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management of technology
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MANAGEMENT OF TECHNOLOGY
Roberto E. Lopez-Martinez
Department of Systems Engineering, Institute of Engineering, National
University of Mexico, Mexico
Keywords: innovation, technology management, corporate strategy, research
and development
Contents
1. Introduction. Recent Changes in Business and Technological Paradigms
2. Management of Technology and its Role in the Process of Innovation
3. The Evolution of Management of Technology
4. Integrated Strategic Management of Technology
Related Chapters
Bibliography
Biographical Sketch
Summary
Management of technology is a set of concepts, skills, techniques and
practices resulting in decision-making and implementation in relation to the
development and use of technology by firms and ultimately aimed at
succeeding in innovation and increasing firm’s competitiveness. This article
describes the co-evolution of this multidisciplinary activity and the process of
technological innovation as well as its understanding through economic and
management models. The first approaches to manage innovation were
consequently linear, technology-push approaches focused on research and
development activities within the firm. The rapid changes in the business
environments and the patterns of competition have yielded new integrated
approaches to what can now be called ‘technology-based management of
technology’.
1. Introduction: Recent Changes in Business and Technological
Paradigms
Today, there is general agreement regarding the importance of technological
innovation for the growth and competitiveness of firms and for the
improvement of national economic performance. Indeed, for the past three
decades diverse areas of research have paid special attention to two essential
aspects of these phenomena. The first concerns the formulation and revision
of diverse models in an effort to identify and explain the constitutive elements
as well as the dynamics of technological change. The second concerns the
identification and analysis of the macro- and micro-level factors influencing
and conditioning the innovative performance of firms.
Thus, new proposals on the epistemology of innovation as well as economic
and management studies on this phenomenon have shown that the
competitiveness of organizations depends increasingly less on fundamental
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discoveries, and more on knowing how to combine different types of
technologies with efficient manufacturing processes and high quality
products. This has implied, on the one hand, the gradual, continuous
improvement in aspects of function, cost and quality and, on the other, the
conversion of firms into intelligent organizations.
During the last decade, many specialists have been pointing out several
changes in the basic pattern of technological innovation. Mainly attributed to
the emergence of high technology, various and important modifications have
been occurring in the whole framework of science, technology and
innovation. According to Fumio Kodama, these changes are significant
enough to merit the label: ‘paradigm shift’. The traditional arguments that
have hitherto been common sense in the management of business and
technology are thus becoming obsolete.
These changes affect those agents that make technology available, the way in
which it is generated, and what it is utilized for. They impact manufacturing
companies as well as their main business and in general, they affect all the
economic actors involved in bringing technology into the marketplace.
Naturally, research and development (R&D) activities and the technology
development process are affected too, modifying innovation patterns and the
diffusion of technology. In sum, this shift has impacted all the intellectual
activities involved in the generation of technology and the societal processes
through which it is realized.
1. A fundamental redefinition of the manufacturing company is taking
place. This is perceived by the fact that R&D investments have begun
to surpass capital investments in many companies; thus, it could be said
that the corporation is shifting from its traditional function of being a
place for production to being a place for thinking.
2. The pattern of business is changing, since the progress of technological
diversification makes it hard to distinguish a firm’s principal activity
from its secondary business. Corporate diversification seems to be
mostly the result of mergers and acquisitions, but these cannot explain
all the situations. More precisely, many high technology firms have
entered the stage where they survive by adapting to the environment,
relying on consistent R&D activities.
3. Innovation patterns are also changing. Recent innovations in high
technology fields seem to be better described as the results of the fusion
of different types of technical breakthroughs rather than as single
technical breakthroughs.
4. Major changes are occurring in the area of research investment decision
making in industry. The pattern of competition reflects at least two
important modifications. First, companies are being forced to introduce
new products into the market before the learning process regarding the
preceding innovations is complete. Thus, corporate investment
decisions are no longer made on the conventional basis of rates of
return. Instead, companies have no choice but to invest to ride the wave
of innovation to avoid being left behind by its competitors. In addition
new competitors can emerge now from different industrial sectors.
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5. In the new technology development process, the key issue now, is not
how to break through technological bottlenecks, but how to put existing
technology to the best possible use. This demand articulation process,
i.e. the process of search and selection among technical options, has
generated a new type of pre-competitive research, one in which the goal
is to create an engineering infrastructure or technological platforms as
the basis of competition.
