Chapter 1 Management of Technology and Innovation: An Overview I. Overview: This chapter covers a.

The significance of technology, innovation, and their management b. The meaning of technology and process of managing technology c. The meaning of innovation and process of managing innovation d. How we are going to approach MTI this semester Introduction a. Importance of Technology and Innovation to Business i. Greenspan quote: When historians look back at the latter half of the 1990sI suspect that they will conclude we are now living through a pivotal period in American economic history. New technologies that evolved from the cumulative innovations of the past half-century have now begun to bring about dramatic changes in the way goods and services are produced and in the way they are distributed to final users ii. Examples: Increased use of the internet, many startup firms, changes in large segments of the economy. iii. RFIDradio frequency identification technology is an example. Allows products to be tracked from the time it leaves the manufacturer until it leaves the retail store. Can be used for inventory control, ordering, scanning prices, creating data sets for data mining of patterns of sales, etc. b. Importance of Technology and Innovation to Society i. Some positive results: higher paying jobs, technology based jobs create more jobs. Insourcing of jobs because of technical capabilities. ii. Some negative results: outsourcing of jobs, loss of some skills and some types of jobs iii. Fact: According to the Organization for International Investment and National Centre for Policy Analysis (2004), the U.S. had received three times more value from jobs coming to the US than it had lost from outsourcing (15 year time frame). iv. Fact: According to Fortune, June 2005, US (540,000) is still the dominate force in world-wide technology and engineering. China (160,000) is growing rapidly, India (130,000) is next followed by Germany (100,000).

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c. Technology and InnovationContinuing i. Example is music technology. LPs and 8-tracks have all but disappeared while IPods are growing rapidly. ii. Example in calculation technology. How many of you know how to use a slide rule? III. The Study of Technology, Innovation, and Its Management a. Imperative is Organization-widenot just concerned with the creation of new products and processes, but also with how it affects social, legal, and cultural aspects of life. b. Imperative is Worldwidestudents today own products made around the worldclothes from Malaysia, Indonesia, Italy, etc., electronics from Japan, telephones from Finland, cars from South Korea, etc. Most likely students careers will involve multi-country aspects. Must pay attention to various institutions. i. Regulatory institutionsthe laws and regulations in a given country ii. Normative institutions--the norms of the industry and profession. For example, accountants and medical doctors have similar norms in many different countries. iii. Cognitive institutionscome from the broader society and shape individual behaviorsshaped principally by the culture of a nation. c. Key is Value Creation and the value should lead to profit for the firm. TechnologyDefinitions. Figure 1.1 illustrates discovery to technology. a. Technology is the practical implementation of learning and knowledge by individuals and organizations to aid human endeavor. Technology is the knowledge, products, processes, tools, and systems used in the creation of goods or in the provision of services. i. Organization as a system is an important concept (Figure 1.2) ii. Importance of organizational levels is also recognized (discussed more fully later). b. Management of Technology is defined as linking different disciplines to plan, develop, implement, monitor, and control technological capabilities to shape and accomplish the strategic objectives of an organization. i. This definition clearly recognizes all of the management functions in the management of technology 1-2

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ii. Figure 1.3 shows some areas that influence MTI in the organization

V.

Importance of Managing Technology a. The rapid pace of technological change: i. Demands a cross-discipline approach. ii. Has resulted in shortened life cycles of products b. There is a need to cut product development times and develop more organizational flexibility c. Because of international competition and reverse engineering, the firm must effectively use technologies and be on the lookout for ways to improve. d. The tools for managing must change with the changes in technology. The employee working virtually from home is supervised differently than the employee sitting in the office.

VI.

The Process of Managing Technology a. Making Decisionsprocess must be managed i. Focus on the strategic posture of the firmwhat does the firm want its approach to technology to be ii. Focus on the scope of products or platform of products and processes iii. Focus on actively determining its direction b. Tools for Managing Technology i. Industry analysisdomestic and international ii. Competitive analysis of competitors and relative position iii. Firm capabilities audit iv. Financial analysis v. Forecasting and risk analysis InnovationDefinitions a. Innovation is the process whereby new and improved products, processes, materials, and services are developed and transferred to a plant and/or

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market where they are appropriate. (See Figure 1.4 for Innovation Categories) b. Management of Innovation is a comprehensive approach to managerial problem solving and action based on an integrative problem-solving framework, and an understanding of the linkages among innovation streams, organizational teams, and organization evolution. It is about implementationmanaging politics, control, and individual resistance to change. i. Management of innovation is part of management of technology ii. Managing innovation requires fostering an environment where innovative thought is encouraged iii. Managing innovation involves leading a firm from existing processes and products to something more valuablepurpose of technology is to create value for the firm. iv. Management of innovation creates an environment that is proactive, encourages creativity and risk taking.

VIII.

The Process of Managing Innovation a. Making Decisionscertain characteristics characterize firms that manage innovation well. Among these are: i. Separate funds for innovation ii. Periodic reviews of informal proposals iii. Clear direction and follow-ups iv. Extensive boundary spanning activities that encourage exploration of what others are doing. v. Realistic expectations vi. Openness to newness vii. Individuals who are ask lots of questions, are willing to learn new skills, take risks, and have strong fit between personal values and organizational goals. b. Tools for Managing Innovation (See Figure 1.5)

IX.

Overview of the Study of MTI a. Strategy Perspective: Strategic management is the firms effort to analyze its environment and its own strengths and weaknesses and then

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consciously choose the competitive path it wants to follow. There are typically three distinct processes: planning, implementation, and evaluation and control. b. Making Strategic Decisions c. Tools for Strategic Management X. XI. Organization of the Book (Figure 1.6) Guidelines: (see overhead) To be proactive rather than reactive a firm should: a. Designate clear technology leadersindividuals who champion change. b. Know how the processes can work to help and to hinder the development of new technology. c. Assess objectively where your firm is on the technology curve. d. Assess the strengths and weaknesses of your personnel and your approach to the management of technology and innovation. e. Set realistic priorities. f. Develop excellent infrastructure to help find and take advantage of potential opportunities. g. Understand what the tasks are and how they are connected and disconnected. h. Be systematic in your search and assessment processes, but review the system thoroughly to be sure it is still applicable. i. Savor every victory and learn from every failure. j. Be confident that once you have made a decision, it is a decision that will move you in the right direction. Supplemental readings: The 10 rules of technology management by L. Gary Boomer, Accounting Today, Feb 13, 2006, v 20 i3, p. 20. Cross disciplinary aspects of MTI Aligning the IT organization to boost financials: a well-managed IT organization can be a valuable partner in addressing change and managing risk enterprise-wide. Aligning this awareness with the primary profit drivers involves managing IT as a professional services organization. (Information Technology) Mark D. Lutchen. Financial Executive June 2005 v21 i5 p34(5)

Technology must be managed to be successful 1-5

The 10 biggest CRM mistakes: a good CRM system can help you identify top customers, boost sales, and increase visibility across your organization. But many CRM users get far less than they paid for. Read on to learn where they blundered. (customer relationship management software) Daniel Tynan. Sales & Marketing Management Dec 2005 v157 i12 p30(4) New robot available in Japan so everyone can have a friend at home. TECHNOLOGY. (the Wakamaru, a home-use robot from Mitsubishi Heavy Industries)(Product/Service Evaluation) Kay Itoi, George Hackett, Brad Stone. Newsweek International Sept 19, 2005 p62

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