Introduction MOT (1)

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Technology Management

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Why MOT?

Rapidly changing technology which ischanging every industry and everybusiness

Rapidly increasing competition which willeventually envelop every market niche, nomatter how sheltered.

Increasingly efficient financial marketsrequiring ever shorter term returns.

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Rate of Technological change

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n er sc p nary a ure oMOT

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TechnologyTechnology consists of three componentsHardware The physical structure and logical

layout of the equipment or machinery that isto be used to carry out the required tasks

Software The knowledge of how to use thehardware in order to carry out the requiredtasks

Brainware the reasons for using the

technology in a particular way. This isreferred to as know-why.

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TechnologyThe fourth component Know-howIt encompasses all levels of technological

achievements

The learned or acquired knowledge regarding

how to do things wellIt may be result of experience, transfer of

knowledge or hands-on-practice

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Technology is

driving changes in the business landscape

no longer limited to supporting businessdecisions

breaking down traditional industrialboundaries

redefining a new era of competition

But still

people have been and will continue toexpress disbelief here is how..,

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Radio and TelevisionTelevision will not be able to hold on to any market it

captures after the first six months. People will soon get

tired of staring at a plywood box every night.

- Daryl F. Zanuck, Head of 20th Century-Fox, 1946

CommunicationWell informed people know it is impossible to transmit the

voice over wires and that were it possible to do so, the thing

would be no practical value

- Editorial in the Boston Post, 1865

ComputersThere is no reason for any individual to have a computer in

their home-Ken Olson, President of Digital Corporation , 1977

I think there is a world market of may be of five computers

- Thomas Watson, Chairman, IBM, 1943

640 K (internal memory) ought to be enough for anybody- Bill Gates, Microsoft, 19818
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ManagementArt of getting people together to

accomplish the desired goalsManagement comprisesPlanning

OrganizingStaffingDirectingControlling

Manages deployment and manipulation

ofhuman resources, financial resources,technological resources and naturalresources

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Management of TechnologyA discipline of management wherein an

organization leverages the technologicalfundamentals to create competitiveadvantage

An integrated application ofengineering, science and managementcapabilities

Process of MOT includesIdentification of technologiesSelectingProcurementAssimilationExploitation of technologies for production of

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Evolution of Management ofTechnology

1950 1970 1980 1990s

R & D Management of Technology Value Based

Management Innovation Strategy Management

Era of Plentiful Resources Era of Accountability

New venture Linking to Broader vision

divisions business of technology

Allocation of Innovation Mgmt. Different org. Outsourcing

Funds to projects arrangements

Scientists & Tools to assess

Engineers values

Leadership Internal Markets

R & D Manager Chief Technology officer 11


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Perspectives in ManagementMarket BasedResource Based

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Market Based Vs ResourceBased

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Key concepts of MOTTo develop ideas about the management of

technology within an open system, fourmajor concepts are employed:Firms as value chainPrimary activities

Support activitiesIndustries as competitive domainsCapacity drivenCustomer drivenKnowledge driven

Forms of technological changeProduct technologyProcess / production technology

Value creation and competitiveadvantages

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Porters Model of Value Chain

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Classification of Industries

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Forms of TechnologicalChangeProcess Technology / ProductionTechnology

Product Technology

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Evolution by Ages

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Evolution of ProductionTechnology

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Product Techology

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Value Creation andCompetitive AdvantageCompetitive advantage is the ability of the

firm to outperform rivals on profitability

It depends on the how the firm is able tocreate for its customers value that exceeds

the cost of creating a product

Value is what the customers are willing topay, and superior value stems from offering

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Levels of Development

Descriptive Flow chart

First level -Individual develops

tacit knowledgeSecond level tacit

knowledge iscodified

Finally there is alevel ofdevelopmentwhere theknowledge is put to22


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Classification of technology

New TechnologyEmerging Technology

High Technology

Medium TechnologyLow Technology

Appropriate Technology

Codified Vs Tacit Technology

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Four Characteristics of MOTOpportunity:The art of perceiving the

triggering event for technology development; itis truly a human activity.

Appropriability: Where the technologydevelopment is due to economic motives,individuals will pursue development only to theextent that there is a reasonable assurancethat the fruits of their labor will flow back to

the developers.

Transferability:Technology or knowledgetransfer is not smooth; knowledge is sticky.

