Technology Management

Course Plan
Hour Topic
Module I
1 Defining Science, engineering and Technology, Introduction to TM, Defining
Management of Technology
2 Scope of TM, Concepts of TM, components of TM, Interdisciplinary nature
of TM
3 Classification of Technology, Evolution of TM
4 Concepts of TM – Firms as value chain, Industries as competitive domain
5 Concepts of TM – Forms of technological change
6 Value creation and competitive advantage, Characteristics of TM
7 Managerial function of TM
8 Implications / Issues of TM
9 Environmental Issues
10 Technological Change
Module II
11 Dynamics of Technological Change
12 Approach to TM
13 & 14 Technology Cycle
15 & 16 Technology flow Process
17 & 18 Tenets of TM
19 & 20 Invention and Innovation
Course Plan
Module III
21&22 Technology intelligence
23 Technology Strategy: An overview
24 Technology acquisition
25 Technology Transfer
26 Transfer of technology from Research to Development
27 Cisco Systems Inc.: Acquisition Integration for Manufacturing
28 & 29 Technology Appropriation
Module IV
30 & 31 Technology Absorption
32 Process of Technology Change : Diffusion
33 Dynamics of Diffusion
33 A model of innovation adoption
34 Factors that drive the process of diffusion
35 & 36 Technology evaluation and assessment: Techniques and Tools
37 Intellectual Property Rights
38 & 39 Case discussions
40 Comprehensive discussions
Dr. Pepper / Seven up Bottling Group
There are many other firms from mature
Industries that are leading examples of
success in managing technological change. For
example, the Dr. Pepper / Seven up Bottling
Group developed the Deja Blue product line.
This is the most basic product imaginable
bottled water. The bottling group has been
able to employ technology to become the low
cost producer in the Industry. Each step of
the production process uses all the technology
possible to lower costs.
Dr. Pepper / Seven up Bottling Group

For example, they designed the production

process to take out curves in the
production line that reduces something as
simple as products falling off the line.
Similarly, the production process is such
that the machinery that fills bottles has
ninety different heads that never have to
stop. The conveyor technology when the
bottle is full is at a slight angle so the
bottles stay upright as they are placed on
pallets. The result is a lower cost
product that has experienced 25% sales
growth per year
Reference Books
 Gerard H. Gaynor, Handbook of Technology
Management, McGraw Hill, 1996
 V.K. Narayanan, Managing Technology and
Innovation for Competitive Advantage,
Pearson Education, 2008
 Tarek Khalil, Management of Technology: the
Key to Competitiveness and Wealth
Creation, McGraw Hill (1999)
 Burgelman et.al “Strategic Management of
Technology and Innovation” Tata McGraw Hill
(2001).
Definition of Science
 Knowledge attained through study or practice
 Knowledge covering general truths of the
operation of general laws, esp. as obtained
and tested through scientific method [and]
concerned with the physical world
 Organized knowledge underlying the practice
is an enterprise that builds and organizes
knowledge in the form of testable
explanations and Predictions about the 
natural world.
Definition of Science
 Science refers to a system of acquiring
knowledge. This system uses observation
and experimentation to describe and explain
natural phenomena.
 The term science also refers to the organized
body of knowledge people have gained
using that system.
 Less formally, the word science often
describes any systematic field of study or
the knowledge gained from it.
Definition of Engineering
 Engineering is the discipline, art and
profession of acquiring and applying
scientific, mathematical, economic, social,
and practical knowledge to design and build
structures, machines, devices, systems,
materials and processes that safely realize
solutions to the needs of society.
Definition of Engineering
 The 
American Engineers' Council for Professional Dev
 (ECPD, the predecessor of ABET) has
defined "engineering" as:
 The creative application of scientific principles
to design or develop structures, machines,
apparatus, or manufacturing processes, or
works utilizing them singly or in
combination; or to construct or operate the
same with full cognizance of their design; or
to forecast their behavior under specific
operating conditions; all as respects an
intended function, economics of operation
and safety to life and property.
Definition of Technology

 Purposeful application of information in the design,

production, and utilization of goods and services,
and in the organization of human activities.
 Technology is the means for accomplishing a task –
it includes whatever is needed to convert
resources into products or services
 Technology, includes the knowledge and resources
that are required to achieve an objective
 Technology is the body of scientific and
engineering knowledge which can be applied in
the design of products and/or processes or in the
search for new knowledge
Technology is…
 Process by which humans modify nature to
meet their needs and wants
 relationship of society with its crafts and tools,
and to extent to which society can control its
environment
 collection of techniques
 application of science, maths and arts

Technology Concept

Technology

Embodied in

Machines Skills

KNOW-HOW – KNOW-WHY
Processes
Designs – Drawings
Property Rights
Training - information
Technology concept
 Technology is a combination of hardware and
software
 Hardware is any physical product, component or
means
 There are two types –End-use product and
production tools equipment and machinery
 Software is the know-how or, technique or
procedure
 There are two types: Know-how and Know-why
 Know-how – is the technology such as process,
techniques, methods
 Know-why – is the type of technology such as
knowledge, skills and experience
Technology
 Technology consists of three components
 Hardware – The physical structure and logical
layout of the equipment or machinery that is
to be used to carry out the required tasks
 Software – The knowledge of how to use the
hardware in order to carry out the required
tasks
 Brainware – the reasons for using the technology
in a particular way. This is referred to as know-
why.
Technology and Science compared

