TECHNOLOGY: DEFINITION AND CHARACTERISTICS• The branch of knowledge that deals with industrial arts, applied science, or engineering• The terminology of an art or science• A technological process, invention, method, or the like and some of the ways in which a social group provides themselves with the material objects of their civilization• Embedded in the definition is the notion of knowledge.• Key to economic progress and technology development is knowledge and it spans several levels of development and it is the outcome of social construction.
LEVELS OF DEVELOPMENT• Individuals / Groups develop ideas, theories, or perspectives. This tacit knowledge may be derived from their experiences, experimentation, or imagination.• The second level consists of tacit knowledge that is verified through scientific process of experimentation.• Finally, there is a level of development where the knowledge is put to use – physically embodied in products, services, or procedures.
TECHNOLOGY AS SOCIALLY CONSTRUCTED The development is the outcome of human beings actively making choices, individually and collectively.• Opportunity :- Technology development takes place when human beings perceive an opportunity for improvement due to either intrinsic or economic reasons.• Appropriability:- Where technology development is due to economic motives, individuals need assurance for a reasonable benefit / profit• Transferability:- Technology or knowledge transfer is not smooth. There may be distortions in communication.• Resources:- Technology development consumes resources – money, time and people. Resources are needed to exploit a technology opportunity.
MANAGEMENT OF TECHNOLOGY Management of technology links engineering, science, and management disciplines to plan, to develop, and to implement technological capabilities to shape and accomplish the strategic and operations goals of an organization.• The emphasis in the management of technology is to accomplish goals of an organization• Technology management focuses on the development of technological capabilities and its deployment in products and processes• Technology management within organizations is linked to other management functions such as marketing or manufacturing.
PERSPECTIVES IN TECHNOLOGY MANAGEMENTMARKET BASED VIEWS• Business firms are defined by the markets they serve. Who are the customers?• Market based perspective tends to underplay the role of the internal capabilities of the firm.RESOURCE BASED VIEWS• The bundle of resources and capabilities are the principal strength of an organization for defining its identity.• The internal resources and capabilities provide the foundation to withstand uncertainties and changes in the external environment.TECHNOLOGY MANAGEMENT FOCUSES ON BOTH – DEVELOPINGCAPABILITIES AND DEPLOYING THEM IN VARIOUS MARKETS.
FIRMS VIEWED AS OPEN SYSTEMSETS OF INTERRELATED ACTIVITIES THAT INTERFACE WITH THE ENVIRONMENT –CUSTOMERS, COMPETITORS, GOVERNMENT, LABOR MARKETS, SUPPLIERS, ETC.• Effectiveness of a firm is dependent on how it successfully interfaces with the environment.• To develop ideas about the management of technology within an open system view, four major concepts are employed. The firm as a value chain Industries as competitive domains Forms of technological change Value creation and competitive advantage.
THE FIRM AS A VALUE CHAIN• The value chain help the firm deliver products and services to its customers.• Customers conception of value is satisfaction of their need. The value delivered is the superiority of the product relative to the price paid in comparison to other competitors.• The firms conception of value is the value it creates for the stock holders. The value appropriated should exceed the opportunity cost of capital.• Every firm is a collection of activities performed to design, produce, market, develop, and support its product. The value chain comprise of these activities.• Value chain consist of two sets of activities – primary and secondary.• Primary activities – inbound logistics, operations, marketing, outbound logistics, and services.• Secondary activities – procurement, technology development, human resource management, and firms’ infrastructure.
INDUSTRIES AS COMPETITIVE DOMAINS• An industry represents a group of firms that offer similar products or services to customers. These domains are the competitive domains• Industries may have different key competitive resources. These can be grouped into three categories. Capacity – driven industries – Physical capital investments are relatively large in relation to cost or value added. Customer driven industries – investments in brands or customer relations generally account for a large part of the cost or value added. Knowledge driven industries – investments in R & D tend to account for a large part of the cost or value added.
