MBA 651: Management of Technology and Innovation Seminar 1: Introduction

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MBA 651 Management of Technology and
InnovationSeminar 1 Introduction

• Moses Acquaah
• 377 Bryan
• 334-5305

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Outline

• What is Innovation?
• Importance of Technological Innovation
• Impact of Technological Innovation on Society
• Why Strategic Management of Technological
  Innovation?
• Creativity and Innovation
• Sources of Innovation
• Models of Innovation Types

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What is Innovation?

• The act of introducing a new product, device,
  method or material for application to commercial
  or practical objectives
• The creation of new knowledge that is applied to
  practical problems
• Innovation is invention commercialization
• The new knowledge can be technological or market
  related
• Technological knowledge of components, linkages
  between components, methods, processes, and
  techniques that go into a product or service.
• Market knowledge of distribution channels,
  product applications, customer expectations,
  preferences, needs, and wants.

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Importance of Technological Innovation

• Technological innovation is the most important
  driver of competitive advantage in many
  industries
• The increasing importance of technological
  innovation is due to
• (1) Globalization of markets
• (2) Advent of advanced technologies (CAD, CAM,
  flexible manufacturing technologies)
• (3) Advances in information technology

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Impact of Technological Innovation on Society

• Positive Effects
• Fosters increased GDP
• Enables greater communication and mobility
• Improvements in medical treatments
• Negative Effects
• Pollution
• Production technologies can create pollution
  that is harmful to surrounding communities
• Depletion of resources
• Agricultural and fishing technologies can result
  in erosion, elimination of natural habitats and
  depletion of ocean stocks
• Other unintended consequences of technological
  change
• Medical technologies can create
  antibiotic-resistant strains of bacteria
• Positive effects gt negative effects

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Importance of Strategic Management of
Technological Innovation

• Most innovative ideas do not become successful
  new products
• Improving a firms innovation success rate
  requires
• (1) An in-depth understanding of the dynamics of
  innovation
• (2) A well-crafted innovation strategy and
• (3) A well-designed process for implementing the
  innovation strategy.

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Creativity and Innovation

• Innovation begins with creativity.
• Creativity is the ability to generate new and
  useful ideas. It enables individuals and
  organizations to produce work that is useful and
  novel.
• Individual creativity is a function of
• Intellectual abilities
• Knowledge
• Thinking styles
• Personality traits
• Intrinsic motivation
• Environment that provides support rewards

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Creativity and Innovation

• Organizational creativity is a function of
• Creativity of individuals within the organization
• Social process contextual factors that shape
  the way individuals interact and behave
• Structure
• Routines
• Incentives
• Ideas collection systems (suggestion boxes,
  Intranet)

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Sources of Innovation

• (1) Individuals
• (a) Inventors Characteristics of individual
  inventors include
• trained in multiple fields
• highly curious and interested in problems than
  solutions
• question previously made assumptions
• view all knowledge as unified
• have both inventive and entrepreneurial traits.
• (b) Users
• When users create solutions to their own needs.

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Sources of Innovation

• (2) Organizations
• (a) In-house RD by firms
• Help build a firms absorptive capacity ability
  to assimilate and utilize new knowledge and
  information obtained externally.
• (b) Collaborations with customers or other
  potential users of innovation.
• (c) Collaborations with external network of other
  firms that may include competitors,
  complementors, and suppliers.
• Complementors are organizations or individuals
  that produce complementary goods or services
  (e.g., lightbulbs for lamps DVD movies for DVD
  players Camera films for Cameras).
• (d) Collaboration with other external sources of
  scientific and technical information
  (universities government labs).

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Sources of Innovations

• (3) Universities and government-funded research
• (a) Universities
• Many universities have become active in setting
  up technology transfer offices to commercialize
  inventions of faculty.
• Universities also contribute to innovations
  through the publications of research findings.
• (b) Government-funded research
• Invest in RD through own laboratories
• Formation of science parks incubators
• Grants for other public or private research
  entities

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Sources of Innovation

• (4) Private non-profit organizations
• Contribute to innovative activity in a variety of
  ways by conducting both in-house RD, and funding
  development efforts of others
• Non-profit hospitals (10 of top 20 US non-profit
  RD performers in 1997)
• Private research institutes
• Private foundations
• Professional or technical societies
• Academic and industrial consortia
• Trade associations

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Sources of Innovation

• (5) Collaborative networks
• Collaborative networks allow the leveraging of
  resources and capabilities across multiple firms
  or individuals.
• Collaborative networks include joint ventures,
  licensing second-sourcing agreements research
  associations, government-sponsored joint
  research, value-added networks for technical or
  scientific interchange, information networks.
• Collaboration often facilitated by geographic
  proximity, which can lead to the creation of
  regional technology clusters (e.g., Silicon
  Valley Semiconductor firms Lower Manhattan
  Multimedia firms Modena, Italy Knitwear
  firms).
• Especially important in high-tech sectors.

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Models of Innovation Types

• (1) Product innovation vs. Process innovation
• Product innovations are embodied in the outputs
  of a firm its goods and services
• Process innovations are often oriented toward
  improving the effectiveness or efficiency of
  producing or marketing goods or services (e.g.,
  reducing defect rates).
• New product innovations and process innovations
  often occur in tandem
• New processes may enable the manufacture of new
  products
• New products may enable the development of new
  processes
• A product innovation for one firm may
  simultaneously be a process innovation for
  another

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Models of Innovation Types

• (2) Radical innovation vs. Incremental innovation
• Radical innovation
• An innovation that is very new and different from
  existing products and processes.
• The most radical innovations
• Are risky they embody new knowledge, producers
  and customers
• May be relative and may change over time or with
  respect to different observers.
• Incremental innovation
• An innovation that makes a relatively minor
  change from (or adjustment to) existing products
  and processes
• It may not be particularly new or exceptional
• It might have been previously known to the firm
  or industry

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Models of Innovation Types

• (3) Competence Enhancing vs. Competence
  Destroying Innovation
• Competence Enhancing Innovation
• An innovation that builds on a firms existing
  knowledge base (e.g., generations of Microsoft
  Windows and Intels microprocessors).
• Competence Destroying Innovation
• An innovation that does not build on a firms
  existing competencies or renders them obsolete
  (e.g., typewriter vs. word processing slide rule
  vs. calculators).

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Types of Innovation

• (4) Architectural vs. Component Innovation
• Most products and processes are made up of a
  hierarchically nested system of components.
• Component Innovation
• An innovation to one or more components that does
  not significantly affect the overall
  configuration of the system.
• Architectural Innovation
• An innovation that changes the overall design of
  a system or the way its components interact with
  each other.
• Knowledge about a component is required to
  initiate or adopt a component innovation
• To initiate and adopt an architectural innovation
  typically requires the architectural knowledge
  about how the components link and integrate to
  form the whole system.

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Models of Innovation Types

• The categories of innovation types described are
  not independent.
• Each category shares relationships with others
• Architectural innovations are often considered
  more radical and more competence destroying than
  component innovation.
• The categorization of innovation into competence
  enhancing vs. destroying, architectural vs.
  component, or radical vs. incremental depends on
  the time frame and industry context from which it
  is considered.