sch87956_fm_i-xviii.indd i 11/16/18 12:02 PMStrategic Management of Technological InnovationFinal PDF to printer

sch87956_fm_i-xviii.indd ii 11/16/18 12:02 PMFinal PDF to printer

sch87956_fm_i-xviii.indd iii 11/16/18 12:02 PMStrategic Management of Technological InnovationSixth EditionMelissa A. SchillingNew York UniversityFinal PDF to printer

First Pagessch65793_fm_ise.indd iv 12/04/18 11:25 AMSTRATEGIC MANAGEMENT OF TECHNOLOGICAL INNOVATIONPublished by McGraw-Hill Education, 2 Penn Plaza, New York, NY 10121. Copyright © 2020 by McGraw-Hill Education. All rights reserved. Printed in the United States of America. No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of McGraw-Hill Education, including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning.Some ancillaries, including electronic and print components, may not be available to customers outside the United States.This book is printed on acid-free paper.1 2 3 4 5 6 7 8 9 LCR 21 20 19ISBN 978-1-260-56579-9MHID 1-260-56579-3Cover Image: ©Shutterstock/iSam iSmileAll credits appearing on page or at the end of the book are considered to be an extension of the copyright page.The Internet addresses listed in the text were accurate at the time of publication. The inclusion of a website does not indicate an endorsement by the authors or McGraw-Hill Education, and McGraw-Hill Education does not guarantee the accuracy of the information presented at these

vsch87956_fm_i-xviii.indd v 11/16/18 12:02 PMAbout the AuthorMelissa A. Schilling, Ph.D.Melissa Schilling is the John Herzog family professor of management and organizations at New York University’s Stern School of Business. Professor Schilling teaches courses in strategic management, corporate strategy and technology, and innovation management. Before joining NYU, she was an Assistant Professor at Boston University (1997–2001), and has also served as a Visiting Professor at INSEAD and the Bren School of Environmental Science & Management at the University of California at Santa Barbara. She has also taught strategy and innovation courses at Siemens Corporation, IBM, the Kauffman Foundation Entrepreneurship Fellows program, Sogang University in Korea, and the Alta Scuola Polytecnica, a joint institution of Politecnico di Milano and Politecnico di Torino.Professor Schilling’s research focuses on technological innovation and knowledge creation. She has studied how technology shocks influence collaboration activity and innovation outcomes, how firms fight technology standards battles, and how firms utilize collaboration, protection, and timing of entry strategies. She also studies how product designs and organizational structures migrate toward or away from modularity. Her most recent work focuses on knowledge creation, including how breadth of knowledge and search influences insight and learning, and how the structure of knowledge networks influences their overall capacity for knowledge creation. Herresearch in innovation and strategy has appeared in the leading academic journals such as Academy of Management Journal, Academy of Management Review, Management Science, Organization Science, Strategic Management Journal, and Journal of Economics and Management Strategy and Research Policy. She also sits on the editorial review boards of Academy of Management Journal, Academy of Management Discoveries, Organization Science, Strategy Science, and Strategic Organization.She is the author of Quirky: The Remarkable Story of the Traits, Foibles, and Genius of Breakthrough Innovators Who Changed the World, and she is coauthor of Strategic Management: An Integrated Approach. Professor Schilling won an NSF CAREER award in 2003, and Boston University’s Broderick Prize for research in 2000.Final PDF to printer

visch87956_fm_i-xviii.indd vi 11/16/18 12:02 PMPrefaceInnovation is a beautiful thing. It is a force with both aesthetic and pragmatic appeal: It unleashes our creative spirit, opening our minds to hitherto undreamed of possibilities, while accelerating economic growth and providing advances in such crucial human endeavors as medicine, agriculture, and education. For industrial organizations, the primary engines of innovation in the Western world, innovation provides both exceptional opportunities and steep challenges. While innovation is a powerful means of competitive differentiation, enabling firms to penetrate new markets and achieve higher margins, it is also a competitive race that must be run with speed, skill, and precision. It is not enough for a firm to be innovative—to be successful it must innovate better than its competitors.As scholars and managers have raced to better understand innovation, a wide range of work on the topic has emerged and flourished in disciplines such as strategic management, organization theory, economics, marketing, engineering, and sociology. This work has generated many insights about how innovation affects the competitive dynamics of markets, how firms can strategically manage innovation, and how firms can implement their innovation strategies to maximize their likelihood of success. A great benefit of the dispersion of this literature across such diverse domains of study is that many innovation topics have been examined from different angles. However, this diversity also can pose integration challenges to both instructors and students. This book seeks to integrate this wide body of work into a single coherent strategic framework, attempting to provide coverage that is rigorous, inclusive, and accessible.Organization of the BookThe subject of innovation management is approached here as a strategic process. The outline of the book is designed to mirror the strategic management process used in most strategy textbooks, progressing from assessing the competitive dynamics of the situation, to strategy formulation, and then to strategy implementation. The first part of the book covers the foundations and implications of the dynamics of innovation, helping managers and future managers better interpret their technological environments and identify meaningful trends. The second part of the book begins the process of crafting the firm’s strategic direction and formulating its innovation strategy, including project selection, collaboration strategies, and strategies for protecting the firm’s property rights. The third part of the book covers the process of implementing innovation, including the implications of organization structure on innovation, the management of new product development processes, the construction and management of new product development teams, and crafting the firm’s deployment strategy. While the book emphasizes practical applications and examples, it also provides systematic coverage of the existing research and footnotes to guide further reading.Complete Coverage for Both Business and Engineering StudentsThis book is designed to be a primary text for courses in the strategic management of innovation and new product development. Such courses are frequently taught in both Final PDF to printer

Preface viisch87956_fm_i-xviii.indd vii 11/16/18 12:02 PMbusiness and engineering programs; thus, this book has been written with the needs of business and engineering students in mind. For example, Chapter Six (Defining the Organization’s Strategic Direction) provides basic strategic analysis tools with which business students may already be familiar, but which may be unfamiliar to engineering students. Similarly, some of the material in Chapter Eleven (Managing the New Product Development Process) on computer-aided design or quality function deployment may be review material for information system students or engineering students, while being new to management students. Though the chapters are designed to have an intuitive order to them, they are also designed to be self-standing so instructors can pick and choose from them “buffet style” if they prefer.New for the Sixth EditionThis sixth edition of the text has been comprehensively revised to ensure that the frameworks and tools are rigorous and comprehensive, the examples are fresh and exciting, and the figures and cases represent the most current information available. Some changes of particular note include:Six New Short CasesThe Rise of “Clean Meat”. The new opening case for Chapter Two is about the development of “clean meat”—meat grown from animal cells without the animal itself. Traditional meat production methods are extremely resource intensive and produce large amounts of greenhouse gases. Further, the growing demand for meat indicated an impending “meat crisis” whereby not enough meat could be produced to meet demand. “Clean meat” promised to enable meat production using a tiny fraction of the energy, water, and land used for traditional meat production. Its production would create negligible greenhouse gases, and the meat itself would have no antibiotics or steroids, alleviating some of the health concerns of traditional meat consumption. Furthermore, it would dramatically reduce animal suffering. If successful, it would be one of the largest breakthroughs ever achieved in food production.Innovating in India: The Chotukool Project. Chapter Three opens with a case about the Chotukool, a small, inexpensive, and portable refrigerator developed in India. In rural India, as many as 90 percent of families could not afford household appliances, did not have reliable access to electricity, and had no means of refrigeration. Godrej and Boyce believed that finding a way to provide refrigeration to this segment of the population offered the promise of both a huge market and making a meaningful difference in people’s quality of life.UberAIR. Chapter Five now opens with a case about UberAIR, Uber’s new service to provide air transport on demand. Uber had already become synonymous with on-demand car transport in most of the Western world; it now believed it could develop the same service for air transport using electric vertical take-off and landing aircraft (eVTOLs). There were a lot of pieces to this puzzle, however. In addition to the technology of the aircraft, the service would require an extensive network of landing pads, specially trained pilots (at least until autonomous eVTOLs became practical), and dramatically new air traffic control regulations and infrastructure. Was the time ripe for on-demand air transport, or was UberAIR ahead of its time?Final PDF to printer

viii Prefacesch87956_fm_i-xviii.indd viii 11/16/18 12:02 PMTesla Inc. in 2018. Chapter Six opens with a new case on Tesla, no longer just an electric vehicle company. This case reviews the rise of Tesla, and then explores the new businesses Tesla has entered, including solar panel leasing and installation (Solar City), solar roof production, and energy storage systems (e.g., Powerwall). Why did the company move into these businesses, and would synergies betweeen them help to make the company more successful?Where Should We Focus Our Innovation Efforts? An Exercise. Chapter Seven now opens with an exercise that shows how firms can tease apart the dimensions of value driving technological progress in an industry, map the marginal returns to further investment on each dimension, and prioritize their innovation efforts. Using numerous examples, the exercise helps managers realize where the breakthrough opportunities of the future are likely to be, and where the firm may be currently overspending.Scrums, Sprints, and Burnouts: Agile Development at Cisco Systems. Chapter Eleven opens with a case about Cisco’s adoption of the agile development method now commonly used in software development. The case explains what agile development is, how it differs from other development methods (such as stage-gated methods), and when (and why) a firm would choose agile development versus gated development for a particular innovation.Cases, Data, and Examples from around the WorldCareful attention has been paid to ensure that the text is global in its scope. The opening cases and examples feature companies from China, India, Israel, Japan, The Netherlands, Kenya, the United States, and more. Wherever possible, statistics used in the text are based on worldwide data.More Comprehensive Coverage and Focus on Current Innovation TrendsIn response to reviewer suggestions, the new edition now provides an extensive discussion of modularity and platform competition, crowdsourcing and customer co-creation, agile development strategies, and more. The suggested readings for each chapter have also been updated to identify some of the more recent publications that have gained widespread attention in the topic area of each chapter. Despite these additions, great effort has also been put into ensuring the book remains concise—a feature that has proven popular with both instructors and students.SupplementsThe teaching package for Strategic Management of Technological Innovation is available online from Connect at and includes:∙ An instructor’s manual with suggested class outlines, responses to discussion questions, and more.∙ Complete PowerPoint slides with lecture outlines and all major figures from the text. The slides can also be modified by the instructor to customize them to the instructor’s needs.∙ A testbank with true/false, multiple choice, and short answer/short essay questions.∙ A suggested list of cases to pair with chapters from the text.Final PDF to printer