FORMS OF TECHNOLOGICAL CHANGEProcess Technology• Process technology pertains to the techniques of producing and marketing goods and services.• It includes work methods, equipments, distribution, and logistics. It is embedded in a firms’ value chain.• Process technology refers to the way an organization conducts its business.• It can reduce cost, or cycle time and improve quality of the product• It is less visible in the marketplace. It can be concealed from competitorsProduct Technology• Refers to the elements of technology embodied in the goods and services of a firm. Changes in product technology could range from minor refinements to entirely new products• Change in product technology add new features or provide superior substitutes for existing products.• Product technology refers to the output of an organization.• It is visible
VALUE CREATION AND COMPETITIVE ADVANTAGE• The firm that possess a competitive advantage yield a higher rate of profit. It is the ability to create for its customers value that exceeds the firms’ cost of creating a product.• Value (use, esteem, exchange, and cost)) is what the customers are willing to pay• Competitive advantage is the key to long term value creation.• Competitive advantage is the major objective behind management of technology decisions.
LEVELS OF ENVIRONMENTTask Environment: -Refers to the set of customers, suppliers, competitors, and otherenvironmental agencies directly related to the firm. It is more or less specificto a firm and is not necessarily shared by its competitors.Industry / Competitive Environment:-It is comprised of a firm and its competitors functioning in the same industry.At this level, environmental factors directly affect all competitors in the sameindustry.General or Macro environment:-Macro environment affects almost all industries. There are four major segmentsin the macro environmentThese are: Social Economic Political Technological
TECHNOLOGICAL ENVIRONMENT• A major segment of the macro environment• Primarily influencing the management of technology• Technology environment is most visible because - It brings new products process, and materials - It directly impacts every aspect of the society - It alters the rules of global trade and competition• It is composed of institutions that participate in the creation of new knowledge and application of that knowledge.• Technology development – creation and application of knowledge
CHANGES IN THE TECHNOLOGICAL ENVIRONMENT• Changes in technological environment is due to - Induced Changes - Autonomous ChangesInduced Changes - Induced changes represent the technological consequences created by social, political, or economic forces. e.g. – influence of demographics and lifestylesAutonomous Changes - influence of independent actions of technology developers in their quest for competitive advantage - independent of forces in other macro environmental segments. - Autonomous changes in technology are drivers of social and economic change
CURRENT DEVELOPMENTS IN TECHNOLOGICAL ENVIRONMENTGlobalization - Resource allocated to technology development - Changing location of manufacturing facilities - Rise of multinationals - Comparative advantage of nationsTime Compression - Shortened product life cycles - Shortened development times - Decreasing payback periodTechnology Integration - Combining technologies to develop new products - Combining technologies to commercialize products.
INNOVATION• To remake, to make new, or to alter• Invention – a new combination of pre existing knowledge• Innovation – A firm producing goods or service or using a system or procedure that is new to it, makes an innovation• Invention – if present – is part of the process of innovation• Therefore, innovation includes both - Technological change new to both enterprise and the economy - A change that has diffused into the economy and is adopted by the firm• Innovation refers both to the output and the process of arriving at a technologically feasible solution to a problem triggered by a technological opportunity or customer needProcess – the process by which organizations arrive at a technical solutionOutput – The output of the process of Innovation.
• Components of innovation 1. A hardware component, consisting of the material or physical aspects of the innovation 2. A software component, consisting of the information base that is needed to use the innovation 3. An evaluation information component, consisting of the information that is useful for decisions related to the adoption of the innovations.
• 4 important points about components of an innovation1. If any component of a specific innovation is changed, other components will need to be changed2. The hardware and software components are intrinsic to the technological innovation3. All innovations contain hardware and software components, they may differ in terms of which component is dominant4. The 3rd component – the evaluation information component – is not intrinsic to technology. It evaluates usefulness to the firm.
DRIVERS OF INNOVATION• Market factors – due to market demands and needs• Input factors - rising costs of inputs, trigger innovations aimed at reducing the use of expensive inputs• Autonomous Innovation – when organizations try to shape the environment to its desired direction
PROCESS OF INNOVATION• Market – Pull is the advancement of technology oriented primarily toward a specific market need, and only secondarily toward increased technical performance.• Technology Push is the advancement of technology oriented primarily toward increased technical performance, and only secondarily toward specific market needs.