Technology

Science


 Involved with our human  Involved with our natural world

created world / universe
 Concerned with “how to?  Concerned with “what is?
 Knowledge created and being
created  Knowledge discovered and
being discovered
  Detached. Generates
 More directly involved
knowledge for its own sake
 Guided by trial and error or
skilled approaches derived  Guided by hypothesis deduced
from the concrete from theory
 Used in combination with such  Used in combination with such
words as : Application,
Instrumental principles, words as : Theory,
response to perceived theoretical principles,
needs, effectiveness, Research, generalization
invention, innovation etc. from theory a

Technology and Engineering Compared

Technology

Engineering


 Involved with our  Involved with

human created and utilizing the
controlled world materials and
 forces of nature for
 Guided by trial and the benefit of
error or skilled mankind
approaches derived  Guided by a more
from the concrete theoretical study
 with specific
solutions
recommended
Management
 Art of getting people together to
accomplish the desired goals
 Management comprises
 Planning
 Organizing
 Staffing
 Directing
 Controlling
 Manages deployment and manipulation of
human resources, financial resources,
technological resources and natural
resources
Management of Technology
Technological


Technology

innovation
 Technology is an  Implies new
application of technology,
knowledge that creating new
leads to production products and
and marketing of services – hence
goods and services new business
 opportunities
 Innovation is the
fundamental to
economic
development
Management of Technology
 Managing technology means using new
technology to create competitive
advantages
 (Technology development, technology adoption
and adaptation, technology transfer etc – will
be discussed during technology cycle)
 Successful business use of technology
requires strategic decisions about
technology by personnel in other areas, such
as production, marketing, sales, finance and
so on.
 Thus, two cultures – technical and financial
need to be bridged, and management
should integrate technology strategy with
Management of Technology
 A discipline of management wherein an
organization leverages the technological
fundamentals to create competitive
advantage
 An integrated application of engineering,
science and management capabilities
 Process of MOT includes
 Identification of technologies
 Selecting
 Procurement
 Assimilation
 Exploitation of technologies for production of
goods and services
 Why Technology Management now?

 … driving changes in the business landscape

 … no longer limited to supporting business
decisions
 … breaking down traditional industrial
boundaries
 … redefining a new era of competition

But still …
… people have been and will continue to express

disbelief – here is how..,

R a d io a n d Te le visio n
Te le visio n w ill n o t b e a b le to h o ld o n to a n y m a rke t
it ca p tu re s a fte r th e first six m o n th s. Pe o p le w ill
so o n g e t tire d o f sta rin g a t a p lyw o o d b ox e ve ry
n ig h t.
- D a ryl F. Z a n u ck , H e a d o f 2 0 th C e n tu ry -Fox , 1 9 4 6
C o m m u n ica tio n
W e ll in fo rm e d p e o p le kn o w it is im p o ssib le to
tra n sm it th e vo ice o ve r w ire s a n d th a t w e re it
p o ssib le to d o so , th e th in g w o u ld b e n o p ra ctica l
va lu e
- Editorialin the Boston Post , 1865

C o m p u te rs
T h e re is n o re a so n fo r a n y in d ivid u a lto h a ve a
co m p u te r in th e ir h o m e
-K e n O lso n , Pre sid e n t o f D ig ita l C o rp o ra tio n , 1 9 7 7
-
I th in k th e re is a w o rld m a rke t o f m a y b e o f five
co m p u te rs
- T h o m a s W a tso n , C h a irm a n , IB M , 1 9 4 3

640 K (internal memory) ought to be enough for anybody

- Bill Gates, Microsoft, 1981
Rate of Technological change
Why MOT?

 Rapidly changing technology which is
changing every industry and every business
 Rapidly increasing competition which will
eventually envelop every market niche, no
matter how sheltered.
 Increasingly efficient financial markets
requiring ever shorter term returns.

Evolution of Management of
Technology
1950 1970 1980 1990s

R &D M anagem ent of Te ch n o lo g y V a lu e B a se d

M a n a g e m e n t In n o va tio n S tra te g y M anagem ent

E ra o f Ple n tifu l R e so u rce s E ra o f A cco u n ta b ility

N e w ve n tu re Lin kin g to B ro a d e r visio n

d ivisio n s b u sin e ss o f te ch n o lo g y
A llo ca tio n o f In n o va tio n M g m t. D iffe re n t o rg . O u tso u rcin g
Fu n d s to p ro je cts a rra n g e m e n ts

Scientists & Tools to assess

Engineers values

Leadership Internal Markets

R & D Manager Chief Technology officer

 Classification of Technology
 Technology is generally divided into five
categories
 Tangible: blueprints, models, operating 
manuals, proto types
 Intangible: consultancy, problem solving, and
training methods
  High: entirely or almost entirely automated
and intelligent' technology which
manipulates ever finer matter and ever
powerful forces.
 Intermediate: semi-automated 'partially
intelligent' technology that manipulates
refined matter and medium level forces.
 Low: labor intensive 'dumb' technology that
Classification of technology
 New Technology
 Emerging Technology
 Appropriate Technology
 Codified Vs Tacit Technology
 High Technology
 Medium Technology
 Low Technology

