This document discusses managing technology and innovation. It covers key topics such as defining technology and innovation, understanding the forces driving technological development, assessing an organization's technology needs, and organizing for innovation. Some of the main points made are that managers must understand what drives new technologies, innovation follows a predictable life cycle, and choosing how to acquire new technologies depends on factors like proprietary advantages and available resources and skills.

1. Managing Technology and
Innovation
Unit V

2. Technology and Innovation
• Technology is the methods, processes,
systems, and skills used to transform
resources into products
• Innovation is a change in method or
technology – a positive, useful departure from
previous ways of doing things
– Process innovations are changes that affect the
way outputs are produced
– Product innovations are changes n the actual
outputs themselves

3. Technology and Innovation
• Managers must understand the forces driving
technological developments so then can anticipate,
monitor, and manage technologies more effectively
– There must be a need, or demand for the technology
– Meeting the need must be theoretically possible, and the
knowledge to do so must be available from basic science
– We must be able to convert the scientific knowledge into
practice in both engineering and economic terms
– The funding, skilled labor, time, space, and other
resources needed to develop the technology must be
available
– Entrepreneurial initiative is needed to identify and pull all
the necessary elements together

4. Technology Life Cycle
• The technology life cycle is a predictable pattern
followed by a technological innovation, from its
inception and development to market saturation
and replacement

5. Diffusion of Technological Innovations
• The percentage of people using the technology is small
in the beginning but increases dramatically as the
technology succeeds and spreads through the
population
• Adopters of a new technology fall into one of five
groups
– Innovators are the first group representing approximately
2.5% of adopters
– Early adopters represent 13.5 % of the adopters
– Early majority represent 34% of the adopters
– Late majority represent 34% of the adopters
– Laggards are the final group representing 16% of the
adopters

6. Diffusion of Technological Innovation

7. Diffusion of Technological Innovation
• The speed with which an innovation spreads
depends largely on five attributes
– Has a great advantage over its predecessor
– Is compatible with existing systems, procedures,
infrastructures, and ways of thinking
– Has less rather than greater complexity
– Can be tried ore tested easily without significant
cost or commitment
– Can be observed and copied easily

8. Technological Innovation in a
Competitive Environment
• Decisions about technology and innovation are
very strategic and managers need to approach
them in a systematic way.
• Two generic strategies a company can use include
– Low-cost leadership can drive innovation as
companies try to gain cost advantages through
pioneering lower-cost product designs
– Differentiation strategy can drive innovation as
companies seek the advantages that come from
having a unique product or service that customers pay
a premium price for

9. Technology Leadership

10. Technology Followership
• Following the technology leader can support
both low-cost and differentiation strategies
– The follower learns from the leader’s experience
– The follower can avoid the costs and risks of
technology leadership
– The follower can adapt the products or delivery
systems to fit buyers’ needs more closely

11. Technology Followership
• A manager’s decision on when to adopt new
technology is also dependent on the potential
benefits of the new technology, as well as the
organization’s technology skills.

12. Assessing Technology Needs
• In today’s increasingly competitive
environment failure to correctly assess the
technology needs of the organization can
fundamentally impair the organization’s
effectiveness
• Assessing the technology needs of the
organization involves:
– Measuring current technologies
– Measuring external trends affecting the industry

13. Measuring Current Technologies
• A technology audit helps clarify the key
technologies on which an organization depends
• One technique for measuring competitive value
categorizes technologies as:
– Emerging technologies are still under development and
thus are unproved
– Pacing technologies have yet to prove their full value but
have the potential to alter the rules of competition by
providing significant advantage
– Key technologies have proved effective, but they also
provide a strategic advantage
– Base technologies are those that are common place in
the industry

14. Assessing External Technological
Trends
• There are several techniques that managers
use to better understand how technology is
changing within an industry
– Benchmarking is the process of comparing the
organization’s practices and technologies with
those of other companies
– Scanning focuses on what can be done and what is
being developed, placing a great emphasis on
identifying and monitoring the sources of new
technologies for an industry

15. Key Factors to Consider in Technology
Decisions
• The most effective approach to technology
depends not only on the technology’s potential to
support the organization’s strategic needs but
also on the organization’s skills and capabilities to
exploit the technology successfully
• The organization’s competitive strategy, the
technical abilities of its employees to deal with
the new technology, the fit of the technology
with the company’s operations, and the
company’s ability to deal with the risks and
ambiguities of adopting a new technology all
must be timed to coincide with the dynamic
forces of a developing technology

16. Key Factors to Consider in Technology
Decisions
• Anticipated market receptiveness is one of the
first considerations that management should
make
– Is there an immediate application that
demonstrates the value of the new technology
– Is there a set of applications that show the
technology is the proven means to satisfy a
market need
• Managers must also consider the feasibility of
technological innovations

17. Key Factors to Consider in Technology
Decisions
• Closely related to technological feasibility is
economic viability
– Managers must consider whether there is a good
financial incentive in pursuing a technology
• What is the anticipated competency
development

18. Key Factors to Consider in Technology
Decisions
• Is the organization stable enough for the new
technology
– Prospector firms develop and exploit technological
expertise are usually early adopters
– Defender firms tend to deepen their capability base
thorough complementary technologies that extend
rather than replace their current ones
– Analyzer firms are a hybrid that needs to stay
technologically competitive but tends to allow others
to demonstrate solid demand in new arenas before it
responds

19. Sourcing and Acquiring New
Technologies
• The primary question of how to acquire new
technology is a whether the organization should
make or buy the technology
– This is known as the make or buy decision
• Some of the more common options for
technological development are
– Internal development
– Purchase
– Contracted development
– Licensing
– Technology trading
– Research partnerships
– Acquisitions

20. Sourcing and Acquiring New
Technologies
• Choosing among the various alternatives can be
simplified by asking the following basic questions:
– Is it important (and possible) in terms of competitive
advantage that the technology remain proprietary?
– Are the time, skills, and resources for internal
development available?
– Is the technology readily available outside the
company?
• This Figure illustrates, the answers to these
questions guide the manager to the most
appropriate technology acquisition option.

21. Sourcing and Acquiring New
Technologies

22. Technology and Managerial Roles
• Technology has traditionally been the
responsibility of vice presidents for research and
development
• Today companies are creating the position of
Chief Technology Officer (CTO)
– Also known as a CIO
– Senior position at the corporate level with broad,
integrative responsibilities
– Responsibilities include coordinating the technological
efforts of various business units; supervising new-
technology development; assessing the technological
implications of major strategic initiatives

23. Technology and Managerial Roles
• Key roles in acquiring and developing new
technologies are:
– The technical innovator is a person who develops
a new technology or has the key skills to install
and operate the technology
– The product champion is a person who promotes
a new technology throughout the organization in
an effort to obtain acceptance of and support for
it
– The executive champion is an executive who
supports a new technology and protects the
product champion of the innovation

24. Organizing for Innovation
• Create an organizational culture that
encourages innovation
– A culture that permits failure is crucial for
fostering the creative thinking and risk taking
required for innovation
• Bureaucracy is an enemy of innovation
– Bureaucracy is useful to maintain orderliness and
gain efficiencies
– Developing radically different technologies
requires a more fluid and flexible structure that
does not restrict thought and action

25. Organizing for Innovation
• A powerful tool for managing technology and
innovations is the development project
– A development project is a focused organizational
effort to create a new product or process via
technological advances
• Adopting a new technology typically requires
changes in the way jobs are designed
– The sociotechnical systems approach to work
redesign will redesign tasks in a manner that
jointly optimizes the social and technical efficiency
of work