33 Strategic Issues in Managing Technology and Innovation
Module 1 : Concept of Strategy
1. INTRODUCTION
2. DEFINITION OF MANAGEMENT OF TECHNOLOGY The Importance of Managing Technology
The Role of Managing Technology at Enterprise Level Tools for Managing Technology
3. DEFINITION OF TECHNOLOGY
4. DEFINITIONS OF INNOVATION
5. DEFINITION OF MANAGEMENT OF INNOVATION Tools for Managing Innovation
6. STRATEGIC MANAGEMENT OF TECHNOLOGY AND INNOVATION
7. STRATEGIC ISSUES IN MANAGING TECHNOLOGY AND INNOVATION
8. MANAGERIAL GUIDELINES
9. SUMMARY
1. LEARNING OUTCOMES
After studying this module, you shall be able to
1. Understand the concept of technology
2. Comprehend the concept of management of technology
3. Importance and role of technology management
4. Tools for management of technology
5. Understand the concept of innovation
6. Learn about the concept of management of innovation
7. Understand the Strategic management of technology and innovation
8. Learn various issues regarding strategic management of technology and innovation
9. Learn about limitations of strategic management of technology and innovation
2. INTRODUCTION
Rapid developments in technology make a profound impact on business firms. New product technologies change the products and product features; new process technologies change the way in which products are produced. Use of new technologies in supply chain mechanism change the way a business firm operates. A business firm must be prepared to adopt and adapt new technologies in order to sustain in business for long. In a competitive environment, every firm should know how to handle technology to its advantage. In other words, every firm should know as to how to manage technology.
Before understanding the concept of management of technology and innovation and strategic issues in managing technology and innovation, it’s important to understand basic definitions and terms such as Technology Innovation Management of technology and Innovation
Strategic Management of Technology and Innovation
These all are related concepts but do represent separate concerns. Following figure 1.1 illustrates some of these differences relating to one issue: the discovery of the atom. The definitions presented and developed below reflect widely accepted views of technology and innovation. However, it should be recognized that there are a number of different ways to define technology, innovation, and the management of each.
3.DEFINITION OF TECHNOLOGY
Technology has been defined in a variety of ways. This range of definitions demonstrates that a variety of different perspectives on technology exist. A few of the major definitions of technology include:
The processes used to change inputs into outputs The application of knowledge to perform work
The theoretical and practical knowledge, skills, and artefacts that can be used to develop products as well as their production and delivery system
The technical means people use to improve their surroundings
The application of science, especially to industrial or commercial objectives; the entire body of methods and materials used to achieve such objectives
4. DEFINITION OF MANAGEMENT OF TECHNOLOGY
Management of Technology can be defined as the process of keeping abreast of the technological developments taking place, planning for implementing the right kind of technology, modifying/altering the prevailing technologies in the firm in order to gain suitable technological competitiveness.
Since technology embraces all aspects of business. Management of technology is concerned with management of technology in all spheres of the business activity, starting from identification of raw material to deliver the products in hands of consumers.
The definition of technology also implies a process that involves the elements of strategic management. Therefore, the definition of the management of technology should also reflect this systematic, strategic approach. Such an approach requires an integration of different disciplines to the management of technology. One of the most commonly cited definitions of the management of technology is consistent with this integration view. Management of technology is defined as linking “engineering, science, and management disciplines to plan, develop, and implement technological capabilities to shape and accomplish the strategic and operational objectives of an organization.”It is necessary that after a technology is implemented, the firm monitors changes that may render the technology obsolete, dangerous, replaceable, or competitively weak.
Example:
A prime example of the need for such evaluation and control is the National Cash Register Company, which was the leading manufacturer of mechanical adding and calculating machines. In the 1960s, the company embarked on a project to build a state-of-the-art manufacturing facility for these mechanical calculators. Just as the facility was being finished, the silicon chip and LED displays were becoming the technology of choice for these products. The technology for silicon chips and LED displays had existed for several years. However, National Cash Register had determined that they would still be the leaders in adding and calculating machines, and the new technology would not replace the need for its products for at least ten years. This turned out to be incorrect; the first hand-held calculators using the new technologies entered the market about the same time as the new facility began production. The company had some very trying years as it adjusted. It did recover and emerged as NCR, but it was a difficult process. Better technology-auditing processes may have prevented those difficulties. Therefore, management of technology can also be defined as follows:
The management of technology is the linking of different disciplines to plan, develop, implement, monitor, and control technological capabilities to shape and accomplish the strategic objectives of an organization. This definition clearly recognizes the role of evaluation and control that many other definitions have omitted.
