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8/3/2019 Strategic Issues in Managing Technology & Innovation
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Strategic Issues in ManagingStrategic Issues in Managing
Technology and InnovationTechnology and Innovation
Prof. Rushen Chahal
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Executive fear over loss of innovation
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Technology and Innovation
The Role of Management
Innovation Management of technology
Research conducted by Forbes, Ernst & Young,
Wharton Business School found that innovation isthe most important driver of corporate value
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How generate an overall enthusiasm for
innovative behavior and risk taking?
One way is to include innovation incorporations mission statement:
At&T: We believe innovation is engine thatkeep us vital and growing.
Gillette: We will invest in and master the keytechnologies vital to category success.
Hallmark: We believe that creativity andquality in our concept, products andservices are essential to our success.
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Key questions of innovative
management (Gary Hamel)
Old management Innovative management
How to do things with perfect
replicability, at ever-increasing scale and steadily
increasing efficiency?
How do you get people toserve the organizations
goals?
How do you build
organizations that are asnimble as change itself?
How do you buildorganizations that merit the
gifts of creativity and passion
and initiative?
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Role of management
The key to success for Sony, and toeverything in business, science, andtechnology for that matter, is never to followthe others
Akio Morita,
Chairman of Sony Corporation
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Role of management
Management has obligation to not only encouragenew product development, but also to develop a
system to ensure that technology is being usedmost effectively with the consumer in mind.
Between 33% and 60% of all new products thatreach the market fail to make a profit.
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Technology and Innovation
Environmental Scanning
External Scanning
New developments in technology
Motorolas intelligence department monitors thelatest technology developments introduced at
scientific conferences, journals and in tradegossip.
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Technology and Innovation
Impact of Stakeholders on Innovation tolook at customers, suppliers, and distributors, forsource of product and service improvements.
Lead Users Process Lay the foundation
Determine the trends
Identify lead users Develop the breakthrough
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Impact of Stakeholders on Innovation
Market Research - to survey current usersregarding what they would like in a new
product.
New Product Acquisition instead of usinglead users and market research to test the
potential of innovative products, somecompanies are using speed and flexibility togain market information.
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Strategic Innovation by Costas Markides
Strategic innovation occurs when acompany identifies gaps in the industrypositioning map, decidesto fillthem, andthe gaps growto become the new massmarket.Gaps are:
New emerging customer segment or existingcustomer segments that other competitors haveneglected
New emerging customer needs or existingcustomer needs not served well by othercompetitors
New ways of producing, delivering, or distributingexisting or new products or services to existing ornew customer segments
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Environmental Scanning
Internal Scanning Has the company developed the resources
needed to try new ideas?
Do the managers allow experimentation withnew products or services?
Does the corporation risk taking and toleratemistakes?
Are people more concerned with new ideas or
with defending their turf? Is it easy to form autonomous project teams?
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Environmental Scanning
Resource Allocation Issues R&D intensity companys spending on R&D
as a percentage of sales revenue. Forexample, 11-13% of sales revenue are spentfor R&D in computer software and drugindustries.
Time to market issues is an important as 60%
of patented innovations are generally imitatedwithin 4 years at 65% of the cost of innovation.
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Technology Sourcing
Outsourcing Technology
Low significant to competitive advantage
Supplier has proprietary technology
Suppliers better and/or cheaper
Strategy based on design not development
Requires special expertise
Requires new people and resources
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Technology and Innovation
Technological Competence
Absorptive capacityis a firms ability tovalue, assimilate, and utilize new externalknowledge.
Those corporations that do purchase aninnovative technology must have thetechnological competence to make gooduse of it.
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Categories of Innovation
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Product/Market Evolution Portfolio Matrix
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Stages of new product development
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Technology and Innovation
Innovative Organizations
Positive attitude toward change
Decentralized decision making Informal structure
Interconnectedness
Organizational slack
Large size System openness
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Designs for Corporate entrepreneurship
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Evaluation and Control
Index of R&D effectiveness is calculatedby dividing the percentage of total revenuespent on R&D into new product by
profitability, which is expressed aspercentage.
When applying to 45 large electronics
manufactures, only 9 companies scored 1.0or higher, indicating that only 20% received apositive payback from their R&D spending.
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How to make a firm more
innovative Change yourculture be more playful and
entrepreneurial.
Change yourattitudes be more risk-taking andmore welcoming of change.
Change yourprocesses make your strategy
process democratic.
Change your incentives allow people toexperiment and dont punish failure.