Introduction toTechnology Management
-Student material-Manuel Lorenzo Hernández
Head of Technology & Innovation, Ericsson España S.A.E-mail: [email protected]
Last updated: 16 March 2010
with a big Thank You to Chalmers University
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Outline
Introduction 10’
The Dynamics of High Technology 50’
Market & Technology 25’
Strategy & Technology 25’
Questions 10’
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The Dynamics of High TechnologyTechnology Adoption/ Diffusion of Innovations
How does adoption of technology evolve with time?
Num
bero
fAdo
pter
s
Time
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The Dynamics of High TechnologyTechnology Adoption/ Diffusion of Innovations
s-shaped Curve / Bass Diffusion model (F. Bass)
Cumulative Number of Adopters
Num
bero
fAdo
pter
s
TimeSource: Rogers, E.(1962->2003) Diffusion of Innovations
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The Dynamics of High TechnologyTechnology Adoption/ Diffusion of Innovations
s-Curve for Cumulative Adoption & Bell Curve for New Adoption
New Adopters
Cumulative Number of Adopters
Num
bero
fAdo
pter
s
TimeSource: Rogers, E.(1962->2003) Diffusion of Innovations
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The Dynamics of High TechnologyTechnology Adoption/ Diffusion of Innovations
What is the social Influence on Technology Adoption?
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The Dynamics of High TechnologyTechnology Adoption/ Diffusion of Innovations
Social Model for Technology Adoption(E. Rogers)
Source: Rogers, E.(1962->2003) Diffusion of Innovations
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The Dynamics of High TechnologyTechnology Adoption/ Diffusion of Innovations
Case of Discontinuous Technology Changes (Moore):Between Early Adopters (visionaries) and Early Majority (pragmatists) there is a chasm that only some technologies and business models succeed in crossing
Techniques to successfully cross the "chasm," include choosing a niche target market, understanding the whole product concept, positioning the product, building a marketing strategy and choosing the most appropriate distribution channel and pricing
The Chasm
Source: Moore, G.(1991-1999) Crossing the Chasm
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The Dynamics of High TechnologyTechnology LifeCycle: Innovation
Performance Evolution vs. Time (or Engineering Effort)
Per
form
ance
Time or Engineering Effort
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The Dynamics of High TechnologyTechnology LifeCycle: Innovation
Performance Evolution vs. Time (or Engineering Effort)
PerformanceLearning
Per
form
ance
Time or Engineering Effort
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The Dynamics of High TechnologyTechnology LifeCycle: Innovation
The conventional Technology S-Curve
First Technology
Second Technology
Third Technology
Per
form
ance
Time or Engineering EffortSource: Christensen, C.(1997) The Innovator’s Dilemma
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The Dynamics of High TechnologyTechnology LifeCycle: Innovation
Disruptive Technology S-Curve
Per
form
ance
in M
arke
tA
Technology 1
Per
form
ance
in M
arke
tBTechnology 2
Time or Engineering EffortSource: Christensen, C.(1997) The Innovator’s Dilemma
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The Dynamics of High TechnologyTechnology LifeCycle: Innovation
The impact of Sustaining and Disruptive technological change
Time or Engineering Effort
Per
form
ance
Progress due to sustaining
technologies
Performance at the highend of the market
Performance at the lowend of the market
Source: Christensen, C.(1997) The Innovator’s Dilemma
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The Dynamics of High TechnologyTechnology LifeCycle: Innovation
The impact of Sustaining and Disruptive technological change
Time or Engineering Effort
Per
form
ance
Progress due to sustaining
technologies
Progress due to sustaining
technologiesDisruptiveTechnological
Innovation
Performance at the highend of the market
Performance at the lowend of the market
Source: Christensen, C.(1997) The Innovator’s Dilemma
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The Dynamics of High TechnologyLearning Cycles & Competition
Time
Lear
ning
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The Dynamics of High TechnologyLearning Cycles & Competition
A number of technologies (most of them disruptive) proliferate. Different companies bet on different ones.