Resources:Technolo develo ment24


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The Creation-ApplicationSpectrum

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Spinning out technology

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Core Knowledge needed forMOT

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SC

OPE

OFMO

T

ResearchDevelopment

ResearchDevelopmentDesignManufacturin

g


gMarketingSalesPhysicalDistributionCustomerservice


gMarketingSalesPhysicalDistributionCustomerserviceInformation

systemsHumanResourcesFinancePurchasingPatent andLegalPublicRelationsGeneralAdministration


gMarketingSalesPhysicalDistributionCustomerserviceInformation

systemsHumanResourcesFinancePurchasingPatent andLegalPublicRelationsGeneralAdministrationCustomersSuppliersOther

influences(Internal;28


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Exploitati

on

Acqu

isition

Identificationand

selection

Managerial function of MOT

Technology Strategy

Business Strategy

Technology

Development and

utilization

Technology acquisition

and transfer

R & D

Product and Process

Technology

NPD

Knowledge

Management

Information

Management

Technology

forecasts

Commercialization

Value chain Management

Product Life cycle management

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Managerial functions of MOT

ProtectionIdentify options

Establish strategy

Monitor effectiveness

Identification

Technology assessment

Pre selection Framework

Technology / Market scanning

Information Management

Selection

Technology forecasting

Benchmarking

Decision criteria and Process

Monitoring / Improvement

Acquisition

Internal R & D

Licensing and Joint ventures

Organizational change

Project Management

Technology Insertion

Exploitation

Customer supplier Network

Incremental Development

Product Management

Complementary Assets

Source: Gregory : 199530


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Audit Forecasting Selection &Plan

Acquisition Exploitation

Assessutilization ofexistingtechnology*

Identify thegaps

Priorities

areas for newinputs intechnologyfrom:IncrementalImprovementSchemes*

ModernizationProgramMajor

TechnologyDevelopmentProgram*

Assess thedevelopmenttrends of allthetechnologiesavailable*

Analyzecompeting

alternatives;Costs; Techno-Economic;Adaptability;andEnvironmentalCompatibility*

Comparetechnologyfrom in-house(R&D) andexternalsources *

Analyze Cost;Techno-Economics;Adaptability;Flexibility; TimeFrame; andCompetitorsStrategy, forthe competing

alternativetechnologies

Match theCorporateNeeds with the

Technologies

available andidentify thegaps to bebridged*

Prepare acomprehensive

StrategicTechnology

Obtain andcomprehend:DetailProject Report

ContractManualsTrainingCommissioni

ngAssimilatethetechnologyprocuredthrough use;and

ImproveStandardOperatingPractice*

UpgradeTechnologyafterInduction*

Document;modifyStandardOperating

Practice

Transfer tomarket or inhouse it afterup gradation

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The Framework for Technology

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S t M d l R


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System Model: Resources.Infrastructure and Activities

Resources Infrastructure ActivitiesPeople Purposes Business

Intellectual Property Objectives Management

Information Strategies System

Organizationalcharacteristics

Organizationalstructure

Project

Technology Guiding principles Functional

Time Policies andpractices

Group

Customers Managementattitudes

Individual

Suppliers Managementexpertise

External

Plant and equipment Support for

innovationFacilities Acce tance of risk

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G l d t t i f


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Goals and strategies of aFirm

A firms goals and strategies represent theaggregate of its products, technologies,and services

For such goals to be credible they must be

linked directly to the set of developmentprojects the firm intends to undertake(referred to business architecture)

A business architecture in MOT identifieswhat business parameters to address tomake a good business decision regardingkey problems encountered in achievingobjectives and goals of the strategies of a

new development project34


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Development ChainThe development of any product or service

includes the following chain of acceptancesteps:The research and development of an idea or invention

The competitive evaluation of the ideaThe research required in technologies to develop the

idea

The transfer or purchase of a selected technology forsupport of a process, a component of a product, or a

further development of the technology for its ownmarketability

The acceptance of a proposal to develop the product

The acceptance of the design of the product and/ ortechnology

The acceptance of the products manufacturability i.e.at the volumes and s ecific ualit levels re uired

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Business Architecture

It is necessary to look at the generaldevelopment steps and identify key checkpoints in decision making that relate tobusiness parameters

These steps have a business assessmentcriteria associated with them for whichthere must be a payoff

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MOT FlowchartThe flowchart shows

the practice oftechnologymanagement inresponding to the

business.The model shows a

process that identifiesmajor development

steps starting withtechnology researchleading to an ultimatecustomer payoff

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Business Architecture

There are two phases of architectureResearch and technology phaseProduct development phase

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Research and TechnologyPhase

Research /

Development

Analysis

Competitive

Analysis

Creativity and

Innovation

Technology

Research

Technology

Transfer

Industry

Analysis

CompetitiveAdvantage

Risk

Analysis

Customer

Requirements

FundingTransfer

Pricing

Make Vs

Buy

Technology

Forecasting

Reverse EngineeringProductivity

PayoffTechnology Goals Business Goals

Invention

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Product Development Phase

Market Driven

Proposal

Acceptance

Design / Tech

Acceptance

Software and

Manufacturing

Acceptance

MarketAcceptance

Business

Case

CustomerRequirement

Return on

Assets

RevenueMarketSegmentation

Parts, CIM,

CFM

CAD /Packaging

Opportunity Analysis

PayoffProduct Goals Business Goals

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Changing trends in IndustryFactor Traditional New

Life cycle Long life cycles Short life cycles

Innovations

Few Continuous

Competition

Expected competitionCompetitors are the

enemyCooperation non allowed

Stronger competitionAlliance with competitors

accepted

Market Expected marketLocal market

Uncertain marketGlobal market

Quality Quality is desirable Imperative

Production

Mass productionProduce in large lotsNo commitment tosuppliersLarge inventoriesFixed manufacturing