The Importance of Managing Technology
Now after understanding technology and its management, importance of Managing technology can be discussed? The National Task Force on Technology has listed five specific reasons individuals and organizations should be concerned about the management of technology. These reasons are as follows:
The rapid pace of technological change demands a cross discipline approach if economic development is to occur in an effective and efficient manner to take advantage of technological opportunities.
The rapid pace of technological development and the increasing sophistication of consumers have shortened product life cycles. The result of these factors is a need for organizations to be more proactive in the management of technology.
There is a need to cut product development times as well as to develop more flexibility in organizations. The lead-time from idea to market is being reduced by the emergence of new or altered technologies.
Increasing international competition demands that organizations must maximize competitiveness by effectively using new technologies.
As technology changes, the tools of management must change, but the process of determining what those new tools should be is in its infancy.
The Role of Managing Technology at Enterprise Level
The functional areas where management of technology plays an important in an enterprise can be explained below:
Research and Development activities of the firm.
Integrating the activities of R&D wing with manufacturing departments for carrying out meaningful R&D activities.
Product design/ Product modifications, Process design/ Process modification
Forecasting the technology that the firm may have to acquire/adopt/adapt/ in future.
Managing the technology portfolio of the firm.
Improving technological capacity of the firm in terms of physical resources.
Coordination with stakeholders in the supply chain and customers for smooth diffusion of technology, for cost effective production and for timely delivery of products to customers.
Shortening the product development times.
Conducting technology audit, where by the firm will understand its technology status and need to upgrade technology to required level
Introducing more flexibility in the organization, so that the organization can embrace technological development with ease.
Tools for Managing Technology
This perspective on the role of technology in the firm means that the specific tools necessary to properly manage technology can be very broad. Too often, managers of technology assume that, since the technology is interesting or attractive to them, it will be demanded by the consumer. However, for success, the manager does more than rely on his or her own judgment about the viability of the product. Instead, the manager needs to do things such as:
Analyze the industry structure both domestically and internationally
Understand the firm’s capabilities and those of its competitors
Conduct a financial analysis of the product and firm Forecast future changes
5. DEFINITIONS OF INNOVATION
Now that the definition of technology and its management plus the nature of the tools and decisions related to those issues have been detailed, it is important to define innovation and its management. Innovation is part of technology management, but because of its characterization of having “newness,” it is unique in how it is managed and developed within a business.
The management of innovation requires technology; but the management of technology does not necessarily require innovation. If the processes, products, and structure of the organization are fairly stable and the environment is mature, innovation may not be appropriate. However, managers should be alert for the opportunity to be innovative. Therefore, innovation will be treated as a separate area. Even though innovative processes are part of technology management, firms that undertake a strategic approach that emphasizes innovation and innovative processes have a number of unique issues with which to deal.
Defining innovation is not as easy as it would seem. Most of us think we know what innovation is, but we have our own frames of how to define it. Some have defined innovation as invention plus exploitation. In other words, it is not only the act of creation but the inventor or someone actually taking that product to market and selling it to people. The new definition of innovation argues that innovation is more encompassing and includes the process of developing and implementing the invention. This broader definition is needed because the process elements of innovation are so critical. Thus, preferred and broader definition of innovation, given by Rubenstein, who defined innovation as “the process whereby new and improved products, processes, materials, and services are developed and transferred to a plant and/or market where they are appropriate.” It is important to note that from this definition there are different types of innovations. There can be newness of the product or process, newness of the usage, or a combination of both. The difficulty in managing these different types of innovations varies.
Example:
The most innovative approach is the development of a new product or process to solve a new problem or usage. These types of innovations are usually radical in their influence in change processes. For example, think about how the Internet changed how we work. Another example is the DVD, which illustrates an old process with a new usage. DVDs employ the same basic technology as CDs; however, the means of compression and reading hardware are more advanced. These examples are all product-oriented, but there are also process innovations. Just-in-time (JIT) inventory management is a process innovation that ensures the inputs into a production process are there just as they are needed for the process. Such a process innovation allows firms to save on storage and capital costs. Frequently, product and process innovations are connected. For example, e-mail security that involves virus protection software is a product innovation. But many organizations also deal with the problems of e-mail security by building firewalls to protect company information—a process innovation. It is interesting to note, however, that almost as quickly as new software and processes are developed for protecting a firm’s information, new problems emerge. It is a constant war of innovation.