6. Finally, technology diffusion is shifting from technical change to
institutional inertia; i.e. the widespread generalization of a new radical
technology is possible only after a period of change and adaptation of
many social institutions to the potential of the new technology.
In the following sections, the co-evolution of the notions of innovation and
management of technology will be described to show the way in which
theoretical approaches have attempted to explain the dynamics of the
economic phenomenon of innovation. At the same time, and inspired in these
approaches and in the analysis of the business environment, practitioners and
academics in the field of management have devised methods and techniques
to enhance the utilization of firm’s resources to cope with the changes in the
business dynamics.
2. Management of Technology and its Role in the Process of Innovation
During the last 40 or 50 years, the attention to technological phenomena has
been constantly increasing, especially since the 1980s, due to the rapid
changes in the business, political and social environment of firms.
Consequently, the emerging discipline of management of technology (MoT)
has received widespread attention from practitioners of management,
academics and even from governments and international organizations. In
general terms, management of technology comprises the set of concepts,
skills, techniques and practices resulting in decision-making and
implementation in relation to the development and use of technology by
firms. More specifically, MoT is ultimately aimed at succeeding in innovation
and increasing firm’s competitiveness. Spanning the interface of science,
engineering, economics and management, MoT requires a synergy of
decisions and their realization at diverse levels of government, institutions and
enterprises.
From the MoT perspective, it is assumed that a firm is a system composed of
diverse integrated processes coordinated by a management team whose
purpose is to reach certain business objectives. From this point of view, any
firm must fulfill a series of minimum requirements with regards to skills and
knowledge in order to satisfy an adequate cost/effectiveness relationship in its
processes and maintain the standard level determined by the market and the
environment in which it operates. These requirements correspond to broad
functions that in turn imply the accomplishment of a series of specific
activities.
Diverse management of technology approaches consider that firm’s success
depends on the appropriate use of certain methods in the administration of the
critical or strategic activities, thus allowing the company not only to maintain
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itself within the cost/effectiveness standard but also to systematically surpass
it. Under this perspective, the key characteristic seems to be the ability to
adapt itself to its area of business, its environment and the necessities of its
clients. Thus, the general performance of a firm depends ultimately: First, on
its ability to relate to the environment (extra-organizational aspects), and
second, on its capacity to translate the outside stimuli into a series of
technological and business strategies (intra-organizational aspects).
Within the MoT framework, management methods should thus consider the
firm as a complex system, a blending of varied and complementary skills at
least in the following areas:
1. Entrepreneurial and business aspects to establish the strategic planning
process of the company, and the ways in which the basic supporting
activities are handled and aligned in the firm.
z Competitive strategy and planning, including all the activities
concerned with the selection of the future of the firm and the way to
accomplish it by means of the definition of a general framework that
integrates the company’s decisions.
z Organizational management to provide an appropriate organizational
structure according to the firm’s specific needs.
z Competitive technological intelligence and knowledge management
activities aimed at providing early warning of external developments
that represent potential threats and opportunities, and communicating
this information to all the relevant actors in the corporation, e.g. new
innovations, collaboration prospects, and shifts in science and
technology.
z Human resources management to establish the policies and methods for
hiring, training and evaluating personnel, as well as the reward system
of the company. It also includes the methods to foster creativity within
the firm.
2. Technological aspects to establish the firm’s technology strategy and its
alignment with the firm’s general competitive strategy.
z Engineering, design and R&D including those activities associated with
defining the firm’s plan to develop technological resources according to
its competitive goals.
z Technology transfer and procurement policies, ranging from the
transfer of knowledge within the firm and between the firm and external
organizations, to acquiring the various inputs needed for production. It
also includes the intellectual property strategies adopted by the
company.
z Operations and manufacturing management including all the activities
concerning logistics and production, from receiving and disseminating
inputs to transforming them into the final product.
z Quality management to assess and implant the methods and systems
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needed to guarantee the final product characteristics and specifications.
3. Marketing aspects to establish the competitive strategy of the firm,
involving those activities associated with benchmarking and monitoring
competitors. The evaluation of products’ performance and the
establishment of customers’ relationships are included too.
