it gains a competitive advantage.

Defensive Technology: In this case the firm will obtain the technology that others
already employ. This use of technology will not the give the firm an advantage, but it
allows the business to match its competitors.
It also means that a firm acquires or employs a particular technology to block its use
by others.
 Strategic Process in MTI

•Strategic process of a firm can be broken down into three principle activities.
•A well managed firm performs these activities simultaneously and continuously.

Strategic
process

Planning Implementation Evaluation &

Control
 Planning

•Planning is defined as the systematic gathering of information that leads to the

generation of feasible alternatives for the firm, selection of the most appropriate action
among alternatives and ultimately to the setting of direction for the firm

•Steps in a planning process

•Data gathering
•Mission generation
•Objective setting
•Strategy establishment
 Levels of Strategy

Corporate Strategy: how the firm will accomplish its mission

Business Level Strategy: involves the setting of goals and objectives
Functional Strategy: designs tactics and jobs for accomplishing objectives
 Porter’s Five Forces Model

Threat of
Substitutes

Rivalry among Power of Buyers

Power of Suppliers
competitors

Threat of New
Complementors Entrants
 Implementation
Once the firm has gathered information, identified a gap in the market, and
developed a mission, goals and strategy to be successful in that market, it will
ultimately need to implement its strategy.
•What to do – execute the plan
•When to do it – prioritize activities
•How to do it – make or buy
•Who will do it – us, them or combination

The firms common implementation concerns include.

• Structure
• Employee Hiring and Relations
• Decision Making
• Communication
• Culture
• Employee Incentives
 Value Chain Analysis
A tool to conceptualize how the elements concerned with the implementation of the
firm’s strategy fit together is a value chain analysis
 Evaluation and Control
Evaluation : Comparison of actual outcomes with expected outcomes
Control : Adjustments, as needed
Key Issues

Balanced Scorecard Approach

Shareholder value; Revenue Growth Strategy;

Financial Cost Structure Strategy

Value basis – quality, price, availability, variety, function,

Customer service, brand, image

Processes – Production/Operations, Customer

Internal Relationship Management; Innovation; Industry based

Skills training and development; Information Capital

Learning & Growth
Investment; Organizational Culture and alignment