Subject Code:

536313
Unit - I

Subject Name: Innovation and Technology Management

Outline
Basics of Technology Management Management of Technology Technology life cycle Technological Environment Technological change, Dynamics of Technological change Science and Technology in India

Think! What is technology?

The branch of knowledge that deals with the creation and use of technical means and their interrelation with life, society, and the environment, drawing upon such subjects as industrial arts, engineering, applied science, and pure science.

1. Technology as Objects: Tools, machines, instruments, weapons, appliances - the physical devices of technical performance 2. Technology as Knowledge: The know-how behind technological innovation 3. Technology as Activities: What people do - their skills, methods, procedures, routines 4. Technology as a Process: Begins with a need and ends with a solution 5. Technology as a Sociotechnical System: The manufacture and use of objects involving people and other objects in combination.

Basics of Technology Management

Levels of Development
Idea Generation
Ideas are developed by individuals based on their experience, experimentation or imagination Verifying the validity of the knowledge; Codifying the knowledge thus verified and formalizing it for communication

Verification and Codification

Application of Technology

Putting the knowledge to use

I call my invention The Wheel, but so far Ive been unable to attract any venture capital.IITC e-Chaupal.wmvCisco_CET.wmv

Basics of Technology Management

Classification
New Vs Emerging
New newly introduced or implemented technology that has an explicit impact on a firms processes Emerging Not yet fully commercialized but will be so within next five years

High, Low and Medium

High Refers to advanced and sophisticated technologies that require highly educated people; that is rapidly changing; and requires heavy R&D expenditure Low Technology that have permeated large sections of society Medium Between Low and High (e.g., consumer pdts. & automotive industry)

Appropriate Technology

Indicates a good match between technology utilized and the resources required for its optimal use

Codified Vs Tacit Technology

Codified Allows people to know how technology works but not necessarily why it works in a certain way Tacit Nonarticulated knowledge that resides within the minds of technology developers

Basics of Technology Management

Characteristics
When there is an opportunity for improvement due to either intrinsic or economic reasons, technology development takes place Individuals pursue technology development only when there is reasonable assurance that the technology will be economically or otherwise rewarding Technology transfer is not smooth; knowledge is sticky because of lack of perfect communication among human beings Technology development consumes resources viz., time, money and people. Collateral assets may be needed to exploit a technology opportunity

Opportunity

Appropriability

Transferability

Resources

Management of Technology
Introduction to MOT Establishing Firms Identity and Purpose Key Concepts in MOT

Management of Technology
Introduction

Management of technology focuses on the principles of strategy and organization involved in technology choices, guided by the purpose of creating value for investors
Emphasis is on accomplishing goals of an organization (value creation)

Focus is on development of technological capabilities and its implementation or deployment in products or processes

Within corporations technology management is linked to other management activities such as marketing and manufacturing

Management of Technology
Introduction
Purpose
Value Driven

What Technology Strategy

How Organization and Management

Technology Choices

Management of Technology
Establishing Firms Identity and Purpose
Dimensions Drivers of Strategy Derivatives Strategy Profile Appropriate contexts Market Based Customers and Competitors Resources Positional Mature Markets Resources Based Unique Resources Market Opportunities Core Competencies Dynamic Markets

Management of Technology

Industries as competitive domain

Group of firms that offer similar products/services to customers Domains in which incumbent firms compete Classification by key competitive resources

Capacity Driven Customers Driven Example Cost Investment Competition Steel Industry Physical Resources Based on price Food Industry Brand / Customer Relationship Customer Satisfaction Less mature, and fragmented as compared to capacity driven Fast Higher average profitability

Knowledge Driven Pharmaceutical Industry R&D Innovation New developments are necessary to keep the firm going Very Fast High profitability but more risk

Nature

Mature, Fragmented

Pace of Productivity Improvement Profitability

Modest

Low

Management of Technology
Key Concepts

Forms of Technological Change

Process Technology: Pertains to the techniques of producing and marketing goods and services

Refers to the way an organization conducts its business Process technology changes are designed to produce and market goods and services faster, more efficiently, or in greater volume E.g., Automotive industry (Assembly line changes)

Product Technology: Refers to elements of technology embedded in the goods and services of a firm

Refers to the output of an organization

Product technology changes add new features or provide superior substitutes for existing products
E.g., production of gasoline and electric cars (Refinement in cars)

Whether it is process change or a product change depends on the nature of the firm