4. Financial aspects, including the management of financial resources and
the investment policies of the firm. These activities concern the
definition and achievement of financial goals within the firm’s general
competitive strategy.
2.1 The Evolution of the Notion of Innovation: The Nature of the Process
and its Sources
Undoubtedly, the economic works of Joseph A. Schumpeter have had an
important influence on the theory of management of technology. His
contributions include among others, the first approach to the importance of
innovation for economic growth, the recognition of the role of the ‘innovator-
entrepreneur’ in the process of innovation, the impact of the size of the firms
on their innovative performance and competitiveness and some of the first
ideas to explain technical change as an evolutionary process. Additionally,
two interrelated aspects, debated within the economics of technical change
and business management, have been crucial for the shaping and evolution of
management of technology: the science and technology-push vs. market-pull
debate and the understanding of technological change as a non-linear process.
During the 1950s, it was generally assumed that technological innovation was
a more or less linear process beginning with scientific discovery, passing
through industrial R&D, engineering and manufacturing activities and ending
with a marketable new product or industrial process. Under this assumption,
the marketplace was a passive receptacle for the fruits of R&D.
This technology-push model was generally accepted until the end of the
1960s, when diverse results of empirical research on actual innovations began
to be published. These studies placed considerably more emphasis on the role
of the marketplace in innovation. Thus, a new linear market- or need-pull
model began to gain currency. According to this, innovations are deemed to
arise as the result of a perceived and sometimes clearly articulated customer
need, resulting in closely focused R&D activity leading to a stream of new
products onto the market. In this case, R&D activities were perceived to have
a reactive role in the process.
During the 1970s, these linear models of innovation began increasingly to be
regarded as oversimplified and atypical cases of a more general process of
coupling between science, technology and the marketplace. However, it must
be noted that at an industry wide level, the relative importance of technology-
push and need-pull might vary considerably according to the different phases
of the technology and industry life cycles. For example, emerging
technologies such as those in the field of biotechnology seem to be pushed by
scientific or technological research and when they evolve and mature, market
needs begin to gain importance in shaping future developments.
This new interactive model can be regarded as a sequential, though not
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necessarily continuous process that can be divided into a series of functionally
distinct but interacting stages. The overall process could be described as a
complex net of communication paths, both intra- and extra-organizational,
linking together the various functions of the firm and linking it to the broader
scientific and technological communities and to the marketplace.
Finally, since the latter half of the 1980s, a shift was marked from considering
innovation as a predominantly sequential process, to considering it as a
parallel process involving simultaneously, elements of R&D and
manufacturing and marketing and so on. At the same time, joint ventures and
strategic alliances increased dramatically, giving an added dimension to the
process.
During the 1990s, new features have been added to the model, involving a
much closer strategic integration between collaborating companies and what
can be called the ‘electronification of innovation’. This latter implies an
increased use of expert systems as a development aid, simulation modeling,
linked supplier/user computer aided design (CAD) systems as part of the co-
development process of new products and closer CAD and manufacturing
systems. This new systemic perspective considers innovation not only as a
cross-functional process, but also as a multi-institutional networking process.
3. The Evolution of Management of Technology
As mentioned before, from a management perspective, the adoption of some
of the theses regarding the origin and nature of the process of innovation, has
had important implications for the way in which firms manage their
technological resources. At least, three general approaches can be identified in
the evolution of MoT: the R&D management, the innovation management and
the technology planning approaches.
The starting point for the R&D management approach can be found both, in
the technology-push explanation and in the S-curve model of the diffusion of
technology. According to the latter, the dynamics of technologies imply that
they have particular life cycles characterized by their evolution through
different stages of maturity. The management perspective to this model
assumes that the performance of any given technology is proportional to the
amount of accumulated investment during the development phase of that
technology. This assumption has strong implications for top managers since
the development costs of any particular technology are frequently very
expensive. Thus, the underlying rationale of the R&D management current of
thought is to provide funds for research and development in order to harvest
benefits from the higher levels of performance resulting from the R&D
efforts.
This approach is not normally considered a top management responsibility.
R&D is similar to a black box into which corporate leadership places money
and resources and harvest benefits from increased technological performance.