Customized productionProduce in small lotsSuppliers are partnersReduce inventoriesFlexible manufacturing

Organiza Large corporations Smaller plants; outsourcing,41


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Old New TrendsReducing the directcosts of productionshould be primary focusof management concern

The indirect costs of thefirm should be reducedwhile improvingcompetitiveness isviewed as a major

challenge

Production economiesrequire large volume

Single critical

technology-basedproduct lines will havelong product life cycles

Multi-core technology

product lines will haveshorter product life cycle

World markets can bedivided on a national

basis, with nationalfirms dominant in domes

World markets aretechnology are now

global and enterpriseshould be globally42

Strategic Operational and


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Strategic, Operational andManagement Issues

Strategic Issues1. Understanding the scope of managing technology

2. Managing Technology different levels

3. Adding value with technology

4. Developing a technology policy

5. Bridging the gap between technology policy andresults

6. Precursors to technology strategy

7. Including technology in business strategy

8. Rationalizing strategy and operations9. Managing the decision making process

10. Systems thinking the imperative

11. Negative impact of single issue management

12. The role of technology in achieving competitive

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Strategic Issues

Understanding the role of technology in thebusinessA business, not technical responsibilityIntegrating resources, infrastructure and

activitiesIncluding Technology in business strategyResearchDevelopmentDesignManufacturingMarketingAdministration

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Strategic Issues

Managing Technology different levelsGlobally

Corporate, sector, group, division, strategic businessunit

Research, development, design, manufacturing,

marketing, sales, physical distribution, customerservice, all administrative and support functions

Managing project at the project level, team level

Managing technology by scientists, engineers andother professionals

Technology Managers Who managestechnology?At different levels from executive to individual

decision make

Description of role45


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Strategic IssuesAdding value with technology leveraging available

sourcesInternal and worldwide

External and worldwide

Developing a technology policy

Bridging the gap between technology policy andresultsTransforming the thinkers into thinkers and doers

Transforming the doers into doers and thinkers

Managing the decision making process Practices

and modelsConsensus

Quantitative and qualitative

Intuitive

Balanced46


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Operational Issues1. Idea and concept generation2. Forecasting

3. Evaluating

4. Justifying Investments

5. Planning management

6. Managing the project management process7. Managing discontinuities

8. Descriptions how, where and why?

9. Resolving problems and exploring opportunities

10. System cycle management

11.Technological intelligence

12. Innovation

13. Entrepreneurship

14.Technology transfer

15. Information

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Operational Issues

16.Functional Integration17. Investing in research

18.Organizing for effective product development

19.Market pull and or technology push

20. Introducing new process

21. Introducing new product

22.Selecting, monitoring and terminating projects

23. Integrating technology, products and markets

24.Linking purposes, objectives and strategies

25.Focussing on value adding activities

26.Resolving the information paradox

27.Effectiveness, efficiency and economic use of resources

28.Analysis followed by synthesis determines results

29.Differentiating the mean and the ends

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Operational Issues

30.Eliminating the barriers to effectivemanagement of technology

31.Developing and using business unittechnology plans

32.Organizing and allocating resources33.Developing as-is profiles

34.Closing the gaps from competence tocapability to competitive advantage

35. Implementing activity based management

36. Implementing the project approach at alllevels

37.Auditing research, development, technologies

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Operational Issues

Idea and concept generationForecasting

Technologies

Products

Markets

Productivity and Performance

Technological IntelligenceDeveloping a process: Internal and external

Recognizing emerging technologies

Using technological intelligence for technologyleadership

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InnovationDescription and scope

Organizational environment

Role of creativity

In all business functions not just science andenginering

Innovating on schedule

Technology TransferWithin the organization, business units, functions,

individualsAcademia and industry

Government agency and industry

Global opportunities

Consortium

Operational Issues

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Investing in ResearchCorporate or operationalInternal and external

Organizing for effective product

developmentRequirement total systemThe processLimitations of formalized structureNeed for flexibilityBalancing freedom and constraintsBalancing stability and changeCreating an appropriate environment

Operational Issues

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Management Issues

People relatedDeveloping competent personnel

Overcoming objections and resistance to change

Competencies and capabilities

Productivity and performance

Specialization and segmentation

Providing a balanced environment

Educating the organization

Focusing the organization

Integrating business functions

Achieving gains from technology management

Facing realities

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Management Issues

Achieving the gains from TechnologyManagementAutomation of work in all functions

Computer-integrated manufacturing

Computer aided design, engineering, manufacturingand others

Concurrent and simultaneous engineering

Information systems that provide information

Using technology and business models and

simulationsUsing other computer-aided technologies such as

artificial intelligence, expert systems, chaos theoryetc.