Levels of Development

Descriptive Flow chart



First level - Individual

develops tacit
knowledge
Second level – tacit
knowledge is codified
Finally – there is a
level of development
where the knowledge
is put to use –
physically embodied
in the products

Further Classification of Technologies
 State of the art technologies : those
technologies that equal or surpass the
competitors
 Proprietary technologies: those technologies
protected by patents or secrecy agreements
that provide a measurable competitive
advantage
 Known technologies: those technologies that
may be common to many organizations but are
used in unique ways
 Core technologies: those technologies that are
essential to maintain a competitive position
 Leveraging technologies: those technologies
that support several products, product line, or
Further Classification of Technologies
 Supporting technologies: technologies that
support the core technology
 Pacing technologies: technologies whose rate
of development controls the rate of product or
process development
 Emerging technologies: technologies that are
currently under consideration for future products
or processes
 Scouting technologies: formal tracking of
potential product and process technologies for
future study or application
 Idealized unknown basic technologies:
technologies that, if available, would provide a
significant benefit in some aspect of life
 E xte rn a l te ch n o lo g ie s

B a sic Te ch n o lo g ie s

D istin ctive te h n o lo g ie s
Core Knowledge needed for MOT
Interdisciplinary Nature of MOT
Management of Technology
 MOT implies managing the systems that
enable the creation, acquisition and
exploitation of technology.

 It involves assuming responsibility for
creating, acquiring and spinning out
technology to aid human endeavors.
Key concepts of MOT
To develop ideas about the management of
technology within an open system, four
major concepts are employed:
Firms as value chain
Primary activities
Support activities
Industries as competitive domains
Capacity driven
Customer driven
Knowledge driven
Forms of technological change
Product technology
Process / production technology
Value creation and competitive
advantages
Porters Model of Value Chain
Classification of Industries
Value creation and competitive
advantage
 Competitive advantage is the ability of the
firm to outperform its competitors on
profitability
 It depends on how the firm is able to create
value for its customers that exceeds the
firms cost of creating a product
 Value is what the customers are willing to pay
Forms of Technological Change
 Process Technology
 Techniques of producing and
marketing goods and services
 It includes work methods,
equipment, distribution and
logistics
 Product Technology
 Refersto the elements of
technology embodied in the
goods and services of a firm
Evolution by Ages
Evolution by Production Technology
Four Characteristics of MOT
Opportunity: The art of perceiving the triggering
event for technology development; it is truly a
human activity.

Appropriability: Where the technology
development is due to economic motives,
individuals will pursue development only to
the extent that there is a reasonable
assurance that the fruits of their labor will flow
back to the developers.

Transferability: Technology or knowledge
transfer is not smooth; knowledge is sticky.

Resources: Technology development consumes
resources.
The Creation-Application Spectrum
 Research Research Research Research Research
Development Development Development Development Development
Phase I Phase
DesignII Phase
DesignIII Phase
DesignIV Phase
DesignV
Manufacturing Manufacturing Manufacturing Manufacturing
Marketing Marketing Marketing
Sales Sales Sales
Physical Distribution Physical Distribution Physical Distribution
S Customer service Customer service Customer service
Information systems Information systems
C Human Resources Human Resources
Finance Finance
O Purchasing
Patent and Legal
Purchasing
Patent and Legal
P Public Relations
General
Public Relations
General
Administration Administration
E Customers
Suppliers
OF Other influences
(Internal; External)
M
O
T
Phase III
 Successfulimplementation of Phase
III depends on:
 An understanding for resource
capabilities
 An evaluation of the infrastructure
 A definition of the decision criteria
 A well defined statement of purpose
 A project specification
 And an evaluation and validation of
assumptions
System Model: Resources.
Infrastructure and Activities
Resources N IH S ynInfrastructure
d ro m e Activities
People Purposes Business
Intellectual Property Objectives Management
Information D e te rmStrategies System
in e h o w p e o p le re sp o n d s to th e o rg . p u rp o se s
Organizational Organizational structure Project
characteristics To ta l tim e
Technology Guiding principles
C ycle tim e a n d tim in g
Functional
Time Policies and practices Group
Customers Management attitudes Individual
Suppliers Management expertise External
Plant and equipment Support for innovation
Facilities Acceptance of risk
To p d o w n a n d B o tto m u p
Finance Communication
Phase IV and V
 Phase IV Adds the administrative
functions. It includes functions
such as human resources,
finance, purchasing, patent and
legal, public relations and
general administration