In sum, R&D management is in essence the coordination of activities of
different individuals in order to optimize the corporation’s technological
performance against that of its competitors.
From a similar but more integrated point of view, the innovation management
perspective is focused in the entire process of innovation, from conception to
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commercialization. This approach incorporates diverse management
techniques, derived mainly from management science and engineering, to the
diverse functions of the firm from R&D to manufacturing and marketing. Its
rationale recognizes that when technological life cycles are becoming
increasingly short and dynamic, it is not enough to focus solely on research
and development and expect this to generate sufficient improvement in the
firm’s general performance. Within the innovation management current,
technological changes are assumed to be rather unpredictable but still
predetermined according to the technology life cycles.
Finally, the technology planning approach can be viewed as a reaction to an
environment perceived as increasingly dynamic and complex. Two possible
driving forces have been proposed to explain this development: increased
competition and sustained progress. According to the first hypothesis,
increased global competition leads to growth in R&D spending and shorter
product life cycles, which in turn bring about increased competition. This
creates a self-reinforcing cycle over ever-increasing competition. The second
driving force, sustained progress, implies that the lapse between the discovery
of a fundamental piece of knowledge and its application has become
progressively shorter over time. This new situation suggests that companies
should be managed in a different manner than was the case 30–40 years ago.
Thus, this approach is planning oriented through a set of analytical tools
aimed at the rational decision making at top management levels of the firm.
Among the diverse common issues that have been deeply analyzed and
discussed by the different currents of MoT, perhaps with different focus and
levels of application within the firm, we can mention the following:
z The strategic management of technology and its contribution to the
general business objectives as related to the need of an integral
management of R&D activities. These include the management of
business and project portfolios, the need to establish long-term
strategies and the participation of the whole corporation in strategic
decision making.
z Human resources management specifically related to R&D activities
has received attention from the perspective of changing organizations,
organizational learning and the necessity to react rapidly to technology
fusion.
z The development processes and concurrent engineering as well as the
problems associated to the communication flows among the firm’s
functional areas, how to increase the designers’ involvement with user
needs and how to respond more efficiently to market changes.
z Organizational reengineering and the improvement of knowledge and
technology transfer due to the increasing use of outsourcing.
z The role played by the interaction of central R&D laboratories and
business units in technology development.
z The increasing importance of competitive technological intelligence
with regard to technology development and firms’ competitiveness and
consequently the need to improve the flow of information within the
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corporation.
z The internationalization of R&D activities as a means to respond to the
particular needs generated by global markets.
z The role and implications of information technology to improve R&D
efficiency.
In addition to this non-exhaustive list of interrelated aspects, two subjects
received special attention in the MoT literature during the decade of the
1990s. On the one hand, all the issues concerning the diverse forms of
networking and collaboration between firms and other organizations; and, on
the other, the need for companies to focus on their core competencies as a
means to increase their competitiveness.
3.1 Networking and Technology Development
The great interest in looking for ways to enhance collaborative research for
technology development, departs from the recognition that firms alone are not
capable to successfully respond to the challenges of competitiveness. The
fusion of technologies, the scarcity of resources, the need to share risks and
global competition, are among others, important reasons that are pushing
companies to complement their own resources with those of other firms,
universities and other R&D organizations.
Today, the great majority of leader companies has had some kind of
collaboration experiences focused on technology development. Thus, a new
task of technology management has been to increase the possibilities of
obtaining successful results from collaborative enterprises. Many problems
have arisen for firms while trying to exploit the advantages of collaborative
relationships; the following issues can be mentioned:
z How to obtain better results from strategic alliances as a means to
improve competitiveness? And, how long do the relationships should
last?
z How to address collaborative efforts from the strategic perspective and
specific technological and competitive needs of the organizations
involved?
z What is the role of vertical relationships, i.e. with customers and
suppliers, to enhance the firms’ capabilities to identify new business
opportunities?
z What is the role of collaboration to improve firms’ capacities for
renewal and adaptation to changing environments?
z How to learn and accumulate knowledge derived from collaboration
and networking within a dynamic environment characterized by the
fusion of technologies?
z How to manage a firm as an element of a network? And, how to
manage the alignment of those elements of the network that are internal
with those which are external to the company?