sch87956_fm_i-xviii.indd ix 11/16/18 12:02 PMSUCCESSFUL SEMESTERS INCLUDE CONNECTYou’re in the driver’s seat.Want to build your own course? No problem. Prefer to use our turnkey, prebuilt course? Easy. Want to make changes throughout the semester? Sure. And you’ll save time with Connect’s auto-grading too.65%Less TimeGradingThey’ll thank you for it.Adaptive study resources like SmartBook® help your students be better prepared in less time. You can transform your class time from dull definitions to dynamic debates. Hear from your peers about the benefits of Connect at it simple, make it affordable. Connect makes it easy with seamless integration using any of the major Learning Management Systems—Blackboard®, Canvas, and D2L, among others—to let you organize your course in one convenient location. Give your students access to digital materials at a discount with our inclusive access program. Ask your McGraw-Hill representative for more information.Students—study more efficiently, retain more and achieve better outcomes. Instructors—focus on what you love—teaching.Solutions for your challenges.A product isn’t a solution. Real solutions are affordable, reliable, and come with training and ongoing support when you need it and how you want it. Our Customer Experience Group can also help you troubleshoot tech problems—although Connect’s 99% uptime means you might not need to call them. See for yourself at ©Hill Street Studios/Tobin Rogers/Blend Images LLCFor InstructorsFinal PDF to printer

sch87956_fm_i-xviii.indd x 11/16/18 12:02 PMEffective, efficient studying.Connect helps you be more productive with your study time and get better grades using tools like SmartBook, which highlights key concepts and creates a personalized study plan. Connect sets you up for success, so you walk into class with confidence and walk out with better grades.Study anytime, anywhere.Download the free ReadAnywhere app and access your online eBook when it’s convenient, even if you’re offline. And since the app automatically syncs with your eBook in Connect, all of your notes are available every time you open it. Find out more at“I really liked this app—it made it easy to study when you don’t have your textbook in front of you.”- Jordan Cunningham, Eastern Washington UniversityLearning for everyone. McGraw-Hill works directly with Accessibility Services Departments and faculty to meet the learning needs of all students. Please contact your Accessibility Services office and ask them to email [emailprotected], or visit for more information.No surprises.The Connect Calendar and Reports tools keep you on track with the work you need to get done and your assignment scores. Life gets busy; Connect tools help you keep learning through it all. Chapter 12 Quiz Chapter 11 QuizChapter 7 QuizChapter 13 Evidence of Evolution Chapter 11 DNA TechnologyChapter 7 DNA Structure and Gene...and 7 more...13 14©Shutterstock/wavebreakmediaFor StudentsFinal PDF to printer

xisch87956_fm_i-xviii.indd xi 11/16/18 12:02 PMAcknowledgmentsThis book arose out of my research and teaching on technological innovation and new product development over the last decade; however, it has been anything but a lone endeavor. I owe much of the original inspiration of the book to Charles Hill, who helped to ignite my initial interest in innovation, guided me in my research agenda, and ultimately encouraged me to write this book. I am also very grateful to colleagues and friends such as Rajshree Agarwal, Juan Alcacer, Rick Alden, William Baumol, Bruno Braga, Gino Cattanni, Tom Davis, Sinziana Dorobantu, Gary Dushnitsky, Douglas Fulop, Raghu Garud, Deepak Hegde, Hla Lifshitz, Tammy Madsen, Rodolfo Martinez, Goncalo Pacheco D’Almeida, Joost Rietveld, Paul Shapiro, Jaspal Singh, Deepak Somaya, Bill Starbuck, Christopher Tucci, and Andy Zynga for their suggestions, insights, and encouragement. I am grateful to director Mike Ablassmeir and marketing manager Lisa Granger. I am also thankful to my editors, Laura Hurst Spell and Diana Murphy, who have been so supportive and made this book possible, and to the many reviewers whose suggestions have dramatically improved the book:Joan AdamsBaruch Business School (City University of New York)Shahzad AnsariErasmus UniversityRajaram B. BaligaWake Forest UniversitySandy BeckerRutgers Business SchoolDavid BerkowitzUniversity of Alabama in HuntsvilleJohn BersVanderbilt UniversityPaul BierlyJames Madison UniversityPaul CheneyUniversity of Central FloridaPete DaileyMarshall UniversityRobert DeFillippiSuffolk UniversityDeborah DoughertyRutgers UniversityCathy A. EnzCornell UniversityRobert FinklesteinUniversity of Maryland–University CollegeSandra FinklesteinClarkson University School of BusinessJeffrey L. FurmanBoston UniversityCheryl GaimonGeorgia Institute of TechnologyElie GeislerIllinois Institute of TechnologySanjay GoelUniversity of Minnesota in DuluthAndrew HargadonUniversity of California, DavisSteven HarperJames Madison UniversityFinal PDF to printer

xii Acknowledgmentssch87956_fm_i-xviii.indd xii 11/16/18 12:02 PMI am also very grateful to the many students of the Technological Innovation and New Product Development courses I have taught at New York University, INSEAD, Boston University, and University of California at Santa Barbara. Not only did these students read, challenge, and help improve many earlier drafts of the work, but they also contributed numerous examples that have made the text far richer than it would have otherwise been. I thank them wholeheartedly for their patience and generosity.Melissa A. SchillingDonald E. HatfieldVirginia Polytechnic Institute and State UniversityGlenn HoetkerUniversity of IllinoisSanjay JainUniversity of Wisconsin–MadisonTheodore KhouryOregon State UniversityRajiv KohliCollege of William and MaryAija LeiponenCornell UniversityVince LutheranUniversity of North Carolina—WilmingtonSteve MarkhamNorth Carolina State UniversitySteven C. MichaelUniversity of IllinoisMichael MinoClemson UniversityRobert NashVanderbilt UniversityAnthony PaoniNorthwestern UniversityJohannes M. PenningsUniversity of PennsylvaniaRaja RoyTulane UniversityMukesh SrivastavaUniversity of Mary WashingtonLinda F. TegardenVirginia TechOya TukelCleveland State UniversityAnthony WarrenThe Pennsylvania State UniversityFinal PDF to printer

sch87956_fm_i-xviii.indd xiii 11/16/18 12:02 PMxiiiPreface vi1 Introduction 1PART ONEIndustry Dynamics of Technological Innovation 132 Sources of Innovation 153 Types and Patterns ofInnovation 434 Standards Battles, Modularity, and Platform Competition 675 Timing of Entry 95PART TWOFormulating Technological Innovation Strategy 1136 Defining the Organization’s Strategic Direction 1157 Choosing Innovation Projects 1418 Collaboration Strategies 1679 Protecting Innovation 197PART THREEImplementing Technological Innovation Strategy 22310 Organizing for Innovation 22511 Managing the New Product Development Process 24912 Managing New Product Development Teams 27713 Crafting a Deployment Strategy 297INDEX 327Brief ContentsFinal PDF to printer

xivsch87956_fm_i-xviii.indd xiv 11/16/18 12:02 PMChapter 1Introduction 1The Importance of Technological Innovation 1The Impact of Technological Innovation on Society 2Innovation by Industry: The Importance of Strategy 4The Innovation Funnel 4The Strategic Management of Technological Innovation 6Summary of Chapter 9Discussion Questions 10Suggested Further Reading 10Endnotes 10PART ONEINDUSTRY DYNAMICS OF TECHNOLOGICAL INNOVATION 13Chapter 2Sources of Innovation 15The Rise of “Clean Meat” 15Overview 19Creativity 20Individual Creativity 20Organizational Creativity 22Translating Creativity Into Innovation 24The Inventor 24Innovation by Users 26Research and Development by Firms 27Firm Linkages with Customers, Suppliers, Competitors, and Complementors 28Universities and Government-Funded Research 30Private Nonprofit Organizations 32Innovation in Collaborative Networks 32Technology Clusters 33Technological Spillovers 36Summary of Chapter 37Discussion Questions 38Suggested Further Reading 38Endnotes 39Chapter 3Types and Patterns ofInnovation 43Innovating in India: The Chotukool Project 43Overview 46Types of Innovation 46Product Innovation versus Process Innovation 46Radical Innovation versus Incremental Innovation 47Competence-Enhancing Innovation versus Competence-Destroying Innovation 48Architectural Innovation versus Component Innovation 49Using the Dimensions 50Technology S-Curves 50S-Curves in Technological Improvement 50S-Curves in Technology Diffusion 53S-Curves as a Prescriptive Tool 54Limitations of S-Curve Model as a Prescriptive Tool 55Technology Cycles 56Summary of Chapter 62Discussion Questions 63Suggested Further Reading 63Endnotes 64ContentsFinal PDF to printer