 Phase V adds customers,
suppliers and other internal and
external influencers
SMALL CASE ON LINUX
 Linux is an operating system created by
Linux Torvalds, a Finnish student. The
operating system is offered free and has
become the leading competitor to
proprietary operating systems like UNIX
and Microsoft.
 The heart of the system is referred to as
the Linux kernel, which is the code that
forms the basis of any firm’s operating
system. The firm is then able to take the
code and build on it. This adaptability
has led firms such as IBM and HP to use
Linux as their operating system.
SMALL CASE ON LINUX
 The development of Linux demonstrates a
consistent themes in many technological
areas. The predicted pattern of
development is difficult to predict.
 Firms must constantly scan the business
horizon for changes that are occurring
and look for the unexpected. A free
operating system that becomes the back
bone of many firm’s efforts would have
been difficult to predict five years ago.
Today, however the resource is widely
used around the world.
SMALL CASE ON LINUX
 What type of technology does
Linux represent – continuous,
disruptive or next generation?
 Explain what such classification
of type of technology would
mean for competitors and
consumers.
What is continuous technology?
 When there are no major changes
that occur at one time
 This progression is designed to
change an existing technology but
not change its functionality
 The innovation is aimed at improving
performance, function, and/or
quality at lower cost

 Opposite is radical technology
If Linux is considered as continuous…
 Competitors –
 Evaluation and control
 Planning
 Implementation
 Consumers
 Bargaining power
 More variety
 Compare quality and performance


SUBSTITUTE PRODUCT
Topics discussed so far
 Definition of science, engineering and
technology
 Technology concept (know-how and know-
why)
 Interdisciplinary nature of MOT, Spinning out
technology
 Why technology management?
 Evolution of MOT
 Classification of MOT
 Levels of Development
 Key concepts of MOT
 Scope of MOT and the resources and
infrastructure
Managerial function of MOT

B u sin e ss S tra te g y
Te ch n o lo g y
Te ch n o lo g S tra te g y
y fo re ca sts
Te ch n o lo g y R &D
K n o w le d g e
D e ve lo p m e n t a n d Pro d u ct a n d Pro ce ss
M anagem ent
u tiliza tio n Te ch n o lo g y
In fo rm a tio n
Te ch n o lo g y N PD
M anagem ent
a cq u isitio n a n d
tra n sfe r

C o m m e rcia liza tio n

V a lu e ch a in M a n a g e m e n t
Pro d u ct Life cycle
m anagem ent
 Managerial functions of MOT
Identification Selection
§Technology assessment §Technology forecasting
§Pre selection Framework §Benchmarking
§Technology / Market §Decision criteria and
scanning Process
§Information Management §Monitoring / Improvement
Pro te ctio
n
Id e n tify o p tio n s
E sta b lish
Exploitation stra te g y Acquisition
§Customer – supplier M o n ito r §Internal R & D
Network §Licensing and Joint
§Incremental Development e ffe ctive n e ss ventures
§Product Management §Organizational change
§Complementary Assets §Project Management
§Technology Insertion

Source: Gregory : 1995

Audit Forecasting Selection & Plan Acquisition Exploitation
Assess utilization of •Assess the •Analyze Cost; Obtain and •Upgrade
existing technology* development trends Techno-Economics; comprehend: Technology after
 of all the Adaptability; •Detail Project Induction*
Identify the gaps technologies Flexibility; Time Report
 available* Frame; and  •Document; modify
Priorities areas for Competitors’ Strategy, Contract Standard Operating
new inputs in •Analyze competing for the competing Manuals Practice
technology from: alternatives; Costs; alternative Training

–Incremental Techno-Economic; technologies Commissioning •Transfer to market

Improvement Adaptability; and Assimilate the or in house it after up
Schemes* Environmental •Match the Corporate technology gradation
–Modernization Compatibility* Needs with the procured through
Program Technologies use; and
–Major Technology •Compare available and identify •Improve Standard
Development technology from in- the gaps to be Operating Practice*
Program* house (R&D) and bridged*
external sources *
•Prepare a
comprehensive
‘Strategic Technology
Plan’.
 Technology Cycle

TECHNOLOGY AWARENESS
Of marketable inventions
Need driven
expectations

TECHNOLOGY ABANDONMENT TECHNOLOGY ACQUISITION

OBSELESCENCINGEXTERNAL AND INTERNAL ENVIRONMENT
by self-generation or transfer
Factors affecting the technology user

Demolition Installation

TECHNOLOGY ADVANCEMENT TECHNOLOGY ADAPTATION

tion involving major modifications of acquired technology
minor modifications of acquired technology for spe

Promotion
Technology Awareness
 Technical Intelligence
 Technology Environment - definition,
classification, …
 Technology Change
 Technology Life cycle
 Technology Acquisition STRATEGIC
DECISION
 Technical feasibility – Definition,
classification, scope,...
 Economic feasibility
 Technology Adaptation APPROPRIATION
 Relevance of particular technology to a
company’s present needs (minor
modifications)
Four Characteristics of MOT
Opportunity: The art of perceiving the triggering
event for technology development; it is truly a
human activity.

Appropriability: Where the technology
development is due to economic motives,
individuals will pursue development only to
the extent that there is a reasonable
assurance that the fruits of their labor will flow
back to the developers.

Transferability: Technology or knowledge
transfer is not smooth; knowledge is sticky.