6. DEFINITION OF MANAGEMENT OF INNOVATION
With innovation defined, how do we manage it? Successful innovation management depends on the top management of the organization’s willingness to commit the resources to allow individuals and groups to recognize “newness” and respond accordingly. This commitment by the top management to innovation, in turn, requires their recognition of several realities. These realities are as follows:
Therefore, management of innovation can be defined as a comprehensive approach to managerial problem solving and action based on an integrative problem-solving framework, andan understanding of the linkages among innovation streams, organizational teams, and organization evolution. It is about implementation—managing politics, control, and individual resistance to change. The manager is an architect/engineer, politician/ network builder, and artist/scientist.
Tools for Managing Innovation
The management of technology involves a much broader scope of continuing and nurturing existing technology than does innovation. Innovation directly involves the discovery and development of new products and/or processes. Most often, when we think of innovation, we think of radically new and inventive products and/or processes. For example, the innovation of the lean manufacturing system pioneered by Toyota has reshaped how manufacturers do business, with techniques such a just-in- time (JIT) inventory now becoming the norm worldwide. However, innovation does not have to be so radical; it may be as simple as using an old product in a new way. Its possible to differentiate the management of technology (MOT) and the management of innovation (MOI), but remember that they are interconnected within the organization. This differentiation helps us better analyze the firm’s actions, but in reality, they are intertwined at a number of levels.
7. STRATEGIC MANAGEMENT OF TECHNOLOGY AND INNOVATION
Strategic Management of Technology refers to the management of technology considering the long term future prospects of the organization. Technology has become the greatest asset of all business firms. In order to meet with both domestic and global competition, a firm has to have a well thought- out strategy for managing its technology. Strategic management of technology has thus become a core business strategy for all firms. This is especially so for production oriented firms where technology and innovation has a great role to play. Developing a technology/acquiring a technology, developing an innovative product or process using technology developed/acquired, launching the product in market, getting customer feedback on product launched, modifying the product/ process based on customer feedback, keeping track of advances in technology, carrying out technology audit of firms for identifying technology status and for and knowing technology to be acquired , fostering technological innovations, keeping abreast of technological developments among the peer group/ competitors etc. are all essential for management of technology and these call for a strategy at every stage. All these activities mentioned above form of chain of activities covering all stages of business. Strategic management of technology refers to having a strategy for every stage in technology development chain. Every stage needs to be managed with a strategy since technology has inherent risk of meeting failure with failure when it is commercialized. When a new technology is developed/ acquired and a new product is brought in the market, it may so happen that the product is not well received in market. At times the product may altogether be rejected by the market. It all depends on many factors. The span of time involved from conceptualization of product idea to commercialization of the product may be very large and the investment required in terms of men, material and financial resources may be huge. In spite of these, a new technology may fail to impress upon customers. This emphasizes strategic management of technology and innovation so that the innovation/technology will be accepted by the customers and the firm will reap the benefit of technology.
Strategic management when applied at each and every stage in technology development chain will help in reducing the cost of production considerably and will add value to product at every stage, thereby making the product a success. Value addition gives the product an edge over the competitor’s products and thus helps the firm gain competitive advantage in the long run. Thus, strategic management of technology will help a firm achieve competitive advantage in long run. Thus strategic management of technology will help a firm achieve competitive advantage in long run.
8. STRATEGIC ISSUES IN MANAGING TECHNOLOGY AND INNOVATION
In this age of hyper competition and innovation, management of technology plays a crucial role. Innovation is the major driver of companies for creation of value.
a) The Role of Management
Due to increased competition and accelerated product development cycles, innovation and the management of technology are becoming crucial to corporate success. New product development is positively associated with corporate performance. Approximately half the profits of all U.S. companies come from products launched in the previous 10 years. What is less obvious is how a company can generate a significant return from investment in R&D as well as an overall sense of enthusiasm for innovative behavior and risk-taking. One way is to include innovation in the corporation’s mission statement.
Eg. Intel: “Delight our customers, employees, and shareholders by relentlessly delivering the platform and technology advancements that become essential to the way we work and live.”
Another way is by establishing policies that support the innovative process. If top management and the board are not interested in these topics, managers below them tend to echo their lack of interest.
b) Environmental Scanning
Issues in innovation and technology influence both external and internal environmental scanning.
(i) External Scanning
Corporations need to continually scan their external societal and tack environment for new development in technology that may have some application to their current or potential products. This is external scanning.
Impact of Stakeholders on Innovation
A company should look to its stakeholders, especially its customers, suppliers, and distributors, for sources of product and service improvements. These groups of people have the most to gain from innovative new products or services. Under certain circumstances, they may propose new directions for product development. Some of the methods of gathering information from key stakeholders are using lead users, market research, and new product experimentation.