Contents xvsch87956_fm_i-xviii.indd xv 11/16/18 12:02 PMChapter 4Standards Battles, Modularity, and Platform Competition 67A Battle for Dominance in Mobile Payments 67Overview 71Why Dominant Designs Are Selected 71Learning Effects 72Network Externalities 73Government Regulation 76The Result: Winner-Take-All Markets 76Multiple Dimensions of Value 77A Technology’s Stand-Alone Value 78Network Externality Value 78Competing for Design Dominance in Markets with Network Externalities 83Modularity and Platform Competition 87Modularity 87Platform Ecosystems 89Summary of Chapter 91Discussion Questions 92Suggested Further Reading 92Endnotes 93Chapter 5Timing of Entry 95UberAIR 95Overview 98First-Mover Advantages 98Brand Loyalty and Technological Leadership 98Preemption of Scarce Assets 99Exploiting Buyer Switching Costs 99Reaping Increasing Returns Advantages 100First-Mover Disadvantages 100Research and Development Expenses 101Undeveloped Supply and Distribution Channels 101Immature Enabling Technologies and Complements 101Uncertainty of Customer Requirements 102Factors Influencing Optimal Timing of Entry 104Strategies to Improve Timing Options 108Summary of Chapter 108Discussion Questions 109Suggested Further Reading 109Endnotes 110PART TWOFORMULATING TECHNOLOGICAL INNOVATION STRATEGY 113Chapter 6Defining the Organization’s Strategic Direction 115Tesla, Inc. in 2018 115Overview 123Assessing the Firm’s Current Position 123External Analysis 123Internal Analysis 127Identifying Core Competencies and Dynamic Capabilities 131Core Competencies 131The Risk of Core Rigidities 132Dynamic Capabilities 133Strategic Intent 133Summary of Chapter 137Discussion Questions 138Suggested Further Reading 139Endnotes 139Chapter 7Choosing Innovation Projects 141Where Should We Focus Our Innovation Efforts? AnExercise 141Overview 146The Development Budget 146Quantitative Methods For Choosing Projects 149Discounted Cash Flow Methods 149Real Options 152Disadvantages of Quantitative Methods 154Final PDF to printer

xvi Contentssch87956_fm_i-xviii.indd xvi 11/16/18 12:02 PMQualitative Methods for Choosing Projects 154Screening Questions 155The Aggregate Project Planning Framework 157Q-Sort 159Combining Quantitative and Qualitative Information 159Conjoint Analysis 159Data Envelopment Analysis 161Summary of Chapter 163Discussion Questions 163Suggested Further Reading 164Endnotes 164Chapter 8Collaboration Strategies 167Ending HIV? Sangamo Therapeutics and Gene Editing 167Overview 175Reasons for Going Solo 1751. Availability of Capabilities 1762. Protecting Proprietary Technologies 1763. Controlling Technology Development and Use 1764. Building and Renewing Capabilities 177Advantages of Collaborating 1771. Acquiring Capabilities and Resources Quickly 1772. Increasing Flexibility 1783. Learning from Partners 1784. Resource and Risk Pooling 1785. Building a Coalition around a Shared Standard 178Types of Collaborative Arrangements 178Strategic Alliances 179Joint Ventures 181Licensing 182Outsourcing 183Collective Research Organizations 184Choosing a Mode of Collaboration 184Choosing and Monitoring Partners 187Partner Selection 187Partner Monitoring and Governance 191Summary of Chapter 192Discussion Questions 193Suggested Further Reading 193Endnotes 194Chapter 9Protecting Innovation 197The Digital Music Distribution Revolution 197Overview 201Appropriability 202Patents, Trademarks, and Copyrights 202Patents 203Trademarks and Service Marks 207Copyright 208Trade Secrets 210The Effectiveness and Use of Protection Mechanisms 211Wholly Proprietary Systems versus Wholly Open Systems 212Advantages of Protection 213Advantages of Diffusion 215Summary of Chapter 218Discussion Questions 219Suggested Further Reading 219Endnotes 220PART THREEIMPLEMENTING TECHNOLOGICAL INNOVATION STRATEGY 223Chapter 10Organizing for Innovation 225Organizing for Innovation at Google 225Overview 227Size and Structural Dimensions of the Firm 228Size: Is Bigger Better? 228Structural Dimensions of the Firm 230Centralization 230Formalization and Standardization 231Mechanistic versus Organic Structures 232Size versus Structure 234The Ambidextrous Organization: The Best of Both Worlds? 234Final PDF to printer

Contents xviisch87956_fm_i-xviii.indd xvii 11/16/18 12:02 PMModularity and “Loosely Coupled” Organizations 236Modular Products 236Loosely Coupled Organizational Structures 237Managing Innovation Across Borders 240Summary of Chapter 243Discussion Questions 244Suggested Further Reading 244Endnotes 245Chapter 11Managing the New Product Development Process 249Scrums, Sprints, and Burnouts: Agile Development at Cisco Systems 249Overview 252Objectives of the New Product Development Process 252Maximizing Fit with Customer Requirements 252Minimizing Development Cycle Time 253Controlling Development Costs 254Sequential versus Partly Parallel Development Processes 254Project Champions 257Risks of Championing 257Involving Customers and Suppliers in the Development Process 259Involving Customers 259Involving Suppliers 260Crowdsourcing 260Tools for Improving the New Product Development Process 262Stage-Gate Processes 262Quality Function Deployment (QFD)—The House of Quality 265Design for Manufacturing 267Failure Modes and Effects Analysis 267Computer-Aided Design/Computer-Aided Engineering/Computer-Aided Manufacturing 268Tools for Measuring New Product Development Performance 269New Product Development Process Metrics 271Overall Innovation Performance 271Summary of Chapter 271Discussion Questions 272Suggested Further Reading 272Endnotes 273Chapter 12Managing New Product Development Teams 277Innovation Teams at the Walt Disney Company 277Overview 279Constructing New Product Development Teams 280Team Size 280Team Composition 280The Structure of New Product Development Teams 285Functional Teams 285Lightweight Teams 286Heavyweight Teams 286Autonomous Teams 286The Management of New Product Development Teams 288Team Leadership 288Team Administration 288Managing Virtual Teams 289Summary of Chapter 292Discussion Questions 292Suggested Further Reading 293Endnotes 293Chapter 13Crafting a Deployment Strategy 297Deployment Tactics in the Global Video Game Industry 297Overview 306Launch Timing 306Strategic Launch Timing 306Optimizing Cash Flow versus Embracing Cannibalization 307Licensing and Compatibility 308Pricing 310Final PDF to printer

xviii Contentssch87956_fm_i-xviii.indd xviii 11/16/18 12:02 PMDistribution 312Selling Direct versus Using Intermediaries 312Strategies for Accelerating Distribution 314Marketing 316Major Marketing Methods 316Tailoring the Marketing Plan to Intended Adopters 318Using Marketing to Shape Perceptions and Expectations 320Summary of Chapter 323Discussion Questions 324Suggested Further Reading 324Endnotes 325Index 327Final PDF to printer

1sch87956_ch01_001-012.indd 1 11/02/18 02:10 PMChapter OneIntroductionTHE IMPORTANCE OF TECHNOLOGICAL INNOVATIONIn many industries, technological innovation is now the most important driver of competitive success. Firms in a wide range of industries rely on products developed within the past five years for almost one-third (or more) of their sales and profits. For example, at Johnson & Johnson, products developed within the last five years account for over 30 percent of sales, and sales from products developed within the past fiveyears at 3M have hit as high as 45 percent in recent years.The increasing importance of innovation is due in part to the globalization of markets. Foreign competition has put pressure on firms to continuously innovate in order to produce differentiated products and services. Introducing new products helps firms protect their margins, while investing in process innovation helps firms lower their costs. Advances in information technology also have played a role in speeding the pace of innovation. Computer-aided design and computer-aided manufacturing have made it easier and faster for firms to design and produce new products, while flexible manufacturing technologies have made shorter production runs economical and have reduced the importance of production economies of scale.1These technologies help firms develop and produce more product variants that closely meet the needs of narrowly defined customer groups, thus achieving differentiation from competitors. For example, in 2018, Toyota offered 22 different passenger vehicle lines under the Toyota brand (e.g., Camry, Prius, Highlander, and Tundra). Within each of the vehicle lines, Toyota also offered several different models (e.g.,Camry L, Camry LE, Camry SE,Camry Hybrid SE, etc.) with different features and at different price points. In total, Toyota offered 193 car models ranging in price from $15,635 (for the Yaris three-door liftback) to $84,315 (for the Land Cruiser), and seating anywhere from three passengers (e.g., Tacoma Regular Cabtruck) to eight passengers (Sienna Minivan). On top of this, Toyota also produced a range of luxury vehicles under its Lexus brand. Similarly, in 2018 Samsung produced more than 30unique smartphones. Companies can use broad portfolios of product models to help ensure they can penetrate almost every conceivable market niche. While producing multiple product variations used to be expensive and technological innovationThe act of introducing a new device, method, or material for application to commercial or practical objectives.Final PDF to printer