Resources: Technology development consumes
resources.
The Framework for Technology
Goals and strategies of a Firm
 A firm’s goals and strategies represent the
aggregate of its products, technologies, and
services
 For such goals to be credible they must be
linked directly to the set of development
projects the firm intends to undertake
(referred to business architecture)
 A business architecture in MOT identifies what
business parameters to address to make a
good business decision regarding key
problems encountered in achieving
objectives and goals of the strategies of a
new development project
Development Chain
 The development of any product or service
includes the following chain of acceptance
steps:
 The research and development of an idea or invention
 The competitive evaluation of the idea
 The research required in technologies to develop the
idea
 The transfer or purchase of a selected technology for
support of a process, a component of a product, or a
further development of the technology for its own
marketability
 The acceptance of a proposal to develop the product
 The acceptance of the design of the product and/ or
technology
 The acceptance of the product’s manufacturability i.e.
at the volumes and specific quality levels required
Business Architecture
 It is necessary to look at the general
development steps and identify key
check points in decision making that
relate to business parameters
 These steps have a business assessment
criteria associated with them for which
there must be a payoff
MOT Flowchart
 The flowchart shows
the practice of
technology
management in
responding to the
business.
 The model shows a
process that
identifies major
development steps
starting with
technology
research leading to
an ultimate
customer payoff
Business Architecture
 There are two phases of
architecture


 Research and technology phase


 Product development phase
Research and Technology Phase

Technology Transfer Funding

Transfer Pricing
Technology Make Vs Customer
Research Buy Requirements
Creativity and Risk
Technology
Innovation Analysis
Forecasting
Competitive Competitive
Analysis Reverse Engineering
Productivity Advantage
Research / Industry
Development Invention Analysis
Analysis

Technology Goals Payoff Business Goals

Product Development Phase
Market Market Revenue
Acceptance Segmentation
Software and Parts, CIM, Return on
Manufacturing CFM Assets
Acceptance
Design / Tech CAD / Customer
Acceptance Packaging Requirement
Market Driven Business
Proposal Opportunity Analysis Case
Acceptance

Product Goals Payoff Business Goals

Technology Awareness
Technology Awareness
 1. Technology Environment
 1.1 Actors (Developers, Facilitators)
 1.2 Dynamics (Autonomous, Induced)
 1.3 Current Environmental Trends (Globalization,
Time compression, Technology Integration)
 2. Technology Change
 2.1 Overview of the dynamics of technological
change (innovation)
 2.2 Technology Evolution
 2.3 Implications for the management of
technology
 2.4 Dynamics of Diffusion
 2.5 A model of innovation adoption
 3. Technology Intelligence
1. Technology Environment
Scope
 What is meant by environment and
technological environment in particular?
 Who are the main actors in the
technological environment?
 How do changes occur in the technological
environment?
 What are some of the major current
developments in the technological
environment?
 What are some of the major current
developments in the technological
environment facing firms?
Introduction
1. Technological environment can be viewed
as a network of organizations
consisting of developers and facilitators.
2. Technology development occurs in

stages. Each stage then provides the

basis for development in ensuing stages.
3.The way in which technology develops is

not determined solely by a developer.

National and often international, political
considerations will drive technological
development.
Levels of Environments
Task Environment
 Itrefers to the set of customers,
suppliers, competitors and other
environmental agencies directly
related to the firm
 The task environment is more or less
specific to a firm and is not
necessarily shared by its
competitors
Competitive Environment
 Itcomprises of the firm and its
competitors
 New entrants, substitute
products, suppliers, customers
and competition influence what
happens in an industry
 The factors affect different
competitors differently
Macro Environment
Technological Environment
 Technology environment is the most
visible and pervasive macro-
environmental segment in a
society:

1.Brings new products, processes and
material
2.Directly impacts every aspect of the

society around us (entertainment,

communications, health care,
Transportation modes)
3.Alters the rules of global trade and
Technology Environment
 It comprises two institutions
 New knowledge (Science)
 The application of the knowledge to
develop new products, processes and
materials (Technology)
 Thus,Technology Development
consists of two sets of activities
 Creation of knowledge and
 Application of that knowledge
Creation of Knowledge
 The knowledge base of technology is
derived from basic research
 The basic research focuses on generating
scientific knowledge and deal with
fundamental question of science
 Scientific research is often cumulative
 Research questions begin in some current
state of scientific knowledge; these
questions stimulate research projects from
which scientific results are published in
scientific literature
Application of Knowledge
 Scientific knowledge is put into
practice to design an innovation
that will solve a perceived need or
problem.
 Researches involved in application
are the main consumers of basic
research
 The end result of their efforts is often
a product prototype that may have
commercial potential
Application of knowledge
 Activities of application knowledge:
 Applied Research: consists of scientific
investigations of known phenomena that do not
typically advance scientific knowledge
 Development: reduces the knowledge to practice
in workable prototype form
 Engineering: defines the knowledge for
commercial exploitation or other practical end
users
 Commercialization: includes activities such as
manufacturing that finally put the technology to
use till it becomes adopted and used by others

1.1 Types of actors in the environment
Roles of corporations
1.As technology developers, they are drivers
of change in the technology environment
2.Beneficiaries of technology change

initiated by others.
3.Facilitate technology development by

others external to the firm through

investments in their research projects.
4.Corporations may also be the victims of

technology change created by others.