Market – Pull and Technology Push• Market pull innovations tend to occur when the customers are technologically sophisticated and are excellent sources of ideas for innovation.• Technology push innovations require the firm to have direct experience with users to create successful applications of new technology. The firm generate the ideas about the innovation.• Market pull innovations tend to occur more frequently in case of older technologies, whereas technology push innovations tend to occur in new and emerging technologies.• In case of push, technical information resides among the innovators, and the users are likely to be technically unsophisticated.• Market pull innovations are often incremental innovations because an established market that informs the need bases its perception of opportunity on known technologies. Conversely, technology push is often the major source of breakthrough innovations.
Types of Innovation• Incremental Innovation - These innovations represent minor improvements of changes to the elements of an existing product or organizational technologies and practices. Their ini8tiation and implementation require little new organizational knowledge.• Modular Innovations – These innovations refer to significant changes in elements of products, organizational practices, and technologies without significant changes to the existing configuration of the elements. Only the new components of the of the system needs to be understood.• Architectural Innovations – These innovations use existing organizational practices and technologies but reconfigure them in new or different ways. Thus, their initiation require and organizational knowledge of how existing components are to be configured into a new system. No significant new knowledge is required.• Radical Innovations – These innovations represent revolutionary changes that require clear departures from existing organizational practices and technologies. Significant new knowledge concerning components and configuration is required.
Technology Evolution Refers to the changes in the performance characteristics of a specific technology over time Six major characteristics or dynamics of technological change1. S curve of technology evolution2. Technology Progression3. Levels of technology development4. Technology change agents5. Evolutionary characteristics of technological change6. Uncertainty and technological insularity
S Curve – 4 Stages1st Stage –Emergence – when technology has come into existence but shows little improvement in its performance characteristic2nd Stage – Rapid Improvement – when the performance characteristic improves at an accelerating pace3rd Stage – Declining improvement - when the pace of improvement declines4th Stage – Maturity – when further improvements become very difficult to achieve
Technology Progression• Technology progression describes the process by which new technologies emerge to make existing technologies obsolete. Whereas technology evolution describes the incremental improvements in existing technologies, technology progression refers to radical breakthroughs that produce new technologies. Technology progression may be described using a series of S curves.• Radical breakthroughs generally appear to be a matter of chance• Technological progression is also the result of an accumulation of relevant know-how or learning. Technological change or breakthroughs occurring without a history of unsuccessful efforts is rare.
Levels of Technology Development• From basic research to commercialization, development activities take place at many levels – in areas such as development, engineering, and operations.• A different level of technical skill and business orientation is needed for each.• Radical innovations often appear as a matter of chance – this is partly because these innovations often require integrating developments from a number of levels• The synthesis resulting from the integration of developments then gives the appearance of a radical breakthrough.
Technology Change Agents• The agents or creators of technological change are almost innumerable and vary significantly across the levels of technological change.• Independent entrepreneurs, business firms, and some governmental agencies play leading roles in applied research to commercialization
Evolutionary Characteristics of Technological Change• The coexistence of different types of innovations- incremental, modular, architectural, and radical – and the simultaneous development of innovations at multiple levels by numerous change agents bestow evolutionary characteristics on technological development.• Thus, technological developments can be broken down into a series of small steps.
Uncertainty and Technological Insularity• The evolutionary character of technological change suggests that the individuals and firms that are engaged in solving technical problems face a great degree of uncertainty during innovation.• Uncertainty is coped up by engaging in a process of learning – gathering information from technological environment, experimentation, and imitation.• The search for or dissemination of technical information embedded in an innovation is governed by the principle of technological insularity.• This principle suggests that a characteristic feature of technical know-how is that it is not easily transmitted.• Thus, the know-how acquired in the development of one innovation may not be fully transferable to the development of another innovation. – first hand knowledge is not easily transferred. – technical and scientific information in early stages of research is expensive – New know-how and knowledge is not easily accepted
DIFFUSION• Diffuse means to spread in all directions• Diffusion is the process by which an innovation is propagated through certain channels over time among the units of a system.• 4 major elements in the definition - Innovation - Propagation - Time - System
• Innovation: A technical solution is considered to be an innovation when it is new or perceived as new by the individual or the unit of adoption. It does not matter whether or not an idea is objectively new or measured by the lapse of time since its use of discovery.• Propagation: Propagation refers to the spread of an innovation beyond its inventor. Propagation is the result of a decision to adopt an innovation by an individual or a firm. An innovation presents an uncertain situation to an adopter, and hence the decision to adopt is to some extent influenced by the communication process between the adopter and the individual who has innovated.• Time: The time dimension is involved in diffusion, because it takes time for individuals or firms to decide to adopt an innovation. Not all adopters adopt an innovation at the same time.• System: A system is a set of interlinked units that participate in the diffusion process. The members of units of a system may be individuals, informal groups, or organizations.