Management of Technology
Key Concepts

Forms of Technological Change

Process Technology Changes Changes are less visible in the marketplace Process technology makes it possible for the firm to reduce its cost or cycle time and improve the quality of its products Modifies the way a firm conducts its business and may bring about changes in a firms HR practices, logistics and marketing functions

Product Technology Changes Changes are easy to detect and copy by competitors

Product technology changes bring about improvements in existing products

Helps firms compete for customers by radically redefine their product / market scope

Factory

Car Manufacturing before conveyorization

Factory

Assembly Line of the Ford T Model, 1913

Factory

Truck Assembly Line

Factory

Small Truck Assembly Line

Product Layout (Assembly Line)

Factory

Car Assembly Line

Management of Technology

Value Creation and Competitive Advantage

Competitive advantage is the ability of the firm to outperform rivals on profitability

Depends on how a firm is able to provide superior value to its customers at relatively lower cost

Management of Technology
Key Concepts

Firm as a value chain

Helps the firm deliver products and services to its customers Provide mechanism by which to capture the cost structure of the firm
Firms Infrastructure Human Resource Management Technological Development Procurement Inbound Logistics Outbound Logistics Marketing and Sales

A
R G
Service

Operations

I N

Value Chain Analysis

A typical value chain analysis can be performed in the following steps: Analysis of own value chain identify the primary and support activities. Each of these activity categories needs to be broken up into its basic components and costs are allocated to every single activity component. Analysis of customers and suppliers value chains examine how does your product fit into the value chain of the customer and the supplier. Key Activities - Identify activities that differentiate the firm and the potential cost advantages in comparison with competitors
.

Identify potential value added for the customer how can our product add value to the customers value chain (e.g. lower costs or higher performance) where does the customer see such potential? The final step is to identify those activities that provide a differential advantage compared to competitors.
These are the competencies or the core competencies of the organization

Technological capability of an organization is a measure of its innovativeness. As the level of innovative capability of a firm goes up, the organization's capacity to face challenges also undergoes significant change.
A major component of technological capability is learning from others. The process of diffusion is an important source of technological capability. An organization that is a member of a value chain, where the product or service can be broken-up into its individual components,

In this classification, six levels of technological capabilities are identified. The level of technological capability of the firm increases as is goes down the ladder formed by these technology types.

Reverse Engineering: Ability to imitate an

existing product. For example, Sharp Corp. imported a crystal radio set from USA in 1925; reverse engineered it and made Japans first radio, the Sharp Dyne.

Product Innovation: Innovations that lead to

improvements of existing products or development of new products. The innovations could be incremental, architectural.

Process Innovation: Improvements

in the manufacturing process, or integration of steps in the manufacturing process leading to reductions in cycle time or reductions in the number of process types, improving the manufacturing process yields, etc.

Application Innovation:

Utilisation of an existing idea or concept for a new application, or a new design, method or measurement technique. It can sometimes dramatically, improve existing products and processes. For example, the development of Nylon into material for use as tyre cords.

Systems Innovation:

Innovations involving integration of sub-subsystems and several innovations. This may be through linking or integration of a variety and sub-systems, and involving product, process and application innovations.

The Four Phases of the Technology Life Cycle

The TLC may be seen as composed of four phases: (a) the research and development (R&D) phase (sometimes called the "bleeding edge") when incomes from inputs are negative and where the prospects of failure are high.

(b) the ascent phase when out-of-pocket costs have been recovered and the technology begins to gather strength by going beyond some Point A on the TLC (sometimes called the "leading edge")
(c) the maturity phase when gain is high and stable, the region , going into saturation, marked by M, and (d) the decline (or decay phase), after a Point D, of reducing fortunes and utility of the technology.

NATURAL LIMITS EFFICIENT Capital Intensive

Max. Rate of Technology Change EFFICIENT PERFORMANCE

TECHNICAL CHANGE

INEFFICIENT No Knowledge

New Invention
Initiation Period

Technology
Improvement Period
RESEARCH EFFORT

Mature
Technology Period

Technological change generally follows the course described by the technology life cycle graph. By plotting the market volume over time for any industry, one can identify the changing innovativeness of the industry. This is called technological aging of the industry. When a new industry based on new technology is begun it marks the inception of the technology. For example, the inception of the Automobile industry was 1887 when Gottlieb Daimler manufactured the first gasoline-powered automobile. This Excel Books the base forms
6-42

The Technology Life Cycle (TLC) describes the commercial gain of a product through the expense of research and development phase, and the financial return during its "vital life". Some technologies, such as steel, paper or cement manufacturing, have a long lifespan (with minor variations in technology incorporated with time) whilst in other cases, such as electronic or pharmaceutical products, the lifespan may be quite short.