sch87956_ch01_001-012.indd 2 11/02/18 02:10 PM2 Chapter 1 Introductiontime-consuming, flexible manufacturing technologies now enable firms to seamlessly transition from producing one product model to the next, adjusting production schedules with real-time information on demand. Firms further reduce production costs by using common components in many of the models.As firms such as Toyota, Samsung, and others adopt these new technologies and increase their pace of innovation, they raise the bar for competitors, triggering an industry-wide shift to shortened development cycles and more rapid new productintroductions. The net results are greater market segmentation and rapid product obsolescence.2 Product life cycles (the time between a product’s introduction and its withdrawal from the market or replacement by a next-generation product) have become as short as 4 to 12 months for software, 12 to 24 months for computer hardware and consumer electronics, and 18 to 36 months for large home appliances.3This spurs firms to focus increasingly on innovation as a strategic imperative—a firm that does not innovate quickly finds its margins diminishing as its products become obsolete.THE IMPACT OF TECHNOLOGICAL INNOVATION ON SOCIETYIf the push for innovation has raised the competitive bar for industries, arguably making success just that much more complicated for organizations, its net effect on society is more clearly positive. Innovation enables a wider range of goods and services to be delivered to people worldwide. It has made the production of food and other necessities more efficient, yielded medical treatments that improve health conditions, and enabled people to travel to and communicate with almost every part of the world. To get a real sense of the magnitude of the effect of technological innovation on society, look at Figure1.1, which shows a timeline of some of the most important technological innovations developed over the last 200 years. Imagine how different life would be without these innovations!The aggregate impact of technological innovation can be observed by looking at gross domestic product (GDP). The gross domestic product of an economy is its total annual output, measured by final purchase price. Figure1.2 shows the average GDP per capita (i.e., GDP divided by the population) for the world from 1980 to 2016. The figures have been converted into U.S. dollars and adjusted for inflation. As shown in the figure, the average world GDP per capita has risen steadily since 1980. In a series of studies of economic growth conducted at the National Bureau of Economic Research, economists showed that the historic rate of economic growth in GDP could not be accounted for entirely by growth in labor and capital inputs. Economist Robert Merton Solow argued that this unaccounted-for residual growth represented technological change: Technological innovation increased the amount of output achievable from a given quantity of labor and capital. This explanation was not immediately accepted; many researchers attempted to explain the residual away in terms of measurement error, inaccurate price deflation, or labor improvement. gross domestic product (GDP)The total annual output of an economy as measured by its final purchase price.Final PDF to printer

sch87956_ch01_001-012.indd 3 11/02/18 02:10 PMChapter 1 Introduction 3Butineach case the additional variables were unable to eliminate this residual growth component. A consensus gradually emerged that the residual did in fact capture technological change. Solow received a Nobel Prize for his work in 1981, and the residual became known as the Solow Residual.4While GDP has its shortcomings as a measure of standard of living, it does relate very directly to the amount of goods consumers can purchase. Thus, to the extent that goods improve quality of life, we can ascribe some beneficial impact of technological innovation.Sometimes technological innovation results in negative externalities. Production technologies may create pollution that is harmful to the surrounding communities; agricultural and fishing technologies can result in erosion, elimination ofnatural habitats, and depletion of ocean stocks; medical technologies can result in unanticipated consequences such as antibiotic-resistant strains of bacteria or moral dilemmas regarding the use of genetic modification. However, technology is, in its purest essence, knowledge—knowledge to solve our problems and pursue our goals.5 Technological innovation is thus the creation of new knowledge that is applied to practical problems. Sometimes this knowledge is applied to problems hastily, without full consideration of the consequences and alternatives, but overall it will probably serve us better to have more knowledge than less.externalitiesCosts (or benefits) that are borne (or reaped) by individuals other than those responsible for creating them. Thus, if a business emits pollutants in a community, it imposes a negative externality on the community members; if a business builds a park in a community, it creates a positive externality for community members.1800 - 1800—Electric battery- 1804—Steam locomotive- 1807—Internal combustion engine- 1809—Telegraph- 1817—Bicycle1820 - 1821—Dynamo- 1824—Braille writing system- 1828—Hot blast furnace- 1831—Electric generator- 1836—Five-shot revolver1840 - 1841—Bunsen battery (voltaic cell)- 1842—Sulfuric ether-based anesthesia- 1846—Hydraulic crane- 1850—Petroleum refining- 1856—Aniline dyes1860 - 1862—Gatling gun- 1867—Typewriter- 1876—Telephone- 1877—Phonograph- 1878—Incandescent lightbulb1880 - 1885—Light steel skyscrapers- 1886—Internal combustion automobile- 1887—Pneumatic tire- 1892—Electric stove- 1895—X-ray machine1900 - 1902—Air conditioner (electric)- 1903—Wright biplane- 1906—Electric vacuum cleaner- 1910—Electric washing machine- 1914—Rocket1920 - 1921—Insulin (extracted)- 1927—Television- 1928—Penicillin- 1936—First programmable computer- 1939—Atom fission1940 - 1942—Aqua lung- 1943—Nuclear reactor- 1947—Transistor- 1957—Satellite- 1958—Integrated circuit1960 - 1967—Portable handheld calculator- 1969—ARPANET (precursor to Internet)- 1971—Microprocessor- 1973—Mobile (portable cellular) phone- 1976—Supercomputer1980 - 1981—Space shuttle (reusable)- 1987—Disposable contact lenses- 1989—High-definition television- 1990—World Wide Web protocol- 1996—Wireless Internet2000 - 2003—Map of human genome FIGURE 1.1Timeline of Some of the Most Important Technological Innovations in the Last 200YearsFinal PDF to printer

sch87956_ch01_001-012.indd 4 11/02/18 02:10 PM4 Chapter 1 IntroductionFIGURE 1.2Gross DomesticProduct per Capita, 1989–2016 (in Real 2010 $US Billions)Source: USDA Economic ResearchService,, accessed April 16th, 2018.90,00080,00070,00060,00050,00040,00030,00020,00010,0001980198219841986198819901992199419961998200020022004200620082010201220142016–INNOVATION BY INDUSTRY: THE IMPORTANCE OF STRATEGYAs will be shown in Chapter Two, the majority of effort and money invested in technological innovation comes from industrial firms. However, in the frenetic race to innovate, many firms charge headlong into new product development without clear strategies or well-developed processes for choosing and managing projects. Such firms often initiate more projects than they can effectively support, choose projects that are a poor fit with the firm’s resources and objectives, and suffer long development cycles and high project failure rates as a consequence (see the accompanying Research Brief for a recent study of the length of new product development cycles). While innovation is popularly depicted as a freewheeling process that is unconstrained by rules and plans, study after study has revealed that successful innovators have clearly defined innovation strategies and management processes.6The Innovation FunnelMost innovative ideas do not become successful new products. Many studies suggest that only one out of several thousand ideas results in a successful new product: Many projects do not result in technically feasible products and, of those that do, many fail to earn a commercial return. According to a 2012 study by the Product Development and Management Association, only about one in nine projects that are initiated is successful, and of those that make it to the point of being launched to the market, only about half earn a profit.7 Furthermore, many ideas are sifted through and abandoned before a project is even formally initiated. According to one study that combined data from prior studies of innovation success rates with data on patents, venture capital Final PDF to printer

sch87956_ch01_001-012.indd 5 11/02/18 02:10 PMChapter 1 Introduction 5funding, and surveys, it takes about 3000 raw ideas to produce one significantly new and successful commercial product.8 The pharmaceutical industry demonstrates this well—only one out of every 5000 compounds makes it to the pharmacist’s shelf, and only one-third of those will be successful enough to recoup their R&D costs.9 Furthermore, most studies indicate that it costs at least $1.4 billion and a decade of research to bring a new Food and Drug Administration (FDA)–approved pharmaceutical product to market!10 The innovation process is thus often conceived of as a funnel, with many potential new product ideas going in the wide end, but very few making it through the development process (see Figure1.3).Research Brief How Long Does New Product Development Take?aIn a large-scale survey administered by the Product Development and Management Association (PDMA), researchers examined the length of time it took firms to develop a new product from initial concept to market introduction. The study divided new product development projects into categories representing their degree of innovativeness: “radical” projects, “more innovative” projects, and “incremental” projects. On average, incremental projects took only 33weeks from concept to market introduction. More innovative projects took significantly longer, clocking in at 57 weeks. The development of radicalproducts or technologies took the longest, averaging 82 weeks. The study also found that on average, for more innovative and radical projects, firms reported significantly shorter cycle times than those reported in the previous PDMA surveys conducted in 1995 and 2004.a Adapted from Markham, S. K., and H. Lee, “Product Development and Management Association’s 2012 Comparative Performance Assessment Study,” Journal of Product Innovation Management 30, no. 3 (2013): 408–29.FIGURE 1.3The New Product Development Funnel in Pharmaceuticals125Leads 2–3 drugs tested 1 drug Rx5000CompoundsDiscovery & Preclinical3–6 yearsClinical Trials6–7 yearsApproval½–2 yearsFinal PDF to printer