Business related processes

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F th Cl ifi ti f


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Further Classification ofTechnologies

State of the art technologies :Those technologiesthat equal or surpass the competitors

Proprietary technologies: those technologiesprotected by patents or secrecy agreements thatprovide a measurable competitive advantage

Known technologies: those technologies that may becommon to many organizations but are used in uniqueways

Core technologies: those technologies that are

essential to maintain a competitive positionLeveraging technologies: those technologies that

support several products, product line, or classes ofproducts

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Further Classification of


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Supporting technologies: technologies that supportthe core technology

Pacing technologies: technologies whose rate ofdevelopment controls the rate of product or processdevelopment

Emerging technologies: technologies that arecurrently under consideration for future products orprocesses

Scouting technologies: formal tracking of potentialproduct and process technologies for future study orapplication

Idealized unknown basic technologies:technologies that, if available, would provide asignificant benefit in some aspect of life

Further Classification ofTechnologies

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Introduction

1. Technological environment can be viewedas a network of organizations consisting ofdevelopers and facilitators.

2. Technology development occurs in stages.

Each stage then provides the basis fordevelopment in ensuing stages.

3.The way in which technology develops isnot determined solely by a developer.

National and often international, politicalconsiderations will drive technologicaldevelopment.

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Scope

1. What is meant by environment andtechnological environment in particular?

2. Who are the main actors in thetechnological environment?

3. How do changes occur in thetechnological environment?

4. What are some of the major currentdevelopments in the technologicalenvironment?

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What is meant by environmentand technological environment in

particular?

Technology Environment

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Levels of Environments

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Task Environment

It refers to the set of customers, suppliers,competitors and other environmentalagencies directly related to the firm

The task environment is more or less

specific to a firm and is not necessarilyshared by its competitors

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Competitive Environment

It comprises of the firm and its competitorsNew entrants, substitute products,

suppliers, customers and competitioninfluence what happens in an industry

The factors affect different competitorsdifferently

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Macro Environment

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Technological Environment

Technology environment is the most visibleand pervasive macro-environmentalsegment in a society:

1.Brings new products, processes andmaterial

2.Directly impacts every aspect of thesociety around us (entertainment,communications, health care,

Transportation modes)

3.Alters the rules of global trade andcompetition65


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It comprises two institutionsNew knowledge (Science)The application of the knowledge to develop

new products, processes and materials

(Technology)Thus, Technology Development consists of

two sets of activitiesCreation of knowledge and

Application of that knowledge

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Creation of Knowledge

The knowledge base of technology isderived from basic research

The basic research focuses on generatingscientific knowledge and deal with

fundamental question of scienceScientific research is often cumulativeResearch questions begin in some current

state of scientific knowledge; these questions

stimulate research projects from whichscientific results are published in scientificliterature

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Application of Knowledge

Scientific knowledge is put into practice todesign an innovation that will solve aperceived need or problem.

Researches involved in application are the

main consumers of basic researchThe end result of their efforts is often a

product prototype that may havecommercial potential

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Application of knowledge

Activities of application knowledge:Applied Research: consists of scientific

investigations of known phenomena that donot typically advance scientific knowledge

Development: reduces the knowledge topractice in workable prototype form

Engineering: defines the knowledge forcommercial exploitation or other practical end

usersCommercialization: includes activities such as

manufacturing that finally put the technologyto use till it becomes adopted and used by

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Who are the main actors inthe technological

environment?


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Types of actors in the


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ypenvironment

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Roles of corporations

1.As technology developers, they are driversof change in the technology environment

2.Beneficiaries of technology changeinitiated by others.

3.Facilitate technology development byothers external to the firm throughinvestments in their research projects.

4.Corporations may also be the victims oftechnology change created by others.

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Innovation Networks

In the technological environment, inter-linkages develop between numerousorganizations.Interconnections among technology

developersIndustry-university linkages

Alliances

Interconnections among technologydevelopers and facilitatorsIncubation

Government agencies

Cross National differences among networks

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Innovation Networks

Networks facilitate the flow of information,resources, personnel and other inputsnecessary for technology development anddiffusion

Networks speed technology developmentfor several reasonsAssist in the diffusion of technologyCreate a critical mass of skill that speed

knowledge developmentProvide a social safety net for individuals.

Because technology development in risky

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3. How do changes occur inthe technological

environment?


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Influence of Regulatory


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g yEnvironment

The influence of the political/regulatoryenvironment is felt in at least three ways:

1.It influences the thrust of major basic

research

2.It can facilitate or impede every phase oftechnology development

3.It can act as a facilitator of private sectortechnology development

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Long wave theory of


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g yEconomic change

A reciprocal linkage exists betweentechnological and economic segments

Long wave theory works as followsFirst, discoveries in science trigger technological

innovation

Second, new industries are formed around thesemarkets, and continued innovations in these newlyformed industries expand the markets

Third, as technology matures, many competitors enterinternationally, eventually creating excess capacitythat in turn decreases profitability

Finally, business failures, unemployment, andattendant economic turmoil in financial markets maylead to depressions

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A Comparison of Tofflers Three


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A Comparison of Toffler s ThreeWaves

TechnologicalDevelopment

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4. What are some of themajor current developments

in the technological

environment?