The life cycle of a technology:

The first technological phase of the industry is the rapid development of the new technology. This phase is called the Technology Development phase. In the case of the automobile, it phase was from 1887 to 1902, as experiments with steam, electric and gasoline powered vehicles were tried. Product improvements continued and improved processes for producing cheaper, better products were innovated. During this phase weak competitors are eliminated. For example, in 1909 there were 69 auto manufacturing firms in USA. Only half these firms survived by 1916.

In the Applications Launch phase a standard design is worked out and rapid growth of the market begins. Successful firms grow large. Corporate R&D becomes important to maintain incremental model improvements.

This phase is followed by the Applications Growth phase where there is a rapid growth in the penetration of technology into markets. Excel Books Competition is on price and segmented 6-43

Production is specialized and efficient. Economies of scale and marketing dominance reduce competitors, to the final few. For example, by 1965, only General Motors, Ford, Chrysler, and American Motors had survived in the American automobile industry.

As the innovation rate slows down, the market peaks, the Mature Technology phase begins.

MARKET
VOLUME

B Products A Processes

Technology Development

Application Launch

Application Growth

TIME

Mature Technology Excel Books

Technology Substitution

6-44

Technological Environment
Introduction Definition and Importance Actors in Technological Environment Changes in Technological Environment Current Developments in Technological Environment

Technological Environment
What is environment?

A firm operates in an environment consisting of various other players, viz., competitors, government, other firms and so on. Technological environment not only shapes, but is also shaped by other environments facing an organization
Macroenvironment (affects all industries)
Task Environment (Specific to a firm and not necessarily shared by the competitors) Industry/ Competitive

Firm

(Environmental factors affects all competitors in the same industry)

Technological Environment
Macroenvironment

Consists of social, economic, political and technological environment State 1 Nation Nation State 2
Social

Technological

Social

Political/ Regulatory

Firm Economic

Political/ Regulatory

Macroenvironment

Technological Environment
Definition and Importance

A major segment of the environment and the primary environmental segment that influences the management of technology Importance

It brings new products, processes, and materials It directly impacts every aspect of the society around us, such as transportation modes, communications, entertainment, health care, food, agriculture, and industry It alters the rules of global trade and competition

Consists of firms that create new knowledge and firms that apply new knowledge

Technological Environment

Definition and Importance Steps in technological development

Creation of new knowledge

Basic / Fundamental research without any specific objectives E.g., Digital imaging Investigations intended to solve practical problems E.g., Biometrics

Application of new knowledge

Knowledge creation

Knowledge application

Technological Environment
Actors in Technological Environment
Developers Public NASA, Federal Labs, University Labs Facilitators AICTE, Governments

Private

Tata Institute of Fundamental Research, Bell Laboratories

Venture capitalists Technology evaluators

Technological Environment
Actors in Technological Environment
Technology Development

Victims of technology changes made by competitors

Role of a firm

Beneficiary of technology change initiated by others

Facilitate technology development

Technological Environment
Actors in Technological Environment
Creation of new knowledge Applied Research Application of Knowledge Development Engineering Commercialization

Government Institutions (e.g., Federal Labs, NASA) Scientific Research Labs

Government Institutions (e.g., NASA) Corporations (e.g., GE, R&D Labs) Universities Entrepreneur s

Corporations Private Firms

Universities

New Venture Development Groups

Technological Environment
Changes in the Environment

Induced Changes

Changes induced by forces (such as demographics and lifestyle) in macro-environmental segments other than technological environment

Political Environment

Demographic and Lifestyle influence technology development. E.g., Railways

Social Environment

Government policies influence technology development. E.g., Telecom

Technological Environment

Economic conditions of citizens influence technology development. E.g., Tata Nano

Economic Environment

Technological Environment
Changes in the Environment

Autonomous Changes

Changes induced in the technological environment due to independent actions of technology developers in the quest for competitive advantage. These changes are largely independent of the forces in other macro-environmental segments

E.g., Intel in Microprocessor Technology; Automobile Manufacturing; Space-related technology; Consumer products

Technological Environment
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

Technology Integration

Combining technologies to develop new products Combining technologies to commercialize products

Science and Technology in India

Emergence of E-Commerce Advances in Medical Sciences Lagging Behind

Research and Development activities Education Defense systems