sch87956_ch01_001-012.indd 6 11/02/18 02:10 PM6 Chapter 1 IntroductionThe Strategic Management of Technological InnovationImproving a firm’s innovation success rate requires a well-crafted strategy. A firm’s innovation projects should align with its resources and objectives, leveraging its core competencies and helping it achieve its strategic intent. A firm’s organizational structure and control systems should encourage the generation of innovative ideas while also ensuring efficient implementation. A firm’s new product development process should maximize the likelihood of projects being both technically and commercially successful. To achieve these things, a firm needs (a) an in-depth understanding of the dynamics of innovation, (b) a well-crafted innovation strategy, and (c) well-designed processes for implementing the innovation strategy. We will cover each of these in turn (see Figure1.4).In Part One, we will cover the foundations of technological innovation, gaining an in-depth understanding of how and why innovation occurs in an industry, and why some innovations rise to dominate others. First, we will look at the sources of innovation in Chapter Two. We will address questions such as: Where do great ideas come from? How can firms harness the power of individual creativity? What role do customers, government organizations, universities, and alliance networks play in creating innovation? In this chapter, we will first explore the role of creativity in the generation of novel and useful ideas. We then look at various sources of innovation, including the role of individual inventors, firms, publicly sponsored research, and collaborative networks.In Chapter Three, we will review models of types of innovation (such as radical versus incremental and architectural versus modular) and patterns of innovation (including s-curves of technology performance and diffusion, and technology cycles). We will address questions such as: Why are some innovations much harder to create and implement than others? Why do innovations often diffuse slowly even when they appear to offer a great advantage? What factors influence the rate at which a technology tends toimprove over time? Familiarity with these types and patterns of innovation will help us distinguish how one project is different from another and the underlying factors that shape the project’s likelihood of technical or commercial success.In Chapter Four, we will turn to the particularly interesting dynamics that emerge in industries characterized by network externalities and other sources of increasing returns that can lead to standards battles and winner-take-all markets. We will address questions such as: Why do some industries choose a single dominant standard rather than enabling multiple standards to coexist? What makes one technological innovation rise to dominate all others, even when other seemingly superior technologies are offered? How can a firm avoid being locked out? Is there anything a firm can do to influence the likelihood of its technology becoming the dominant design? When are platform ecosystems likely to displace other forms of competition in an industry?In Chapter Five, we will discuss the impact of entry timing, including first-mover advantages, first-mover disadvantages, and the factors that will determine the firm’s optimal entry strategy. This chapter will address such questions as: What are the advantages and disadvantages of being first to market, early but not first, and late? What determines the optimal timing of entry for a new innovation? This chapter reveals a number of consistent patterns in how timing of entry impacts innovation success, and Final PDF to printer

sch87956_ch01_001-012.indd 7 11/02/18 02:10 PMChapter 1 Introduction 7FIGURE 1.4The Strategic Management of Technological InnovationPart 3: Implementing TechnologicalInnovation Strategy Part 1: Industry Dynamics ofTechnological Innovation Part 2: Formulating TechnologicalInnovation Strategy Chapter 4Standards Battles,Modularity, andPlatform CompetitionChapter 2Sources ofInnovationChapter 5Timing of EntryChapter 3Types and Patternsof InnovationChapter 6Defining the Organization’sStrategic DirectionChapter 9Protecting InnovationChapter 8CollaborationStrategiesChapter 7Choosing InnovationProjectsChapter 10Organizing forInnovationChapter 13Crafting a DeploymentStrategyChapter 12Managing NewProductDevelopment TeamsChapter 11Managing the NewProduct DevelopmentProcessFeedbackFinal PDF to printer

sch87956_ch01_001-012.indd 8 11/02/18 02:10 PM8 Chapter 1 Introductionit outlines what factors will influence a firm’s optimal timing of entry, thus beginning the transition from understanding the dynamics of technological innovation to formulating technology strategy.In Part Two, we will turn to formulating technological innovation strategy. ChapterSix reviews the basic strategic analysis tools managers can use to assess the firm’s current position and define its strategic direction for the future. This chapter will address such questions as: What are the firm’s sources of sustainable competitive advantage? Where in the firm’s value chain do its strengths and weaknesses lie? What are the firm’s core competencies, and how should it leverage and build upon them? What is the firm’s strategic intent—that is, where does the firm want to be 10 years from now? Only after the firm has thoroughly appraised where it is currently can it formulate a coherent technological innovation strategy for the future.In Chapter Seven, we will examine a variety of methods of choosing innovation projects. These include quantitative methods such as discounted cash flow and options valuation techniques, qualitative methods such as screening questions and balancing the research and development portfolio, as well as methods that combine qualitative and quantitative approaches such as conjoint analysis and data envelopment analysis. Each of these methods has its advantages and disadvantages, leading many firms to use a multiple-method approach to choosing innovation projects.In Chapter Eight, we will examine collaboration strategies for innovation. This chapter addresses questions such as: Should the firm partner on a particular project or go solo? How does the firm decide which activities to do in-house and which to access through collaborative arrangements? If the firm chooses to work with a partner, how should the partnership be structured? How does the firm choose and monitor partners? We will begin by looking at the reasons a firm might choose to go solo versus working with a partner. We then will look at the pros and cons of various partnering methods, including joint ventures, alliances, licensing, outsourcing, and participating in collaborative research organizations. The chapter also reviews the factors that should influence partner selection and monitoring.In Chapter Nine, we will address the options the firm has for appropriating the returns to its innovation efforts. We will look at the mechanics of patents, copyright, trademarks, and trade secrets. We will also address such questions as: Are there ever times when it would benefit the firm to not protect its technological innovation so vigorously? How does a firm decide between a wholly proprietary, wholly open, or partially open strategy for protecting its innovation? When will open strategies have advantages over wholly proprietary strategies? This chapter examines the range of protection options available to the firm, and the complex series of trade-offs a firm must consider in its protection strategy.In Part Three, we will turn to implementing the technological innovation strategy. This begins in Chapter Ten with an examination of how the organization’s size and structure influence its overall rate of innovativeness. The chapter addresses such questions as: Do bigger firms outperform smaller firms at innovation? How do formalization, standardization, and centralization impact the likelihood of generating innovative ideas and the organization’s ability to implement those ideas quickly and efficiently? Is it possible to achieve creativity and flexibility at the same time as efficiency and reliability? How do multinational firms decide where to perform their development Final PDF to printer

sch87956_ch01_001-012.indd 9 11/02/18 02:10 PMChapter 1 Introduction 9activities? How do multinational firms coordinate their development activities toward a common goal when the activities occur in multiple countries? This chapter examines how organizations can balance the benefits and trade-offs of flexibility, economies of scale, standardization, centralization, and tapping local market knowledge.In Chapter Eleven, we will review a series of “best practices” that have been identified in managing the new product development process. This includes such questions as: Should new product development processes be performed sequentially or in parallel? What are the advantages and disadvantages of using project champions? What are the benefits and risks of involving customers and/or suppliers in the development process? What tools can the firm use to improve the effectiveness and efficiency of its new product development processes? How does the firm assess whether its new product development process is successful? This chapter provides an extensive review of methods that have been developed to improve the management of new product development projects and to measure their performance.Chapter Twelve builds on the previous chapter by illuminating how team composition and structure will influence project outcomes. This chapter addresses questions such as: How big should teams be? What are the advantages and disadvantages of choosing highly diverse team members? Do teams need to be colocated? When should teams be full time and/or permanent? What type of team leader and management practices should be used for the team? This chapter provides detailed guidelines for constructing new product development teams that are matched to the type of new product development project under way.Finally, in Chapter Thirteen, we will look at innovation deployment strategies. This chapter will address such questions as: How do we accelerate the adoption of the technological innovation? How do we decide whether to use licensing or OEM agreements? Does it make more sense to use penetration pricing or a market-skimming price? When should we sell direct versus using intermediaries? What strategies can the firm use to encourage distributors and complementary goods providers to support the innovation? What are the advantages and disadvantages of major marketing methods? This chapter complements traditional marketing, distribution, and pricing courses by looking at how a deployment strategy can be crafted that especially targets the needs of a new technological innovation.1. Technological innovation is now often the single most important competitive driver in many industries. Many firms receive more than one-third of their sales and profits from products developed within the past five years.2. The increasing importance of innovation has been driven largely by the globalization of markets and the advent of advanced technologies that enable more rapid product design and allow shorter production runs to be economically feasible.3. Technological innovation has a number of important effects on society, including fostering increased GDP, enabling greater communication and mobility, and improving medical treatments.Summary of ChapterFinal PDF to printer

sch87956_ch01_001-012.indd 10 11/02/18 02:10 PM10 Chapter 1 Introduction4. Technological innovation may also pose some negative externalities, including pollution, resource depletion, and other unintended consequences of technological change.5. While government plays a significant role in innovation, industry provides the majority of R&D funds that are ultimately applied to technological innovation.6. Successful innovation requires an in-depth understanding of the dynamics of innovation, a well-crafted innovation strategy, and well-developed processes for implementing the innovation strategy.1. Why is innovation so important for firms to compete in many industries?2. What are some advantages and disadvantages of technological innovation? 3. Why do you think so many innovation projects fail to generate an economic return?Discussion QuestionsClassicsArrow, K. J., “Economic welfare and the allocation of resources for inventions,” in The Rate and Direction of Inventive Activity: Economic and Social Factors, ed. R. Nelson (Princeton, NJ: Princeton University Press, 1962), pp. 609–25.Baumol, W. J., The Free Market Innovation Machine: Analyzing the Growth Miracle of Capitalism (Princeton, NJ: Princeton University Press, 2002).Mansfield, E., “Contributions of R and D to economic growth in the United States,” Science CLXXV (1972), pp. 477–86.Schumpeter, J. A., The Theory of Economic Development (1911; English translation, Cambridge, MA: Harvard University Press, 1936).Recent WorkAhlstrom, D., “Innovation and Growth: How Business Contributes to Society,” Academy of Management Perspectives (August 2010): 10–23.Lichtenberg, F. R., “Pharmaceutical Innovation and Longevity Growth in 30 Developing and High-Income Countries, 2000–2009,” Health Policy and Technology3(2014):36–58.“The 25 Best Inventions of 2017,” Time (December 1, 2017).Schilling, M. A., “Towards Dynamic Efficiency: Innovation and Its Implications for Antitrust,” Antitrust Bulletin 60, no. 3 (2015): 191–207.Suggested Further Reading1. J. P. Womack, D. T. Jones, and D. Roos, The Machine That Changed the World (New York: Rawson Associates, 1990).2. W. Qualls, R. W. Olshavsky, and R. E. Michaels, “Shortening of the PLC—An Empirical Test,” Journal of Marketing 45 (1981), pp. 76–80.3. M. A. Schilling and C. E. Vasco, “Product and Process Technological Change and the Adoption of Modular Organizational Forms,” in Winning Strategies in a Deconstructing World, eds. R. Bresser, M. Hitt, R. Nixon, and D. Heuskel (Sussex, England: John Wiley & Sons, 2000), pp. 25–50.EndnotesFinal PDF to printer