Innovation Networks
 Inthe technological environment,
inter-linkages develop between
numerous organizations.
 Interconnections among technology
developers
 Industry-university linkages
 Alliances
 Interconnections among technology
developers and facilitators
 Incubation
 Government agencies
Innovation Networks
 Networks facilitate the flow of information,
resources, personnel and other inputs
necessary for technology development and
diffusion
 Networks speed technology development for
several reasons
 Assist in the diffusion of technology
 Crease a critical mass of skill that speed
knowledge development
 Provide a social safety net for individuals.
Because technology development in risky

1.2 Changes in Technological
Environment
 Changes in the technological
environment often come about in
two interrelated ways:
 Induced changes
 Represents the technological
consequences created by social,
political, or economic forces.
 Autonomous changes
 These changes are initiated by
technology developers but are largely
independent of the forces in other
macro-environmental segments.
Influence of Regulatory Environment
 The influence of the political/regulatory
environment is felt in at least three ways:

1.It influences the thrust of major basic
research
2.It can facilitate or impede every phase of

technology development
3.It can act as a facilitator of private sector

technology development
Autonomous Changes
 Autonomous changes in technology
are drivers of fundamental social
and economical change
 Social change
 The first stage corresponds to
agriculture
 The second stage corresponds to
machine production
 The third stage refers to the information
revolution triggered by advances in
computer technology.
Long wave theory of Economic change
 A reciprocal linkage exists between
technological and economic segments
 Long wave theory works as follows
 First, discoveries in science trigger
technological innovation
 Second, new industries are formed around
these markets, and continued innovations in
these newly formed industries expand the
markets
 Third, as technology matures, many
competitors enter internationally, eventually
creating excess capacity that in turn
decreases profitability
 Finally, business failures, unemployment, and
A Comparison of Toffler’s Three
Waves

Technological
Development
1.3 Overview of Trends in Technology
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
 Decreasing payback periods
 Technology Integration
 Combining technologies to develop new products
 Combining technologies to commercialize products
The Impact of Trends on Institutions
Process of Technology Change
Technology Change
 Technology change consists of two
closely linked processes:


 Innovation


 Diffusion
Focus of Technology change
 What are the different types of
innovation?

 What are the dynamics of technology
evolution?

Invention and innovation
 Invention is a new combination of
preexisting knowledge
 Innovation includes:
 A technological change new to both
enterprise and the economy
 A change that has diffused into the
economy and is adopted by the firm
Dynamics of Technological Change

 Firm Level


 Technology Level
Firm Level
 Technological change may be described as
a process of problem solving.

 Four stages in the process of problem
solving
 1.Problem Recognition
 2.Technology Selection
 3.Solution Development
 4.Commercialization / implementation
A model of problem solving
Technology Level
Technological change displays evolutionary dynamics
that are not controlled by a single firm
Actors of these changes

1.Technology developers, which typically are firms

involved in innovation in their pursuit of competitive

advantage
2.Technology facilitators, who may provide the

resources for financing and executing the innovation

efforts
3.Customers who are interested in the fruits of

technology development and who will shape the

direction of development
4.Regulatory agents, the governmental bodies and

others who shape the form of products and processes

by establishing standards or specifications and
5.Other stakeholders, who may be the beneficiaries
Implications for the MOT


1.Innovation, imitation and adoption



2.The role of technology and market



factors


3.The centrality of learning


Innovation, Imitation and Adoption
 When a firm innovates,
two different groups of
players respond to the
innovation
 Customers – makes
decisions to adopt
or not to adopt the
innovation
 Competitors – may
decide to copy the
innovation. This is
referred as
imitation
 Innovation and
Imitation are supply-
side concepts
 Diffusion is a demand-
The role of technology and market
factors
 For a technological
change to be
successful the
firm has to
manage two
related processes
 Finding effective
solutions to a
problem and
 Gaining acceptance
of the solution in
the market place
The centrality of learning
 Three major mechanisms of learning
 Environmental surveillance through technical
and market intelligence.
 Experimentation within firms whereby firms can
learn problem solving by simulation and by
trial and error.
 Imitation through competitive intelligence.


 Multifaceted Learning lies at the core of

Technological change

Technological Change
 Technological change consists of two
closely linked processes:


 Innovation

 Diffusion

Innovation

 What is innovation?
 What are the different types of innovation?
 What are the dynamics of technology
evolution?
 What are the characteristics of innovative
firms?




What is Innovation
 Innovation includes both:
 A technological change new to both enterprise
and the economy.
 A change that has diffused into the economy
and is adopted by the firm


 Innovation refer both to the output and

the process of arriving at a
technologically feasible solution to a
problem triggered by a technological
opportunity or customer need
Process and Output: Innovation


 Process
 –Innovation refers to the process by which
individuals or organizations arrive at a technical
solution.
 Output
 –Innovation to refer to a product or service i.e.
the output of the innovation process



Components of Innovation
 As outputs all technological innovations have
three components:
 A hardware component consisting of the
material or physical aspects of the
innovation
 A software component consisting of the
information base that is needed to use the
innovation
 An evaluation information component
consisting of the information that is useful
for decisions related to the adoption of the
innovation

Components of Innovation
 The components form a system.
 If any component of a specific innovation is changed,
other components will need to be changed also so as
to render the innovation user friendly.
 The hardware and software components are
intrinsic to the technological innovation.
 Domination of the component: Hardware
dominant/ Software Dominant
 Third component is not intrinsic and refers to the
information accompanying an innovation that
enables firms or individuals to evaluate its
usefulness.
Firm level innovation
Drivers of Innovation
 Environmental Factors
 Market factors
 Appears to have a primary influence on innovation.
 Input factors
 Rising costs of inputs, trigger innovations aimed at
reducing the use of the expensive inputs
 Autonomous factors
 Intellectual curiosity
 Technological possibility