At the end a particular technology (e.g. gasoline engine in the car industry) dominates and the many companies that bet on a different technology disappear
Technologies
At this stage performance is measured primarily on a single dimension (e.g. image resolution). Competition is often focused solely on that single dimension
The competitive advantage goes to the company able to execute the learning cycles faster
Performance
Source: Davila et al (2005) – Making Innovation Work
As product performance improves, certain customer segments start valuing different product dimensions –price, availability, …
The winners are those companies that are able to read the market and understand the differences across market segments
Segmentation
As the technology market is becoming mature, competing players focus more and more in efficiency and sustaining technologies
Radical innovations may appear and force the start a new lifecycle
Efficiency
The focus shifts to manage complementarities: synergies with other products and businesses, networks with partners, …
At this stage companies are most vulnerable to radical changes in their environment
Complementarities
Time
T P S E C
Lear
ning
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Market and TechnologyThe Business Model construct
Business Model?
TechnicalInputs
•Feasibility•Performance
•Other
EconomicOutputs
•Value•Price•Profit•Other
Measured in Technical Domain Measured in Social Domain
Source: Henry Chesbrough (2003) Open Innovation: The new imperative for creating and profiting from technology
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Market and TechnologyThe Business Model construct
A new cool Technology does not have a value per se;a suitable Business Model must be found and applied
Business Model:Value propositionMarket SegmentPosition in the Value ChainCost Structure and Target MarginsValue networkCompetitive strategy
TechnicalInputs
•Feasibility•Performance
•Other
EconomicOutputs
•Value•Price•Profit•Other
Measured in Technical Domain Measured in Social Domain
Source: Henry Chesbrough (2003) Open Innovation: The new imperative for creating and profiting from technology
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Market and TechnologyThe Business Model construct
VALUE PROPOSITION What ? COST STRUCTURE
AND MARGINS How much ?
VALUE NETWORK Who with ?MARKETSEGMENT Who to?
POSITION IN VALUE CHAIN Where ? COMPETITIVE
STRATEGY How to?
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Market and TechnologyBusiness Model Examples
Subscription business model Razor and blades business model (bait and hook) Pyramid scheme business model Multi-level marketing business model Network effects business model Monopolistic business model Cutting out the middleman model Auction business model Online auction business model Bricks and clicks business model Loyalty business models Collective business models Industrialization of services business model Servitization of products business model Low-cost carrier business model Online content business model Freemium business model Premium business model Direct sales model Value Added Reseller model Professional open-source model Various distribution business models
http://en.wikipedia.org/wiki/Business_modelSee
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Strategy and Technology
What is strategy?
“the match an organization makes between itsinternal resources and skills…and the
opportunities and risks created by its externalenvironment.”
Source: Hofer and Schendel (1978)
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Strategy and Technology
The two basic principles of StrategicManagement of Technology are:
1. Focus on your Customers
2. Leverage your Core Competencies
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Strategy and TechnologyMake or Buy?
Strategy and TechnologyMake or Buy?
Low High
Est
ablis
hed
Em
ergi
ngTe
chno
logy
/Kno
wle
dge
In-house Level of Knowledge
BUY-IN
DEVELOP
OPTIMIZEAND/OR
OUTSOURCE
RESEARCHLow
High
Business A
pplication
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Strategy and TechnologyAdaptability
Defining and executing a strategy is a must
… but unplanned things happen …
and adaptability is equally important
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Strategy and TechnologyAdaptability: Core Competencies & Core Rigidities
The development and use of competencies and resources are
guided by the firm’s dominant management logic
Competenciesbecome routines,
which are difficult to change
Companies miss out innovation opportunities
Core Competencies become Core Rigidities
So sometimes (only sometimes, but sometimes) it is right:Not to ask your customer… and review the business landscape around
Not to stick to your core competencies… and learn again
Strategic Direction
Ericsson ResearchGroup Function R&D
DevelopmentUnits
Strategic and New Areas
External ResearchCooperations
Business Decision
Strategy and TechnologyR&D Long-term & Short-term (Ericsson Approach)
UniversitiesOperatorsEU FP projects
FocusNow 5 years 10 years
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References
Rogers, E. M. (1962, latest edition 2003). Diffusion of innovations (5th ed.). New York: Free Press.Moore, G. (1991, revised 1999) Crossing the Chasm: Marketing and Selling High-tech Products to Mainstream Customers. Collins Business EssentialsChristensen, C. (1997).The Innovator’s dilemma. Collins Business EssentialsChesbrough, H. (2003). Open Innovation:The new imperative for creating and profiting from Technology. Harvard Business School PressDavila, T. (2003). Making innovation work. Wharton School PublishingAdner, R (2005). Disruptive Technologies and the emergence of competition. RAND Journal of Economics, Vol. 36, No. 2, Summer 2005, pp. 229–254