sch87956_ch01_001-012.indd 11 11/02/18 02:10 PMChapter 1 Introduction 114. N. Crafts, “The First Industrial Revolution: A Guided Tour for Growth Economists,” The American Economic Review 86, no. 2 (1996), pp. 197–202; R. Solow, “Technical Change and the Aggregate Production Function,” Review of Economics and Statistics 39 (1957), pp.312–20; and N. E. Terleckyj, “What Do R&D Numbers Tell Us about Technological Change?” American Economic Association 70, no. 2 (1980), pp. 55–61.5. H. A. Simon, “Technology and Environment,” Management Science 19 (1973), pp. 1110–21.6. S. Brown and K. Eisenhardt, “The Art of Continuous Change: Linking Complexity Theory and Time-Paced Evolution in Relentlessly Shifting Organizations,” Administrative Science Quarterly 42 (1997), pp. 1–35; K. Clark and T. Fujimoto, Product Development Performance(Boston: Harvard Business School Press, 1991); R. Cooper, “Third Generation New Product Processes,” Journal of Product Innovation Management 11 (1994), pp. 3–14; D. Doughery, “Reimagining the Differentiation and Integration of Work for Sustained Product Innovation,” Organization Science 12 (2001), pp. 612–31; and M. A. Schilling and C. W. L. Hill, “Managing the New Product Development Process: Strategic Imperatives,” Academy of Management Executive 12, no. 3 (1998), pp. 67–81.7. Markham, SK, and Lee, H. “Product Development and Management Association’s 2012 comparative performance assessment study,” Journal of Product Innovation Management 30 (2013), issue 3:408–429.8. G. Stevens and J. Burley, “3,000 Raw Ideas Equals 1 Commercial Success!” Research Technology Management 40, no. 3 (1997), pp. 16–27.9. Standard & Poor’s Industry Surveys, Pharmaceutical Industry, 2008.10. DiMasi, J. A., H. G. Grabowski, and R. W. Hansen, “Innovation in the Pharmaceutical Industry: New Estimates of R&D Costs,” Journal of Health Economics 47 (May 2016):20–33.Final PDF to printer

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sch87956_ch02_013-042.indd 13 11/05/18 01:32 PMPart OneIndustry Dynamics of Technological InnovationIn this section, we will explore the industry dynamics of technological innovation, including:∙ The sources from which innovation arises, including the roles of individuals, organizations, government institutions, and networks.∙ The types of innovations and common industry patterns of technological evolution and diffusion.∙ The factors that determine whether industries experience pressure to select a dominant design, and what drives which technologies to dominate others.∙ The effects of timing of entry, and how firms can identify (and manage) their entry options.This section will lay the foundation that we will build upon in Part Two, Formulating Technological Innovation Strategy.Final PDF to printer

sch87956_ch02_013-042.indd 14 11/05/18 01:32 PMPart 1: Industry Dynamics of Technological InnovationChapter 2Sources of InnovationChapter 5Timing of EntryChapter 4Standards Battles,Modularity, andPlatform CompetitionChapter 3Types and Patternsof InnovationPart 2: Formulating TechnologicalInnovation StrategyChapter 6Defining the Organization’s Strategic DirectionChapter 9Protecting InnovationChapter 8CollaborationStrategiesChapter 7Choosing InnovationProjectsPart 3: Implementing TechnologicalInnovation StrategyChapter 10Organizing for InnovationChapter 13Crafting a DeploymentStrategyChapter 11Managing the NewProduct DevelopmentProcessChapter 12Managing NewProductDevelopment TeamsFeedbackIndustry Dynamics of Technological InnovationFinal PDF to printer

15sch87956_ch02_013-042.indd 15 11/05/18 01:32 PMChapter TwoSources of InnovationThe Rise of “Clean Meat”aIn late 2017, Microsoft founder Bill Gates and a group of other high-powered investors—who comprise Breakthrough Energy Ventures, such as Amazon’s Jeff Bezos, Alibaba’s Jack Ma, and Virgin’s Richard Branson—announced their intention to fund a San Francisco–based start-up called Memphis Meats with an unusual business plan: it grew “clean” meat using stem cells, eliminating the need to breed or slaughter animals. The company had already produced beef, chicken, and duck, all grown from cells.bThere were many potential advantages of growing meat without animals. First, growth in the demand for meat was skyrocketing due to both population growth and development. When developing countries become wealthier, they increase their meat consumption. While humanity’s population had doubled since 1960, consumption of animal products had risen fivefold and was still increasing. Many scientists and economists had begun to warn of an impending “meat crisis.” Even though plant protein substitutes like soy and pea protein had gained enthusiastic followings, the rate of animal protein consumption had continued to rise. This suggested that meat shortages were inevitable unless radically more efficient methods of production were developed.Large-scale production of animals also had a massively negative effect on the environment. The worldwide production of cattle, for example, resulted in a larger emissions of greenhouse gases than the collective effect of the world’s automobiles. Animal production is also extremely water intensive: To produce each chicken sold in a supermarket, for example, requires more than 1000gallons of water, and each egg requires 50 gallons. Each gallon of cow’s milk required 900gallons of water. A study by Oxford University indicated that meat grown from cells would produce up to 96 percent lower greenhouse gas emissions, use 45 percent less energy, 99 percent less land, and 96 percent less water.cScientists also agreed that producing animals for consumption was simply inefficient. Estimates suggested, for example, that it required roughly 23 calories worth of inputs to produce one calorie of beef. “Clean” meat promised to bring that ratio down to three calories of inputs to produce a calorie of beef—more than seven times greater efficiency. “Clean” meat also would not contain Final PDF to printer

sch87956_ch02_013-042.indd 16 11/05/18 01:32 PM16 Part One Industry Dynamics of Technological Innovationantibiotics, steroids, or bacteria such as E. coli—it was literally “cleaner,” and that translated into both greater human health and lower perishability.The Development of Clean MeatIn 2004, Jason Matheny, a 29-year-old recent graduate from the John Hopkins Public Health program decided to try to tackle the problems with production of animals for food. Though Matheny was a vegetarian himself, he realized that convincing enough people to adopt a plant-based diet to slow down the meat crisis was unlikely. As he noted, “You can spend your time trying to get people to turn their lights out more often, or you can invent a more efficient light bulb that uses far less energy even if you leave it on. What we need is an enormously more efficient way to get meat.”dMatheny founded a nonprofit organization called New Harvest that would be dedicated to promoting research into growing real meat without animals. He soon discovered that a Dutch scientist, Willem van Eelen was exploring how to culture meat from animal cells. Van Eelen had been awarded the first patent on a cultured meat production method in 1999. However, the eccentric scientist had not had much luck in attracting funding to his project, nor in scaling up his production. Matheny decided that with a little prodding, the Dutch government might be persuaded to make a serious investment in the development of meatculturing methods. He managed to get a meeting with the Netherland’s minister of agriculture where he made his case. Matheny’s efforts paid off: The Dutch government agreed to invest two million euros in exploring methods of creating cultured meat at three different universities.By 2005, clean meat was starting to gather attention. The journal Tissue Engineering published an article entitled “In Vitro-Cultured Meat Production,” and in the same year, the New York Times profiled clean meat in its annual “Ideas ofthe Year.” However, while governments and universities were willing to invest in the basic science of creating methods of producing clean meat, they did not have the capabilities and assets needed to bring it to commercial scale. Matheny knew that to make clean meat a mainstream reality, he would need to attract the interest of large agribusiness firms.Matheny’s initial talks with agribusiness firms did not go well. Though meat producers were open to the idea conceptually, they worried that consumers would balk at clean meat and perceive it as unnatural. Matheny found this criticism frustrating; after all, flying in airplanes, using air conditioning, or eating meat pumped full of steroids to accelerate its growth were also unnatural.Progress was slow. Matheny took a job at the Intelligence Advanced Research Projects Activity (IARPA) of the U.S. Federal Government while continuing to run New Harvest on the side. Fortunately, others were also starting to realize the urgency of developing alternative meat production methods.Enter Sergey Brin of GoogleIn 2009, the foundation of Sergey Brin, cofounder of Google, contacted Matheny to learn more about cultured meat technologies. Matheny referred Brin’s Final PDF to printer