• Diffusion refers only to adoption but not to imitation Supply-Side Competitors Imitation Innovation Diffusion Consumers Demand –Side When a firm innovates, two different groups of players respond to the innovation. One group, the customers, makes decisions to adopt or not to adopt the innovation. Diffusion refers to adoption decisions of this kind. The second group (competitors) may decide to copy the innovation to compete with the innovating firm. This is imitation.
Dynamics of Diffusion• Innovations propagate through a population of consumers in the market over time. Not all individuals or firms comprising the market adopt an innovation at the same time; rather, they adopt sequentially over time. This is what we mean by the dynamics of diffusion.• 3 major characteristics of the dynamics of diffusion. - The S curve of diffusion - Reinventing during diffusion - Mechanisms of diffusion.
The S curve of Diffusion• One facet of the dynamics of diffusion is the manner in which the total number of adopters of an innovation, individuals or firms, changes over time. Cumulative number of adoptions No. of customers Frequency of Adoption Time• 4 major stages in the diffusion history of an innovation 1. Emergence characterized by a slow advance 2. A rapid growth phase 3. A slow growth phase 4. Maturity – diffusion almost comes to a halt due to saturation or replacement
Reinvention during diffusion• Many innovations change over the course of their diffusion history. Reinvention refers to the dynamic by which an innovation is changed or modified by the users as they adopt and use it.• 4 ways in which reinvention occurs during diffusion. - Improvement in its functional aspects. Changes in the design and performance characteristics of an innovation are a prerequisite for its further adoption beyond those who have already adopted. These changes require a more detailed specification of the user’s requirements; some of the requirements will be known only during its initial use by the potential adopters. - As an innovation diffuses through a consumer population, a standard model of innovation may emerge and speed the adoption process. This is in case of process innovation - The widespread diffusion of innovations often requires development of complementary products. - Changes in an innovation make possible new applications, thereby facilitating its adoption beyond the originally conceived scope of its application.
Mechanisms of Diffusion• The reason for S shaped curve of diffusion of innovation is due to the two mechanisms by which an innovation propagates through an adopter population - Technology Substitution - Bandwagon EffectTechnology Substitution: The key to the propagation of an innovation through the adopter population is by technology substitution. Technology substitution refers to the actual substitution of a new technique for the old. As new technology outpaces the old technology in terms of its performance characteristics, the diffusion of an innovation is expected to take place at a rapid rate.Bandwagon Effect: It is useful for explaining the speed of diffusion. It focuses on the dynamic by which later adopters, in their decision to adopt an innovation, imitate the behavior of earlier adopters. The experience with the use of an innovation increases as each successive member in the potential adopter population adopts it. The adoption of an innovation beyond the early stage of diffusion is the result of human interaction through interpersonal or interorganizational networks.
A Model of Innovation Adoption Communication Channels Problem Technology Solution ImplementationRecognition Selection DevelopmentKnowledge Attitude Decision Configuration Formation Implementation Adoption Relative Advantage Compatibility Complexity Trial abilityCharacteristics of the ObservabilityDecision MakingUnit: Rejection1.SocioeconomicFactors2. PersonalityVariables3. CommunicationBehavior
A Model of Innovation Adoption• Diffusion involves two different groups of players 1. Firms that may be employing adoption as a way of problem solving 2. Consumers who may simply be buying a product or service.• The decision process that leads either an individual or a firm to adopt an innovation involves 5 steps 1. Awareness: An individual or firm is exposed to an innovation’s existence and gains some understanding of how it functions. 2. Attitude: An individual or firm forms a favorable or an unfavorable attitude toward innovation 3. Decision: This stage consists of the activities of an individual or firm that lead to the choice of adopting or rejecting the innovation 4. Implementation: This occurs when an individual or firm puts an innovation into use 5. Confirmation: This occurs when an individual or firm seeks the reinforcement of an innovation decision that has already been made, but the unit may reverse the decision if exposed to conflicting messages about the innovation