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z How to manage intellectual property when different pieces of
knowledge that will constitute a technology are generated in different
research units?
z How to manage the flow of information in a complex network to
increase the possibilities of success of the projects?
z How to guarantee that all the participants in the network will receive
the economical and technological benefits derived from collaborative
endeavors?
Applying traditional and well-known MoT methods can solve many of these
aspects, simply by introducing the variable of collaboration. However, it is
evident too, that this has important impacts in the structure and activities of
organizations. In many other cases, technology managers have to cope with
completely new problems and situations that require different techniques and
innovative solutions for projects to succeed.
3.2 The Development of Core Competencies, a New Approach to
Strategic Management
This subject that appeared during the last decade still offers many challenges
for practitioners and academics to solve. The concept as defined by C. K.
Prahalad and G. Hamel, forces corporations to rethink themselves aiming at
the transformation of the firms into organizations capable of infusing products
with irresistible functionality or of creating products that customers need but
have not yet realized. Core competencies are the result of collective learning
within the firm, especially how to coordinate diverse productive skills and to
integrate multiple streams of technology. From this it can be inferred that the
articulation of the concept of core competencies demands an integral
management perspective for the firms, different from the point of view of
them as divisions or units and capable of establishing communication flows
above departments and hierarchical and structural barriers.
Undoubtedly, this issue requires more attention and research to be devoted in
the future. Special attention should be paid to the understanding of the role
played by core competencies in the firm and the precise contribution of
technology to identify them, since it should be considered that they rely on
other elements as well, such as human resources capabilities and firms’
structure and behaviors. Additionally, technological advances and the
strategic vision with regard to R&D are crucial for the identification and
development of these. The main challenge remains in its alignment with the
natural development of firm’s strategy and the identification of technological
projects.
Other problem consists in the apparent rigidities imposed by a management
style based on core competencies, since the necessary focussing of resources
could imply loosing the ability to detect emerging opportunities in the
environment. Thus, technology development should support the firm’s
competencies and at the same time provide the means to identify and develop
new core competencies. Similarly, as with other firms’ resources, relying on
this type of MoT derives from the need of leveraging the firm’s own R&D
resources.
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4. Integrated Strategic Management of Technology
Summarizing, the new integrated MoT models operate on two fundamental
principles. First, company managers must drive innovation across the entire
corporation to create value; and, second, they must leverage technology and
competencies to drive sustainable innovation and capture competitive
advantage. To activate these two principles and achieve the objectives of
innovation, a company needs to align and fine-tune its management efforts in
the following key areas: strategy, innovation process, firm’s resources,
organization and learning.
Traditionally, the perceptions and goals of major business units determined
business strategy. The new conditions of the competitive environment forces
firms to count with an innovation strategy fully aligned with the company
strategic vision. This must be tailored to the needs and strengths of the
company’s innovation and technology apparatus as well as that of its partners,
suppliers and customers. Regarding the innovation process, in addition to the
aspects mentioned concerning its understanding as a systemic process,
managers should expand their thinking to perceive this from the point of
origin of raw ideas to the point at which a product is in the hands of a
customer. Similarly, a new MoT perspective should enlarge the definition of
business innovation resources, to include all of the capital, facilities,
capabilities and people that are part of or connected to the innovation process,
including customers and suppliers.
Concerning the organizational structure, companies should build a highly
collaborative and flexible organization from the top down and the bottom up,
one that is thoroughly networked in ways that enable people to communicate
rapidly with one another. By connecting workers at every level of the
organization and beyond, managers encourage the personal interactions and
cross-fertilization that foster innovation. Finally, as suggested earlier, new
companies are dynamic, knowledge-based learning machines, committed to
continuous and sustainable innovation. The new electronic networks should
be organized to gather ideas and best practices from every corner of the
company, to select and edit them, to send the new versions back to the desks
and workstations where they can be put to practical use.
In sum, not only is technology itself changing rapidly, but the innovation
process is changing as well: thanks to the new technological resources, it is
becoming more efficient, faster and flexible. At the same time, its complexity
appears to be increasing with more actors involved more deeply than before.