sch87956_ch02_013-042.indd 17 11/05/18 01:32 PMChapter 2 Sources of Innovation 17foundation to Dr. Mark Post at Maastricht University, one of the leading scientists funded by the Dutch government’s clean meat investment. Post had succeeded in growing mouse muscles in vitro and was certain his process could be replicated with the muscles of cows, poultry, and more. As he stated, “It was so clear to me that we could do this. The science was there. All we needed was funding to actually prove it, and now here was a chance to get what was needed.”eIt took more than a year to work out the details, but in 2011, Brin offered Post roughly threequarters of a million dollars to prove his process by making two cultured beef burgers, and Post’s team set about meeting the challenge.In early 2013, the moment of truth arrived: Post and his team had enough cultured beef to do a taste test. They fried up a small burger and split it into thirds totaste. It tasted like meat. Their burger was 100 percent skeletal muscle and they knew that for commercial production they would need to add fat andconnective tissue to more closely replicate the texture of beef, but those would be easy problems to solve after passing this milestone. The press responded enthusiastically, and the Washington Post ran an article headlined, “Could a TestTube Burger Save the Planet?”fGoing CommercialIn 2015, Uma Valeti, a cardiologist at the Mayo Clinic founded his own culturedmeat research lab at the University of Minnesota. “I’d read about the inefficiency of meat-eating compared to a vegetarian diet, but what bothered me more than the wastefulness was the sheer scale of suffering of the animals.”gAs a heart doctor, Valeti also believed that getting people to eat less meat could improve human health: “I knew that poor diets and the unhealthy fats and refined carbs that my patients were eating were killing them, but so many seemed totally unwilling to eat less or no meat. Some actually told me they’d rather live a shorter life than stop eating the meats they loved.” Valeti began fantasizing about a best-of-both-worlds alternative—a healthier and kinder meat. As he noted, “The main difference I thought I’d want for this meat I was envisioning was that it’d have to be leaner and more protein-packed than a cut of supermarket meat, since there’s a large amount of saturated fat in that meat. . . . Why not have fats that are proven to be better for health and longevity, like omega-3s? We want to be not just like conventional meat but healthier than conventional meat.”hValeti was nervous about leaving his successful position as a cardiologist—after all, he had a wife and two children to help support. However, when he sat down to discuss it with his wife (a pediatric eye surgeon), she said, “Look, Uma. We’ve been wanting to do this forever. I don’t ever want us to look back on why we didn’t have the courage to work on an idea that could make this world kinder and better for our children and their generation.”i And thus Valeti’s company, which would later be named Memphis Meats, was born.Building on Dr. Post’s achievement, Valeti’s team began experimenting with ways to get just the right texture and taste. After much trial and error, and a growing number of patents, they hosted their first tasting event in December 2015. On the menu: a meatball. This time the giant agribusiness firms took notice.Final PDF to printer

sch87956_ch02_013-042.indd 18 11/05/18 01:32 PM18 Part One Industry Dynamics of Technological InnovationAt the end of 2016, Tyson Foods, the world’s largest meat producer, announced that it would invest $150 million in a venture capital fund that would develop alternative proteins, including meat grown from self-reproducing cells. In August of 2017, agribusiness giant Cargill announced it was investing in Memphis Meats, and a few months later in early 2018, Tyson Foods also pledged investment.That first meatball cost $1200; to make cultured meat a commercial reality required bringing costs down substantially. But analysts were quick to point out that the first iPhone had cost $2.6 billion in R&D—much more than the first cultured meats. Scale and learning curve efficiencies would drive that cost down. Valeti had faith that the company would soon make cultured meat not only competitive with traditional meat, but more affordable. Growing meat rather than whole animals had, after all, inherent efficiency advantages.Some skeptics believed the bigger problem was not production economies, but consumer acceptance: would people be willing to eat meat grown without animals? Sergey Brin, Bill Gates, Jeff Bezos, Jack Ma, and Richard Branson were willing to bet that they would. As Branson stated in 2017, “I believe that in 30 years or so we will no longer need to kill any animals and that all meat will either be clean or plant-based, taste the same and also be much healthier for everyone.”jDiscussion Questions1. What were the potential advantages of developing clean meat? What were the challenges of developing it and bringing it to market?2. What kinds of organizations were involved in developing clean meat? What were the different resources that each kind of organization brought to the innovation?3. Do you think people will be willing to eat clean meat? Can you think of other products or services that faced similar adoption challenges?a Adapted from a NYU teaching case by Paul Shapiro and Melissa Schilling.b Friedman, Z., “Why Bill Gates and Richard Branson Invested in ‘Clean’ Meat,” Forbes (August 2017).c Tuomisto, H. L., and M. J. de Mattos, “Environmental Impacts of Cultured Meat Production,” Environmental Science and Technology 14(2011): 6117–2123.d Shapiro, P. Clean Meat: How Growing Meat without Animals Will Revolutionize Dinner and the World(New York: Gallery Books, 2018), 35.e Shapiro, P. Clean Meat: How Growing Meat without Animals Will Revolutionize Dinner and the World(New York: Gallery Books, 2018), 60.f “Could a Test-Tube Burger Save the Planet?” Washington Post, August 5, 2013.g Shapiro, P. Clean Meat: How Growing Meat without Animals Will Revolutionize Dinner and the World(New York: Gallery Books, 2018), 113.h Shapiro, P. Clean Meat: How Growing Meat without Animals Will Revolutionize Dinner and the World(New York: Gallery Books, 2018), 115.i Shapiro, P. Clean Meat: How Growing Meat without Animals Will Revolutionize Dinner and the World(New York: Gallery Books, 2018), 118.j Friedman, Z., “Why Bill Gates and Richard Branson Invested in ‘Clean’ Meat,” Forbes (August 2017).Final PDF to printer

sch87956_ch02_013-042.indd 19 11/05/18 01:32 PMChapter 2 Sources of Innovation 19OVERVIEWInnovation can arise from many different sources. It can originate with individuals, as in the familiar image of the lone inventor or users who design solutions for their own needs. Innovation can also come from the research efforts of universities, government laboratories and incubators, or private nonprofit organizations. One primary engine of innovation is firms. Firms are well suited to innovation activities because they typically have greater resources than individuals and a management system to marshal those resources toward a collective purpose. Firms also face strong incentives to develop differentiating new products and services, which may give them an advantage over nonprofit or government-funded entities.An even more important source of innovation, however, does not arise from any one of these sources, but rather the linkages between them. Networks of innovators that leverage knowledge and other resources from multiple sources are one of the most powerful agents of technological advance.1 We can thus think of sources of innovation as composing a complex system wherein any particular innovation may emerge primarily from one or more components of the system or the linkages between them (see Figure2.1).In the sections that follow, we will first consider the role of creativity as the underlying process for the generation of novel and useful ideas. We will then consider how creativity is transformed into innovative outcomes by the separate components of the innovation system (individuals, firms, etc.), and through the linkages between different components (firms’ relationships with their customers, technology transfer from universities to firms, etc.).innovationThe practical implementation of an idea into a new device or process.FIGURE 2.1Sources of Innovation as a SystemPrivateNonprofitsGovernmentFunded ResearchUniversitiesIndividualsFirmsFinal PDF to printer

sch87956_ch02_013-042.indd 20 11/05/18 01:32 PM20 Part One Industry Dynamics of Technological InnovationCREATIVITYInnovation begins with the generation of new ideas. The ability to generate new and useful ideas is termed creativity. Creativity is defined as the ability to produce work that is useful and novel. Novel work must be different from work that has been previously produced and surprising in that it is not simply the next logical step in a series of known solutions.2 The degree to which a product is novel is a function both of how different it is from prior work (e.g., a minor deviation versus a major leap) and of the audience’s prior experiences.3 A product could be novel to the person who made it, but known to most everyone else. In this case, we would call it reinvention. A product could be novel to its immediate audience, yet be well known somewhere else in the world. The most creative works are novel at the individual producer level, the local audience level, and the broader societal level.4Individual CreativityAn individual’s creative ability is a function of his or her intellectual abilities, knowledge, personality, motivation, and environment.The most important intellectual abilities for creative thinking include intelligence, memory, the ability to look at problems in unconventional ways, the ability to analyze which ideas are worth pursuing and which are not, and the ability to articulate those ideas to others and convince others that the ideas are worthwhile. One important intellectual ability for creativity is a person’s ability to let their mind engage in a visual mental activity termed primary process thinking.5 Because of its unstructured nature, primary process thinking can result in combining ideas that are not typically related, leading to what has been termed remote associations or divergent thinking. Sigmund Freud noted that primary process thinking was most likely to occur just before sleep or while dozing or daydreaming; others have observed that it might also be common when distracted by physical exercise, music, or other activities. Creative people may make their minds more open to remote associations and then mentally sort through these associations, selecting the best for further consideration. Having excellent working memory is useful here too—individuals with excellent working memory may be more likely or more able to search longer paths through the network of associations in their mind, enabling them to arrive at a connection between two ideas or facts that seem unexpected or strange to others.6 A connection that appears to be random may not be random at all—it is just difficult for other people to see the association because they are not following as long of a chain of associations.Consistent with this, studies by professors Mathias Benedek and Aljoscha Neubauer found that highly creative people usually follow the same association paths as less creative people—but they do so with such greater speed that they exhaust the common associations sooner, permitting them to get to less common associations earlier than others would.7 Benedek and Neubauer’s research argues that highly creative people’s speed of association is due to exceptional working memory and executive control. In other words, the ability to hold many things in one’s mind simultaneously ideaSomething imagined or pictured in the mind.creativityThe ability to produce novel and useful work.Final PDF to printer