Process of Innovation
 Two types of innovation process
 1.Market pull
 Is the advancement of technology oriented
primarily toward a specific market need,
and only secondarily toward increased
technical performance.
 2.Technology push
 Is the advancement of technology oriented
primarily toward increased technical
performance, and only secondarily
toward specific market needs.
Types of Innovation outputs
 Two dimensions to classify an innovation
 1.Degree to which specific technologies in an
innovation depart from earlier ones, or what
we will call component knowledge
 2.Degree to which configurations among
technologies in an innovation depart from
earlier one, or what we will call component
configuration

Four major types of innovation
 Incremental innovations: Requires only minor
improvements to the existing system
 Modular innovations: refer to significant changes in
elements of products. The implementation requires would
require an understanding of the new components of the
system
 Architectural innovations: It requires the new
knowledge on how existing components can be configured
into a new system. No significant knowledge is required
concerning the components themselves
 Radical innovations: They are non-aligned with
organizational skills and capabilities of the firm
Classification of Innovations
Pr
od
uc
t

Process
Classification of Innovations for
Products, process and services
Innovation
 The process of innovation
 Long term vs. short term, inside vs. outside the
organization
 The economic impact of innovation
 Potential for wealth creation
 The role of a manager in the Innovation
process
 Long term technological vision vs. planned and
managed



The Process of Technology Innovation
Technology Evolution
Characteristics of Technological
Change

 S-curve of technological evolution
 Technology progression
 Level of technology development
 Technology change agent
 Evolutionary characteristic of technological
change
 Uncertainty and technological insularity
S Curve of technology evolution
 Technology evolution refers to the changes in
the performance characteristics of a specific
technology over time
 Phases of S-curve
 Emergence – when the technology has come into
existence but shows little improvement in its
performance characteristic
 Rapid improvement – when the performance
characteristic improves at an accelerating pace
 Declining improvement – when the pace of
improvement declines
 Maturity – when further improvements become very
difficult to achieve
 The Industry Life
Cycle as an S curve

Performance Maturity

Takeoff

Time
Why S-curve for evolution?
 Learning Processes
 In the first stage, the learning generates a more
or less reliable design and production process
 In the second stage, the learning curve effects
produce rapid improvement in the
performance characteristics
 Technology Limits
 Technology is constrained by physical limits
 Improvements beyond physical (technology)
limits are harder to come by

 The S-curve Maps Major Transitions

Maturity

Performance
Discontinuity
Takeoff

Ferment

Time
But they also create major
opportunity
 Corning glass
 Cookware to optical fiber 

 HP 

 Instrumentation to computers
 IBM
 Mainframes to PCs to Services
 Eli Lilly
 “Random” drug discovery to genetics and
genomics
Technology Progression
 Technology progression describes the process
by which new technologies emerge to make
existing technologies obsolete.
 Technology evolution represents the
incremental evolution of technology over
time.
 Technology progression represents the radical
breakthroughs that significantly replace
current technology
 Technology progression may be described
using a series of S-curves
Technology Progression
Levels of Technology Management
 Basic research – conducted without a practical
application or a problem at hand
 Applied research – basic research result have
to ‘age’ before they can be packaged into a
useful innovation
 Development – Major technological advances
required a cluster of innovations
Technology change agents

 Innumerable
 Vary significantly across the levels of
technological change

Evolutionary characteristics of
technical change


 Simultaneous development of innovations at

multiple levels by numerous change agent
present evolutionary characteristics on
technological development
 Those who are involved in technology
development the so called radical changes will
be seen as an accumulations of incremental
innovations
Uncertainty and technological
insularity
 Great degree of uncertainty
 They cope with this uncertainty by engaging in a process of
learning, gathering information, experimentation and
imitation. Innovation development requires information
concerning:
 The performance of innovation they are seeking to create or
adopt
 Materials and components they are fabricating into the
innovation
 Competitors innovations, the nature of existing patents, and
government policies affecting their proposed innovation;
and
 The problems faced by consumers in the market and how the
proposed innovation might solved certain of these
perceived problems
Innovation process is driven by the exchange of


technological, market and other environmental

information in the face of high uncertainty
Technical Insularity
 The search for or dissemination of technical
information embedded in an innovation is
governed by the principle of technological
insularity
 The principle of technological insularity
suggest that a characteristic feature of
technical know-how is that it is not easily
transmitted

Reasons for Technical Insularity
 Technology evolves – evolves because of
accumulated experience of the individuals.
Thus first hand knowledge is crucial to the
evolution of performance characteristics.
Knowledge is not easily transferred
 Technical know-how is not easily accepted by
individuals not involved in its production.
Such know-how requires abandoning of old
concepts or concepts that have not been
proved useful
Uncertainty and technological
insularity


 Technology insularity leads to



 Spatial clustering

 Temporal clustering



Factors influencing the process of
innovation in organizations
Summary of factors stimulating
innovation
 Integrating Technology Push and Market
pull to Stimulate Innovation

