Technological

Forecasting

BPT 3113 – MANAGEMENT OF TECHNOLOGY

• Introduction• Definition• Forecasting Technology• Technological Forecasting Process• Forecasting Techniques• Current Status• Technology Discontinuity • Summary

Chapter Outline

• Explain the significance, concept and process of forecasting

• Describe the techniques of forecasting• Assess the current status of forecasting

Lesson Outcomes

Introduction Future may not behave like the past – depends

on characteristics and physical limits of the technology, the social and environmental factors influencing its development and market conditions

Predicting the future is more difficult with technology that is experiencing rapid change

The seeking of or anticipation of technological innovation has been called technology forecasting

TF Definition Provides visions of the future that can be used to

guide actions of the present in anticipation of future states

Forecast the character and role of technological advancement based on following established methodologies

A process of identifying the determinants of the direction and rate of technological change and establishing their relationship with the concerned technology to anticipate future trends

A process of predicting technology changes based on facts, assumptions and educated guesses with the help of a chosen technique

Forecasting is indispensable

Forecasting improves quality of decision-making

Scanning the technological environment

Anticipating emerging technological changes

Identifying suitable technologies by evaluating various alternatives

Planning for future technology needs

TF For Decision Making

Forecasting TechnologyForecasting Problem & Objectives

(data inputs)

Forecasting Process &

Techniques

Forecast(output)

Reviewmechanism

Perfo

rmance

Time

Future

Present

Growth Pattern & Possible Future State

of a Technology

Forecasting Model

Traditional forecasting methods depend to a great extent on projecting past performance

into the future

• A technology forecaster must have a good understanding of technology life cycles and the factors that influence technological development and the rate of innovation.

• A good forecast must have:– Credibility and utility– An accurate information base– Clearly described methods and models– Clearly defined and supported assumptions– Quantitative expression whenever possible– A stated level of confidence in the forecasted information

• The attributes of technology most often forecast are:– Growth in functional capability– Rate of replacement of an old technology by a newer one– Market penetration– Diffusion– Likelihood and timing of technological breakthroughs

Forecasting Technology

Common mistakes and pitfalls in forecasting & analysis:

1. Failure to use appropriate data– Use of unreliable data; failure to use valid data due to the

use of wrong technique

2. Mistakes in selecting appropriate methodology– Overemphasis on quantitative techniques; reliance on

single expert

3. Lack of imagination in the form of– Failure to distinguish between signals and noises;

neglecting uncertainty

4. Biases introduced by personal factors– Vested interest of the forecaster; unwillingness to alter

other previous commitments

Forecasting Technology

Make specifications of forecast

Identify variables

Select data sources

Employ forecasting technique

Use by application

Undertake reviews

TF Process

Specify ExpectationsTime period

• The time period may be stated generally or precisely

Nature of technology

• The technology being forecast may be narrowly defined or it may encompass a very broad range

Characteristics to be exhibited by the technology

• The characteristics may be stated only in general terms or may be given precise quantitative values

Probability associated with the characteristics

• The probability associated with the characteristics may be given only generally, as high or low or it may be stated in precise quantitative terms

Exploratory Methods Normative Methods

Technology Monitoring Dynamic Modeling

Trend Analysis Cross Impact Analysis

Expert Opinion Morphological Analysis

Delphi Technique Series Indicators

Scenario Development

Forecasting Techniques

Approach to be used depends on the following factors:

a. Purpose for which the forecast is being made

b. Reliability needed for the forecast

c. Precision of the available data

d. The time frame for the forecast

5 Exploratory Methods:1.Monitoring

– Monitoring is the process of scanning the environment for information about the subject of a forecast

– It’s a method for gathering and organizing information; assessment is to be done carefully based on the data

2.Expert opinion– This method collects opinions of chosen experts in a

particular area and arrives at a forecast– This method is suitable when:

• Identifiable experts in an area exist• Data are lacking• Modelling is difficult or impossible

Forecasting Techniques

3.Trend Analysis– Uses mathematical and statistical techniques to extend

time series data into the future, it assume that past conditions and trends will continue in the future more

– Accurate over short time frames and less reliable for long time frames

 4. Delphi Technique

– An attempt to arrive at a consensus in an uncertain area by questioning a group of experts repeatedly – process goes on till an agreement is reached in the forecast

– Presumes the following conditions : panellists must be wide knowledge and experience of the subject in their expertise and the method presupposes that its conductors are objective in their job

Forecasting Techniques

Forecasting Technology5. Scenarios

− Scenarios are sets of snapshots of some aspect of the future situation and most useful in forecasting and in communicating complex, highly uncertain situations to non-technical audiences

− A set of imaginative descriptions are developed based on quantitative and qualitative data

4 Normative Methods:1.Dynamic Modeling

– A model is a simplified representation of some part of the real world. A model can be used to forecast the behaviour of the system being model

– Model range from flow diagrams, simple equations and scale models to sophisticated computer simulations

2.Cross Impact Analysis– Researchers identify a set of key trends those with high

importance or probability– The question is then put: “if event A occurs, what will be

the impact on all other trends?”– The results are then used to build set of ‘domino chains’

Forecasting Techniques

3. Morphological Analysis– Developed by the well known Swiss astronomer Zwicky in

his work in the field of jet engines– Distinguishes 5 essential steps that constitute the

morphological method

4. Series Indicators– Each company establishes favourite indices of those

general economic conditions most relevant to its product / technology category

– These indices should be examined for any indicators that may affect the life of the technology. 3 general categories of indicators:a. Leading indicatorsb. Simultaneous (coincident) indicatorsc. Lagging indicators

Forecasting Techniques

Current StatusTrends that have contributed to the sophistication and wider application of technological forecasting are:

i. Emphasis on Strategic Approach More firms are adopting strategic approach and

preparing long range plans to gain competitive advantage

ii. Information Management Capabilities Have profoundly changes moved to computer driven

operation

iii. Increased Sophistication in Toolsiv. Rise of Research Agencies

Technology Discontinuity

• Example : Transportation Technologies -

Speed• A technology forecaster predicts

the natural performance limit of each mode of transportation technology

• Use this information to guide decisions about when to start using or abandon a technology before the competition renders it obsolete

• Besides that, the information can be use to make decisions about investing in a new technology, R&D or new products or about acquiring a new company that has the technological capability of the emerging mode of technology

The cumulative curve is used to forecast

maximum transportation speed

A forecaster may use the trend to extrapolate the

efficiency of white light into the future

But there is no guarantee that the trend will indeed continue

to hold in the future

At least the trend will give added information, permitting an educated guess and better

decision making

Management by data is much more effective than

management without adequate information

Technology Discontinuity

Summary• Technological forecasting helps managers in

improving decision making, by providing knowledge of future changes and provides basis for planning

• Forecasting problems are influenced by time period, nature of technology, characteristics to be exhibited by the technology and their probability

• Forecasting has gained significance in this knowledge era and it continues to be an important function in technology management of organizations