All this implies that management of technology remains a highly accurate task
requiring managers of high quality and ability for its success. Recalling a
classic distinction to describe different approaches to science policy, the new
integrated MoT requires both, management for technology and technology for
management. In other words, it needs to apply better management methods
and techniques to successfully develop technology within a dynamic
environment, and at the same time ‘hard’ and ‘soft’ technologies should
enrich management methods. Furthermore, the systemic-networking approach
of innovation requires managerial and organizational flexibility as well as
adaptability to respond to the challenges of competitiveness. The evolving
nature of the process of innovation, including a variety of internal and
external collaborators implies that the need for technology strategy to be at
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the leading edge of corporate strategy is greater than ever before.
Related Chapters
Click Here To View The Related Chapters
Bibliography
Burgelman R. A. and Maidique M. A. (1988). Strategic management of technology and
innovation, Homewood, Illinois: Richard D. Irwin, Inc., [This book introduces to the general
concepts and methods of technology management through the analysis of several case studies
of firms and innovations.]
Drejer A. (1996). The discipline of management of technology, based on considerations
related to technology, Technovation 17(5), 253–265. [This article analyses different
approaches to management of technology and raises questions regarding their suitability to
manage innovation in a complex and diverse environment.]
Jonash R. S. and Sommerlatte T. (2000). The innovation premium. How next generation
companies are achieving peak performance and profitability, Reading, MA: Perseus Books.
[This book focuses on the analysis of leading companies’ best management practices.]
Kodama F. (1991). Analyzing Japanese high technologies. The techno-paradigm shift,
London: Pinter Publishers. [This book describes the new business paradigm through the
empirical analysis of the innovation and technology diffusion processes in Japanese firms.]
Porter M. E. (1985). Competitive Advantage. New York: Free Press. [This book gathers
previous research by the author, focusing on the generation of value within the firm to
increase its competitiveness.]
Prahalad C. K. and Hamel G. (1990). The core competence of the corporation, Harvard
Business Review, May/Jun, 68(3), 79–92. [Based on case studies this article argues that a
company’s competitiveness derives from its capability to conceive itself in terms of its core
competencies and core products.]
Rothwell R. (1992). Successful industrial innovation: critical factors for the 1990s, R&D
Management 22(3), 221–239. [This article analyses the evolution of theoretical models of
innovation from the linear to the systemic approaches, the corresponding management of
technology directives and the characteristics for successful innovation.]
Schumpeter J. A. (1934). The theory of economic development, New York: Oxford University
Press. [Originally published in 1911, this classic work introduced the notion of innovation
and its importance for economic growth. Schumpeter’s works opposed to the dominant
economic theories and were ignored for several years, however, they gain great attention
since the beginning of the 1970s.]
Schumpeter J. A. (1943). Capitalism, Socialism, and Democracy. London: George Allen and
Unwin Ltd. [This work advances the original concept of innovation describing it as a process
of creative destruction, including the important role of research and development involved in
it. Its controversial conclusion that capitalism would be destroyed by its own success and how
Schumpeter arrived to it, has been a source of inspiration and debate in the economics and
management spheres.]
Biographical Sketch
Roberto Lopez-Martinez is currently researcher at the Institute of Engineering of the
National University of Mexico and visiting lecturer of science and technology policy at the
Metropolitan University of Mexico City. He is an Industrial Designer from the Universidad
Iberoamericana and obtained an M.Sc. on Technical Change and Industrial Strategy at the
University of Manchester. From 1979 to 1985 he founded and directed a multidisciplinary
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master degree program of Product Development at the Metropolitan University. He has been
Vice-Principal of the Centre for Technological Innovation and Executive Liaison Officer of
the Institute of Engineering, both at the National University of Mexico. He has published
several articles and contributions for books on management of technology and science and
technology policy. He has carried out diverse consulting activities for universities, as well as
public and private organizations in Mexico and Latin America.
To cite this chapter
Roberto E. Lopez-Martinez, (2004), MANAGEMENT OF TECHNOLOGY, in Science
and Technology Policy, [Ed. Rigas Arvanitis], in Encyclopedia of Life Support Systems
(EOLSS), Developed under the Auspices of the UNESCO, Eolss Publishers, Oxford ,UK,
[http://www.eolss.net] [Retrieved December 6, 2006]
©UNESCO-EOLSS Encyclopedia of Life Support Systems
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