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Overview of Trends in


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GlobalizationResource allocated to technology development

Changing location of manufacturing facilities

Rise of multinationals

Comparative advantage of nationsTime CompressionShortened product life cycles

Shortened development times

Decreasing payback periodsTechnology IntegrationCombining technologies to develop new products

Combining technologies to commercializeproducts82

The Impact of Trends on


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pInstitutions

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Process of Technology Change

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Technology Change

Technology change consists of two closelylinked processes:

Innovation

Diffusion

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Focus of Technology change

What are the different types of innovation?

What are the dynamics of technologyevolution?

What are the characteristics of innovativefirm?

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Dynamics of Technological


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Change

Firm Level

Technology Level

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Firm Level

Technological change may be described asa process of problem solving.

Four stages in the process of problem

solving1.Problem Recognition

2.Technology Selection

3.Solution Development4.Commercialization / implementation

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A model of problem solving

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Technology Level

Technological change displays evolutionary dynamics thatare not controlled by a single firm

Actors of these changes

1.Technology developers, which typically are firmsinvolved in innovation in their pursuit of competitive

advantage2.Technology facilitators, who may provide the

resources for financing and executing the innovationefforts

3.Customers who are interested in the fruits of

technology development and who will shape thedirection of development

4.Regulatory agents, the governmental bodies andothers who shape the form of products and processes byestablishing standards or specifications and

5.Other stakeholders, who may be the beneficiaries or95


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Implications for the MOT

1.Innovation, imitation and adoption

2.The role of technology and market factors

3.The centrality of learning

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Innovation, Imitation and


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Adoption

When a firm innovates,two different groups ofplayers respond to theinnovation

Customers makesdecisions to adopt ornot to adopt theinnovation

Competitors maydecide to copy theinnovation. This is

referred as imitation

Innovation andImitation are supply-side concepts

Diffusion is a demand-97


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The centrality of learning

Three major mechanisms of learningEnvironmental surveillance through technical

and market intelligence.

Experimentation within firms whereby firms

can learn problem solving by simulation andby trial and error.Imitation through competitive intelligence.

Multifaceted Learning lies at the core ofTechnological change

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h l i l h


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Technological Change

Technological change consists oftwo closely linked processes:

Innovation

Diffusion

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Wh i I i


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What is Innovation

Innovation includes both:A technological change new to both

enterprise and the economy.

A change that has diffused into the economy

and is adopted by the firm

Innovation refer both to the output andthe process of arriving at atechnologically feasible solution to aproblem triggered by a technologicalopportunity or customer need

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Process and Output:I ti


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Innovation

Process

Innovation refers to the process by whichindividuals or organizations arrive at a

technical solution.Output

Innovation to refer to a product or service i.e.the output of the innovation process

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C t f I ti


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Components of Innovation

As outputs all technological innovationshave three components:

A hardware component consisting of thematerial or physical aspects of the

innovationA software component consisting of the

information base that is needed to use theinnovation

An evaluation information componentconsisting of the information that is usefulfor decisions related to the adoption of theinnovation

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Components of Innovation

The components form a system.If any component of a specific innovation is changed,

other components will need to be changed also so asto render the innovation user friendly.

The hardware and software components are

intrinsic to the technological innovation.Domination of the component: Hardware

dominant/ Software Dominant

Third component is not intrinsic and refers to

the information accompanying an innovationthat enables firms or individuals to evaluate itsusefulness.

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Firm level innovation

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Drivers of Innovation

Environmental FactorsMarket factorsAppears to have a primary influence on innovation.

Input factors

Rising costs of inputs, trigger innovations aimed atreducing the use of the expensive inputs

Autonomous factorsIntellectual curiosityTechnological possibility

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Definitions

Technical innovations Are about improvedproducts, services, or processes or completelynew ones

Administrative innovations Pertain toorganizational structure and administrativeprocesses and may or may not affect technicalinnovation

Radical innovations Provide a brand newfunctional capability, which is a discontinuity in

the current technological capabilitiesIncremental innovations Improve the existing

functional capability of an existing technologyby improving performance and quality and

lowering cost108

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Definitions

Architectural innovations - Use the firmsexisting knowledge of components butrevolutionize when those component parts areput together

Modular innovations - Build on that knowledgeof how to link components but change thecomponents themselves

Product innovations Are new products orservices introduced to meet an external and

market needProcess innovations Are new elements

introduced into an organization's production orservice operations used to produce a product

or render a service109

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Definitions

Autonomous innovations Are those, whichcan be introduced without modifying othercomponents or items of equipment

Systemic innovations Are those, which

require significant readjustment to otherparts of the system

Systems innovations Provide newfunctional capabilities but are based on

reconfiguring existing technologiesRegular innovations Preserve production

competencies and market competencies

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Definitions

Niche-creation innovations Preserveproduction competencies but disruptmarket competencies

Revolutionary innovations Obsolete

(phase out) production competencies butpreserve market competencies

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Process of Innovation


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Process of Innovation

Two types of innovation process1.Market pullIs the advancement of technology oriented

primarily toward a specific market need,

and only secondarily toward increasedtechnical performance.