O p p o rtu n itie s fo r
O p p o rtu n itie s fo r Te ch n o lo g y Pu sh In n o va tio n
M a rke t Pu ll

Scientific discoveries
Applied Knowledge Market demand
Recognized needs Proliferation of
Intellectual capital application areas
(scientists and Recognized needs
engineers) Opportunities for
increased profitability,
quality, productivity
Entrepreneurs
Influence of environmental trends on
innovation
 Three environmental trends
 Globalization
 Time compression
 Technology integration
Three key managerial implications
 Successful management of technology
requires that the problem solving within the
firm should take into account both technical
and market considerations.
 Learning through environmental intelligence,
innovation and imitation are central to
effective problem solving.
 Development of problem solutions can be
accomplished either in-house, in
collaboration with other or simply by
adopting innovations from outside.
Critical factors in managing technology
 The creativity factor
 The link between science and technology
 Types of innovation
 Creativity and innovation
 Bringing innovation to market
 Technology-price relationship
 The timing factor

Process of Technology Change

Diffu s io n
Diffusion

 What is diffusion?
 What are the dynamics of diffusion?
 What attributes of an innovation
facilitate or hinder diffusion?
 What factors drive the process of
diffusion?
T-M Matrix
What is diffusion


 Diffusion is the process by which an
innovation is propagated through
certain channels over time
among the units of a system.



Diffusion Vs Imitation
Dynamics of Diffusion
 S-curve of diffusion
 Rate of diffusion
 Potential set of adopters
 Reinventionduring diffusion
 Mechanisms of diffusion
 Technology substitution
 Bandwagon effect

Four Phases of diffusion
1.Emergence characterized by a slow advance in
the beginning, suggesting that adoption
proceeds slowly at first when there are few
adopters.
2.A rapid growth phase, when adoption rate

accelerates until half of the individuals in the

system have adopted.
3.A slow growth phase, where the rate of growth

declines, but adoption continues.

4.Maturity, the final stage, where the diffusion

almost comes to a halt, either as a result of

market saturation or the introduction of a new
product, process, or service into the market that
replaces the existing innovation.
Differences in diffusion speed
S-curve diffusion
Reinvention
 Reinvention refers to the dynamics by which an
innovation is changed or modified by the users
as they adopt and use it.
 Four ways in which reinvention occurs:
 Improvement in the design and performance
characteristics of an innovation may be necessity for
its further adoption by adopters (dominant design)
 As an innovation diffuses, a standard model may
emerge and speed the adoption process (standard
process)
 Requirement for complementary products/process for
widespread diffusion
 Possible new applications: adoption beyond the
originally conceived scope of its application
Mechanisms of Diffusion

 Two mechanisms by which an
innovation propagates through an
adopter population


 Technology
substitution
 Bandwagon effect
Technology Substitution
 Explains why an innovation is adopted
 Technology substitution is key that unlocks
the doors of an adopter population for
the propagation of an innovation.
 Technology substitution refers to actual
substitution of a new technique for the
old.
 A new technology or an innovation
displaces an already existing technology
during the process of being adopted

Bandwagon Effect (BE)
 BE is useful for explaining the speed
of diffusion.
 BE refers to the strategy of
information collection employed by
adopters
 It focuses on the dynamics by which
later adopters, in their decision to
adopt an innovation, imitate the
behavior of earlier adopters.


Mechanisms of Diffusion
 Technology Substitution and
Bandwagon effect underscore the
roles of
 Knowledge and learning in the diffusion
process
 Uncertainty and information
 Tech Substitution and Bandwagon
effect refers to the different facets
of learning

A Model of Innovation adoption
Steps involved in innovation

 Awareness
 Attitude formation
 Decision
 Implementation
 Confirmation




Stages in decision to adopt

Trialability
Observability
Requisite Information over the stages
of Adoption Decision
Shifting characteristics of adopters
over time
 Adopters categories depending on their speed
of adoption:
1.Innovators: very eager to try new ideas

2.Early adopters: Opinion leadership

3.Early majority: deliberate in its decision

to adopt new ideas

4.Late majority: adopts new ideas just

after the average member of a system

5.Laggards: last among a population to

adopt an innovation
Selected differences among adopter
categories
Relative importance of decision stage
 Adoption is difficult in organizations
 A number of individuals are usually
involved in the innovation-decision
process, and the implementers are often
a different set of people from the
decision makers.
 The organization structure that gives stability
and continuity to an organization often
resists the implementation of an
innovation.



Factors that drive the process of
diffusion
 Attributesof an innovation
 Community effects and network
externalities
 Characteristics of the population




Attributes of an innovation
 Five attributes of an innovation that influence the
process of diffusion
1.Relative advantage – is the degree to which an

innovation is perceived as being better than the idea that it

supercedes
2.Compatibility – is the degree to which an innovation is


perceived as being consistent with existing values or past

experiences and needs of potential adopters
3.Complexity – is the degree to which an innovation is


perceived as being difficult to understand and use

4.Trialability – is the degree to which an innovation may be


experimented with on a limited basis

5.Observability – is the degree to which the results of an


innovation are available to others

Components and Attributes of an
innovation