Technological Developments
A company’s focusing its scanning efforts too closely on its current product line is dangerous. Most new developments that threaten existing business practices and technologies do not come from existing competitors or even from within traditional industries. A new technology that can substitute for an existing technology at a lower cost and provide higher quality can change the very basis for competition in an industry. Managers therefore need to actively scan the periphery for new product ideas because this is where breakthrough innovations will be found.
(ii) Internal Scanning
Strategists should assess how well company resources are internally allocated and evaluate the organization’s ability to develop and transfer new technology in a timely manner to generate innovative products and services.
Research allocation issues –The company must make available the resources necessary for research and development.
Time to market issues – In addition to money another improvement consideration in the effective management of R&D is time to market. It is an important issue because 60% of patented innovations are generally imitated with in 4 years at 65% of the cost of innovation.
c) Strategy Formulation
R&D strategy deals not only with the decision to be a leader or a follower in terms of technology and market entry but also with the source of the technology.
(i)Technology sourcing – a make or buy decision can be important in a firm’s R&D strategy.
There are two methods for acquiring technology, namely in house R&D is an important source of technical knowledge. Firms that are unable to finance alone the huge cost of developing a new technology may coronate their R&D with other firms through a strategic R&D alliance.
(ii) Technology competence – R&D creates a capacity in a firm to assimilate and exploit new knowledge. This is absorptive capacity. Technology competence is to make good use of the innovative technology purchased by a firm.
d) Strategy implementation
If a corporate decides to develop innovations internally, it must make sure that its corporate system and culture are suitable for such a strategy. It must establish procedures to support all six stages of new product development [idea generation, concept evaluation, preliminary design, prototype build and test final design and pilot production, new business development. Top management must develop an entrepreneurial culture – one that is open to the transfer of new technology into company must be flexible and accepting change.
e) Evaluation and Control
For innovations to succeed, appropriate evaluation and control techniques must be used to ensure that the end product is what was originally planned. Some of these techniques are the stage gate process and the house of quality. Appropriate measures are also needed to evaluate the effectiveness of the R&D process.
(i) The stage-gate process is used by companies such as IBM, 3M, General Motors, Corning, and P&G. Corning’s managers believe that the process enables them to better estimate the potential payback of any project under consideration. They report that the stage-gate process reduces development time, allows identification of questionable projects, and increases the ratio of internally generated products that result in commercially successful products.
(ii) The house of quality is another method of managing new product development. Originally developed at Mitsubishi’s Kobe shipyards, it is a tool to help project teams make important design decisions by getting them to think about what users want and how to get it to them most effectively. It enhances communication and coordination among engineering, marketing, and manufacturing and ensures better product/customer fit. House of quality is a matrix that maps customer requirements against product attributes.
9. MANAGERIAL GUIDELI N ES
To manage its technology and innovation successfully, a firm must be proactive rather than reactive. To promote proactive approaches, a firm should:
Designate clear technology leaders—individuals who champion change;
Know how the processes can work to help and to hinder the development of new technology;
Assess objectively where your firm is on the technology curve;
Assess the strengths and weaknesses of your personnel and your approach to the management of technology and innovation;
Set realistic priorities;
Develop excellent infrastructure to help find and take advantage of potential opportunities;
Understand what the tasks are and how they are connected and disconnected;
Be systematic in your search and assessment processes, but review the system thoroughly to be sure it is still applicable;
Savour every victory and learn from every failure;
Be confident that once you have made a decision, it is a decision that will move you in the right direction.
- SUMMARY
This module has established the foundation for the exploration of management of innovation and technology.
The use of technology continues to expand in business in the India and around the world. This expanding use and impact of technology make the understanding of the management of technology and innovation that much more critical.
The module has defined both technology and innovation and what is needed to manage them.
The focus in these definitions is on multiple dimensions of the concepts, with strategic management playing a particularly critical role
Strategic management of technology and innovation has emphasised on having a strategy for every stage in technology development chain.
Various issues in management of technology and Innovation such as issues pertaining to the role of management, environmental scanning, strategy formulation, strategy implementation, evaluation and control has been discussed in detail.
To manage its technology and innovation successfully, a firm must be proactive rather than reactive. To promote proactive approaches, a firm should follow various managerial guidelines.
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REFERENCES
- Rastogi, P. N. (2011). Management of Technology and Innovation- Competing through Technological Excellence. 2nd Edition. New Delhi: Response Books (Sage Publications Inc.).
- Nagarajan, K. (2015). A Brief course on Technology Management. Ist Edition. New Delhi: New Age International (P) Ltd.
- Margaret, A., Garry, D. (2007). The Management of Technology and Innovation: A Strategic Approach Brief course on Technology Management. Canada: Thomson South-Western.