2.Technology pushIs the advancement of technology oriented

primarily toward increased technicalperformance, and only secondarilytoward specific market needs.

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Types of Innovation outputs


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Types of Innovation outputs

Two dimensions to classify an innovation1.Degree to which specific technologies in

an innovation depart from earlier ones, orwhat we will call component knowledge

2.Degree to which configurations amongtechnologies in an innovation depart fromearlier one, or what we will callcomponent configuration

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Four major types ofinnovation


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innovation

Incremental innovations: Requires only minorimprovements to the existing system

Modular innovations: refer to significant changes inelements of products. The implementation requireswould require an understanding of the new components

of the systemArchitectural innovations: It requires the new

knowledge on how existing components can beconfigured into a new system. No significant knowledgeis required concerning the components themselves

Radical innovations:They are non-aligned withorganizational skills and capabilities of the firm

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Classification of Innovations


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Classification of Innovations

Process

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for Products, process andservices


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services

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Innovation


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Innovation

The process of innovationLong term vs. short term, inside vs. outside

the organization

The economic impact of innovation

Potential for wealth creationThe role of a manager in the Innovation

processLong term technological vision vs. planned

and managed

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Models of Innovation


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Models of Innovation

Two classificationsBased on Iterativeness and AdoptionIterativeness : Linear model &Interactive

model

Adoption: Static model & dynamic modelIterative models look at the interactions of

the people involved in the innovationprocess

Adaptive models examine the feedbackafter the innovation is accepted in themarket

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Adaptation Models


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Adaptation Models

Static modelsAbernathy-Clark ModelHenderson-Clark Model

Value added chain ModelDynamic modelsUtterback-Abernathy ModelTushman-Rosenkopf Model

S Curve models

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Iterative models


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Iterative models

Novicks functional modelBrights 8 process model

Technology push v/s market pull

Vijay Jollys integrated model

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The Process of TechnologyInnovation


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Innovation

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Technology Evolution

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Characteristics ofTechnological Change


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Technological Change

S-curve of technological evolution

Technology progression

Level of technology development

Technology change agent

Evolutionary characteristic of technologicalchange

Uncertainty and technological insularity

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S Curve of technologyevolution


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evolution

Technology evolution refers to the changesin the performance characteristics of aspecific technology over time

Phases of S-curve

Emergence when the technology has come intoexistence but shows little improvement in itsperformance characteristic

Rapid improvement when the performancecharacteristic improves at an accelerating pace

Declining improvement when the pace ofimprovement declines

Maturity when further improvements become verydifficult to achieve

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The Industry LifeCycle as an S curve


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y

Performance

Takeoff

Maturity

Time125

Why S-curve for evolution?


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Why S-curve for evolution?

Learning ProcessesIn the first stage, the learning generates a

more or less reliable design and productionprocess

In the second stage, the learning curveeffects produce rapid improvement in theperformance characteristics

Technology LimitsTechnology is constrained by physical limits

Improvements beyond physical (technology)limits are harder to come by

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The S-curve Maps MajorTransitions


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Transitions

Time

Ferment

Takeoff

Maturity

Discontinuity

Performance

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existing organizationsseverely


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severelyCumulate share of sales of photolithographic alignment

equipment, 1962-1986, by generation

Contact Proximity Scanner S&R (1) S&R (2)

Cobilt 44


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opportunity

Corning glassCookware to optical fiber

HPInstrumentation to computers

IBMMainframes to PCs to Services

Eli LillyRandom drug discovery to genetics and

genomics

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Technology Progression


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Technology progression describes theprocess by which new technologies emergeto make existing technologies obsolete.

Technology evolution represents the

incremental evolution of technology overtime.

Technology progression represents theradical breakthroughs that significantly

replace current technologyTechnology progression may be described

using a series of S-curves

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Levels of TechnologyManagement


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Management

Basic research conducted without apractical application or a problem at hand

Applied research basic research resulthave to age before they can be packaged

into a useful innovationDevelopment Major technological advances

required a cluster of innovations

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Technology change agents


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Technology change agents

Innumerable

Vary significantly across the levels oftechnological change

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Evolutionary characteristicsof technical change


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of technical change

Simultaneous development of innovationsat multiple levels by numerous changeagent present evolutionary characteristics

on technological developmentThose who are involved in technology

development the so called radical changeswill be seen as an accumulations ofincremental innovations

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Uncertainty andtechnological insularity


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technological insularityGreat degree of uncertainty

They cope with this uncertainty by engaging in a processof learning, gathering information, experimentation andimitation. Innovation development requires informationconcerning:The performance of innovation they are seeking to create or

adoptMaterials and components they are fabricating into the

innovation

Competitors innovations, the nature of existing patents, andgovernment policies affecting their proposed innovation; and

The problems faced by consumers in the market and howthe proposed innovation might solved certain of theseperceived problems

Innovation process is driven by the exchange oftechnological, market and other environmental

information in the face of hi h uncertaint

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Technical Insularity


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Technical Insularity

The search for or dissemination of technicalinformation embedded in an innovation isgoverned by the principle of technologicalinsularity

