2. 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.
3. 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.
4. 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.
5. 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.
6. PERSPECTIVES IN TECHNOLOGY MANAGEMENT
MARKET 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 – DEVELOPING
CAPABILITIES AND DEPLOYING THEM IN VARIOUS MARKETS.
7. FIRMS VIEWED AS OPEN SYSTEM
SETS 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.
8. 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.
9. 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.
10. FORMS OF TECHNOLOGICAL CHANGE
Process 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 competitors
Product 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
11. 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.
12. LEVELS OF ENVIRONMENT
Task Environment: -
Refers to the set of customers, suppliers, competitors, and other
environmental agencies directly related to the firm. It is more or less specific
to 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 same
industry.
General or Macro environment:-
Macro environment affects almost all industries. There are four major segments
in the macro environment
These are: Social
Economic
Political
Technological
13. 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
14. CHANGES IN THE TECHNOLOGICAL ENVIRONMENT
• Changes in technological environment is due to
- Induced Changes
- Autonomous Changes
Induced Changes
- Induced changes represent the technological consequences created by
social, political, or economic forces.
e.g. – influence of demographics and lifestyles
Autonomous 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
15. CURRENT DEVELOPMENTS IN TECHNOLOGICAL
ENVIRONMENT
Globalization
- Resource allocated to technology development
- Changing location of manufacturing facilities
- Rise of multinationals
- Comparative advantage of nations
Time Compression
- Shortened product life cycles
- Shortened development times
- Decreasing payback period
Technology Integration
- Combining technologies to develop new products
- Combining technologies to commercialize products.
16. 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 need
Process – the process by which organizations arrive at a technical solution
Output – The output of the process of Innovation.
17. • 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.
18. • 4 important points about components of an
innovation
1. If any component of a specific innovation is
changed, other components will need to be
changed
2. The hardware and software components are
intrinsic to the technological innovation
3. All innovations contain hardware and software
components, they may differ in terms of which
component is dominant
4. The 3rd component – the evaluation information
component – is not intrinsic to technology. It
evaluates usefulness to the firm.
19. 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
20. 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.
21. 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.
22. 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.
23. Technology Evolution
Refers to the changes in the performance characteristics of a specific technology over time
Six major characteristics or dynamics of
technological change
1. S curve of technology evolution
2. Technology Progression
3. Levels of technology development
4. Technology change agents
5. Evolutionary characteristics of technological
change
6. Uncertainty and technological insularity
24. S Curve – 4 Stages
1st Stage –Emergence – when technology has come into
existence but shows little improvement in its
performance characteristic
2nd Stage – Rapid Improvement – when the performance
characteristic improves at an accelerating pace
3rd Stage – Declining improvement - when the pace of
improvement declines
4th Stage – Maturity – when further improvements become
very difficult to achieve
25. 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.
26. 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.
27. 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
28. 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.
29. 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
30. 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
31. • 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.
32. • 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.
33. 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.
34. 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
35. 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.
36. 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 Effect
Technology 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.
37. A Model of Innovation Adoption
Communication Channels
Problem Technology Solution
Implementation
Recognition Selection Development
Knowledge Attitude Decision Configuration
Formation Implementation
Adoption
Relative Advantage
Compatibility
Complexity
Trial ability
Characteristics of the
Observability
Decision Making
Unit: Rejection
1.Socioeconomic
Factors
2. Personality
Variables
3. Communication
Behavior
38. 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