The principle of technological insularitysuggest that a characteristic feature oftechnical know-how is that it is not easilytransmitted

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Reasons for TechnicalInsularity


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Insularity

Technology evolves evolves because ofaccumulated experience of the individuals.Thus first hand knowledge is crucial to theevolution of performance characteristics.Knowledge is not easily transferred

Technical know-how is not easily acceptedby individuals not involved in itsproduction. Such know-how requires

abandoning of old concepts or conceptsthat have not been proved useful

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Uncertainty andtechnological insularity


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technological insularity

Technology insularity leads to

Spatial clustering

Temporal clustering

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Characteristics of innovationfirms


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firms

Entrepreneurial innovationOccurs when new technologies and

scientific development yield economicopportunities for proactive

entrepreneursManaged innovation

Large firm vs. small firm who is more

innovative?

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process of innovation inorganizations


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organizations

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Summary of factorsstimulating innovation


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stimulating innovation

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Integrating Technology Push andMarket pull to Stimulate Innovation


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Market pull to Stimulate Innovation

Opportunities forTechnology Push

Opportunities forMarket Pull

Innovation

Scientific discoveries Applied KnowledgeRecognized needsIntellectual capital

(scientists and

engineers)

Market demandProliferation of

application areasRecognized needs

Opportunities forincreased profitability,

quality, productivityEntrepreneurs

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Influence of environmentaltrends on innovation


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trends on innovation

Three environmental trendsGlobalizationTime compression

Technology integration

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Three key managerialimplications


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p ca o sSuccessful management of technology

requires that the problem solving within thefirm should take into account bothtechnical and market considerations.

Learning through environmentalintelligence, innovation and imitation arecentral to effective problem solving.

Development of problem solutions can be

accomplished either in-house, incollaboration with other or simply byadopting innovations from outside.

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Critical factors in managingtechnology


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gyThe creativity factor

The link between science and technology

Types of innovation

Creativity and innovation

Bringing innovation to marketTechnology-price relationship

The timing factor

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Diffusion

Process of Technology Change

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Diffusion


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What is diffusion?

What are the dynamics of diffusion?

What attributes of an innovation facilitate

or hinder diffusion?What factors drive the process of diffusion?

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T-M Matrix


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What is diffusion


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Diffusion is the process by which

an innovation is propagatedthrough certain channels overtime among the units of asystem.

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Diffusion Vs Imitation


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Misconceptions about newtechnology


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gy1. Best Possible determines the choice of

technology

2. Choice of technology results from rationalanalysis

3. Technological advances or discoveries usuallyare adopted eventually

4. The biggest hurdle is making the originaldiscoverythe downstream development is just a matter of applying

the necessary effort

1. Technology have intrinsic value

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Misconceptions about newtechnology


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6. Radically new advances will win7. The power of new technologydetermines its success

8. Progress in technology comes

principally from continuing to improveperformance

9. A new technology can be grafted onto

an existing business

gy

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Realities


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1. Good enough is the basis for choice

2. Choice is strongly influenced by convention and pastpractice

3. Most dont succeed and shouldnt

4. Most of what is not yet known about a new discovery is

probably bad and requires creativity to overcome5. The customer determines value

6. New is not necessarily better

7. The infrastructure required to support it is often thedetermining factor

8. Progress requires establishing standards, imposingconstraints and achieving routine

9. The new product and the business system developedto produce it should be created together

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Dynamics of Diffusion


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yS-curve of diffusionRate of diffusionPotential set of adopters

Reinvention during diffusion

Mechanisms of diffusionTechnology substitutionBandwagon effect

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Four Phases of diffusion


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1.Emergence characterized by a slow advance inthe beginning, suggesting that adoptionproceeds slowly at first when there are fewadopters.

2.A rapid growth phase, when adoption rate

accelerates until half of the individuals in thesystem have adopted.

3.A slow growth phase, where the rate of growthdeclines, but adoption continues.

4.Maturity, the final stage, where the diffusionalmost comes to a halt, either as a result ofmarket saturation or the introduction of a newproduct, process, or service into the market

that replaces the existing innovation

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Differences in diffusion speed


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p

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Formulation of S-curve Bass Model


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S-curve diffusion


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Reinvention


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Reinvention refers to the dynamics by which aninnovation is changed or modified by the usersas they adopt and use it.

Four ways in which reinvention occurs:Improvement in the design and performance

characteristics of an innovation may be necessity forits further adoption by adopters (dominant design)

As an innovation diffuses, a standard model mayemerge and speed the adoption process (standardprocess)

Requirement for complementary products/process forwidespread diffusion

Possible new applications: adoption beyond theoriginally conceived scope of its application

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Mechanisms of Diffusion


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Two mechanisms by which an innovationpropagates through an adopter population

Technology substitutionBandwagon effect

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Technology Substitution


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Explains why an innovation is adopted

Technology substitution is key that unlocksthe doors of an adopter population for thepropagation of an innovation.

Technology substitution refers to actualsubstitution of a new technique for the old.

A new technology or an innovationdisplaces an already existing technology

during the process of being adopted

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Bandwagon Effect (BE)


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BE is useful for explaining the speed ofdiffusion.

BE refers to the strategy of informationcollection employed by adopters

It focuses on the dynamics by which lateradopters, in their decision to adopt aninnovation, imitate the behavior of earlieradopters.

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Mechanisms of Diffusion


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Technology Substitution and Bandwagoneffect underscore the roles ofKnowledge and learning in the diffusion

processUncertainty and information

Tech Substitution and Bandwagon effectrefers to the different facets of learning

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A Model of Innovation adoption

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Steps involved in innovation


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Awareness

Attitude formation

Decision

ImplementationConfirmation

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Stages in decision to adopt


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Trialability

Observability

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the stages of AdoptionDecision


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Shifting characteristics ofadopters over time


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Adopters categories depending on theirspeed of adoption:

1.Innovators: very eager to try newideas

2.Early adopters: Opinion leadership3.Early majority: deliberate in its

decision to adopt new ideas

4.Late majority: adopts new ideas just

after the average member of a system5.Laggards: last among a population to

adopt an innovation168

Selected differences amongadopter categories


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Relative importance ofdecision stage


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Adoption is difficult in organizationsA number of individuals are usually

involved in the innovation-decisionprocess, and the implementers areoften a different set of people from the

decision makers.The organization structure that gives stability

and continuity to an organization oftenresists the implementation of an

innovation.

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Factors that drive theprocess of diffusion


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Attributes of an innovationCommunity effects and network

externalities

Characteristics of the population

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Attributes of an innovation


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Five attributes of an innovation that influence

the process of diffusion

1.Relative advantage is the degree to which aninnovation is perceived as being better than the ideathat it supercedes

2.Compatibility is the degree to which an innovationis perceived as being consistent with existing values orpast experiences and needs of potential adopters

3.Complexity is the degree to which an innovation isperceived as being difficult to understand and use

4.Trialability is the degree to which an innovation maybe experimented with on a limited basis

5.Observability is the degree to which the results ofan innovation are available to others172

Components and Attributesof an innovation


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Community Effects


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Community adoption level affect value andrisks of adoption.

Increase in returns comes from Learning byusing (means that a technologysperformance ratio improves rapidly as acommunity of adopters)

Network benefits (Positive Externalities)

Technological interrelatedness (a large

base of compatible products needed tomake a technology worthwhile)

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Characteristics of thepopulation


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Three facets of the systemCommunicationsOpinion leaders

Cultural norms

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Influence of environmentaltrends on diffusion


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GlobalizationAdopters are located all over the world

Time CompressionSwifter pattern of innovation

Rapid response in redesign of informationcomponent of innovation, adjustment inmarketing strategies and adoption ofinnovations

Technology IntegrationInstitutionalization of organizational

mechanism for innovation

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INNOVATION PROCESS

INNOVATION STRATEGY

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Innovation Process


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COMMERCIALLY SUCCESSFUL CHANGE

IN

TECHNOLOGY /

BUSINESS MODEL /

BOTH

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BUSINESS PERSPECTIVE

CUSTOMER CENTRIC

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INNOVATIVE

Vs

STATIC ORGANIZATION:

FAILURE vs INACTION

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Rules of Innovation


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Integrating with Business Strategy

Balancing creativity &value capture

Neutralizing organizational antibodies

NetworkingDevising metrics & rewards

INTERDEPENDENT

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How A CompanyCreatesSells

Delivers Value to CustomersCoversSupply ChainTargeted Customer Segments

Customers perception of deliveredvalue

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BUSINESS MODELINNOVATION


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3 Levers

Value proposition ( What)

Supply Chain ( How)

Target Customer ( Whom)

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SOURCES OF TECHNOLOGYINNOVATION


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Product & Service

Process

Enabling Technologies

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INTEGRATING INNOVNMODEL


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Business Model & Technologies

Heavy emphasis on one

Changes to BM & T managed atseparate locations

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6 LEVERS OF INNOVATION


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3 in Business Model

3 in Technology

Innovation involves changes inone or more

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Innovation Levers


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3 TYPES OF INNOVATION


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Incremental

Semi-radical

Radical

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INCREMENTAL INNOVN


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Leads to small improvements

No major investments. Clear goals

Sustainable for long periods

>80% of total investmentCornerstone. Provides protection from

competitive erosion

Constrained creativity

Spiral of rampant incrementalism

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SEMI-RADICALINNOVATION


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Asymmetric w r t BM & Technology

Change in one linked to the other

Innovation in one creates

opportunities in the otherHuge potential. Big challenge

Simultaneous management needed

WAL-MART, SOUTHWEST AIRLINES

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RADICAL INNOVATION


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Results in new product/service

Fundamental changes in competitiveenv.

Leads to series of cascadinginnovations

Huge investments. Low probability

Too much investment wasteful

Balanced portfolio a keyDISPOSABLE BABY DIAPERS

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Summary


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Introduction MOT (1)

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Transcript of Introduction MOT (1)