sch87956_ch02_013-042.indd 21 11/05/18 01:32 PMChapter 2 Sources of Innovation 21and maneuver them with great facileness enables a person to rapidly explore many possible associations.8The impact of knowledge on creativity is somewhat double-edged. If an individual has too little knowledge of a field, he or she is unlikely to understand it well enough to contribute meaningfully to it. On the other hand, if an individual knows a field too well, that person can become trapped in the existing logic and paradigms, preventing him or her from coming up with solutions that require an alternative perspective. Thus, an individual with only a moderate degree of knowledge of a field might be able to produce more creative solutions than an individual with extensive knowledgeof the field, and breakthrough innovations are often developed by outsiders to a field.9Consider, for example, Elon Musk. Elon Musk developed a city search Web portal called Zip2 in college, then founded an Internet financial payments company that merged with a rival and developed the PayPal financial payment system. Then after selling PayPal, Musk decided to found SpaceX to develop reusable rockets, and also became part of the founding team of Tesla Motors, an electric vehicle company. Tesla subsequently acquired Solar City (a solar panel company that Elon Musk had helped his cousins create) and diversified into energy storage and more. Musk crosses boundaries because he enjoys tackling new, difficult problems. He has been able to be successful in a wide range of industries in part because he challenges the traditional models in those industries.10 For example, SpaceX was able to dramatically decrease the price of rocket components by building them in-house, and Solar City was able to dramatically increase solar panel adoption by offering a business model based on leasing that gave customers the option of putting no money down and paying for the panels with part of their energy savings.Another great example is provided by Gavriel Iddan, a guided missile designer for the Israeli military who invented a revolutionary way to allow doctors to see inside a patient’s gastrointestinal system. The traditional approach for obtaining images inside the gut is a camera on the end of a long flexible rod. This method is quite uncomfortable, and cannot reach large portions of the small intestine, but it was the industry standard for many decades. Most gastroenterologists have invested in significant training to use endoscopic tools, and many have also purchased endoscopic equipment for their clinics. Not surprisingly then, most innovation in this domain has focused on incremental improvements in the rod, cameras, and imaging software. Iddan, however, approached the problem of viewing the inside of the gut like a guided missile designer—not a gastroenterologist. He did not have the same assumptions about the need to control the camera with a rod, nor to transmit images with a wire. Instead, he invented a capsule (called the PillCam) with a power source, a light source, and two tiny cameras that the patient can swallow. The patient then goes about her day while the camera pill broadcasts images to a video pack worn by the patient. Roughly eight hours later, the patient returns to the doctor’s office to have the images read by a software algorithm that can identify any locations of bleeding (the camera pill exits naturally). The PillCamhas proven to be safer and less expensive than traditional endoscopy (the PillCam costs less than $500), and it is dramatically more comfortable. For patients, the camera pill Final PDF to printer

sch87956_ch02_013-042.indd 22 11/05/18 01:32 PM22 Part One Industry Dynamics of Technological Innovationwas a no brainer; getting doctors to adopt it has been slower because of their existing investment and familiarity with endoscopy. The PillCam is now sold in more than 60 countries, and several companies now offer competing products. The camera pill is a remarkable solution to a difficult problem, and it is easy to see why it came from an outsider, rather than an endoscope producer.11Outsiders often face resistance and skepticism. People tend to discount generalists and are suspicious of people who engage in activities that seem inconsistent with their identity. Outsiders like Musk, however, bring an advantage that insiders and industry veterans often lack. They aren’t trapped by the paradigms and assumptions that have long become calcified in industry veterans, nor do they have the existing investments in tools, expertise, or supplier and customer relationships that make change difficult and unappealing.The personality trait most often associated with creativity is “openness to experience.”12 Openness to experience reflects an individual’s use of active imagination, aesthetic sensitivity (e.g., the appreciation for art and literature), attentiveness to emotion, a preference for variety, and intellectual curiosity. It is assessed by asking individuals to rate their degree of agreement or disagreement with statements such as “Ihave a vivid imagination,” “I enjoy hearing new ideas,” “I have a rich vocabulary,” “I rarely look for deeper meaning in things” (reversed), “I enjoy going to art museums,” “I avoid philosophical discussions” (reversed), “I enjoy wild flights of fantasy,” and more. Individuals who score high on the openness to experience dimension tend to have great intellectual curiosity, are interested in unusual ideas, and are willing to try new things.Intrinsic motivation has also been shown to be very important for creativity.13That is, individuals are more likely to be creative if they work on things they are genuinely interested in and enjoy. In fact, several studies have shown that creativity can be undermined by providing extrinsic motivation such as money or awards.14This raises serious questions about the role played by idea collection systems in organizations that offer monetary rewards for ideas. On the one hand, such extrinsic rewards could derail intrinsic motivation. On the other hand, if the monetary rewards are small, such systems may be primarily serving to invite people to offer ideas, which is a valuable signal about the culture of the firm. More research is needed in this area to know exactly what kind of solicitation for ideas, if any, is most effective.Finally, to fully unleash an individual’s creative potential usually requires a supportive environment with time for the individual to explore their ideas independently, tolerance for unorthodox ideas, a structure that is not overly rigid or hierarchical, and decision norms that do not require consensus.15Organizational CreativityThe creativity of the organization is a function of creativity of the individuals withinthe organization and a variety of social processes and contextual factors that shape the way those individuals interact and behave.16 An organization’s overall creativity level is thus not a simple aggregate of the creativity of the individuals it employs. The organization’s structure, routines, and incentives could thwart individual creativity or amplify it.Final PDF to printer

sch87956_ch02_013-042.indd 23 11/05/18 01:32 PMChapter 2 Sources of Innovation 23The most familiar method of a company tapping the creativity of its individual employees is the suggestion box. In 1895, John Patterson, founder of National Cash Register (NCR), created the first sanctioned suggestion box program to tap the ideas of the hourly worker.17 The program was considered revolutionary in its time. The originators of adopted ideas were awarded $1. In 1904, employees submitted 7000 ideas, of which one-third were adopted. Other firms have created more elaborate systems that not only capture employee ideas, but incorporate mechanisms for selecting and implementing those ideas. Google, for example, utilizes an idea management system whereby employees e-mail their ideas for new products and processes to a company-wide database where every employee can view the idea, comment on it, and rate it (for more on how Google encourages innovation, see the Theory in Action on Inspiring Innovation at Google). Honda of America utilizes an employee-driven idea system (EDIS) whereby employees submit their ideas, and if approved, the employee who submits the idea is responsible for following through on the suggestion, overseeing its progress from concept to implementation. Honda of America reports that more than 75 percent of all ideas are implemented.18 Bank One, one of the largest holding banks in the United States, has created an employee idea program called “OneGreat Idea.” Employees access the company’s idea repository through the company’s intranet. There they can submit their ideas and actively interact and collaborate on the ideas of others.19Through active exchange, the employees can evaluate and refine the ideas, improving their fit with the diverse needs of the organization’s stakeholders.At Bank of New York Mellon they go a step further—the company holds enterprisewide innovation competitions where employees form their own teams and compete in coming up with innovative ideas. These ideas are first screened by judges at both the regional and business-line level. Then, the best ideas are pitched to senior management in a “Shark Tank” style competition that is webcast around the world. If a senior executive sees an idea they like, they step forward and say they will fund it and run with it. The competition both helps the company come up with great ideas and sends a strong signal to employees about the importance of innovation.20Idea collection systems (such as suggestion boxes) are relatively easy and inexpensive to implement, but are only a first step in unleashing employee creativity. Today companies such as Intel, Motorola, 3M, and Hewlett-Packard go to much greater lengths to tap the creative potential embedded in employees, including investing in creativity training programs. Such programs encourage managers to develop verbal and nonverbal cues that signal employees that their thinking and autonomy are respected. These cues shape the culture of the firm and are often more effective than monetary rewards—in fact, as noted previously, sometimes monetary rewards undermine creativity by encouraging employees to focus on extrinsic rather than intrinsic motivation.21 The programs also often incorporate exercises that encourage employees to use creative mechanisms such as developing alternative scenarios, using analogies to compare the problem with another problem that shares similar features or structure, and restating the problem in a new way. One product design firm, IDEO, even encourages employees to develop mock prototypes of potential new products out of inexpensive materials such as cardboard or styrofoam and pretend to use the product, exploring potential design features in a tangible and playful manner.intranetA private network, accessible only to authorized individuals. It is like the Internet but operates only within (“intra”) the organization.Final PDF to printer

24sch87956_ch02_013-042.indd 24 11/05/18 01:32 PMGoogle is always working on a surprising array of projects, ranging from the completely unexpected (such as autonomous self-driving cars and solar energy) to the more mundane (such as e-mail and cloud services).aIn pursuit of continuous innovation at every level of the company, Google uses a range of formal and informal mechanisms to encourage its employees to innovate:b20 Percent Time: All Google engineers are encouraged to spend 20 percent of their time working on their own projects. This was the source of some of Google’s most famous products (e.g., Google Mail, Google News).Recognition Awards: Managers were given discretion to award employees with “recognition awards” to celebrate their innovative ideas.Google Founders’ Awards: Teams doing outstanding work could be awarded substantial stock grants. Some employees had become millionaires from these awards alone.Adsense Ideas Contest: Each quarter, the Adsense online sales and operations teams reviewed 100 to 200submissions from employees around the world, and selected finalists to present their ideas at the quarterly contest.Innovation Reviews: Formal meetings where managers present ideas originated in their divisions directly to founders Larry Page and Sergey Brin, as well as to CEO Eric Bradbury, D. 2011. Google’s rise and rise. Backbone,Oct:24–27. b Groysberg, B., Thomas, D.A. & Wagonfeld, A.B. 2011. Keeping Google “Googley.” Harvard Business School Case9:409–039. c Kirby, J. 2009. How Google really does it. Canadian Business,82(18):54–58.Theory in Action Inspiring Innovation at GoogleTRANSLATING CREATIVITY INTO INNOVATIONInnovation is more than the generation of creative ideas; it is the implementation of those ideas into some new device or process. Innovation requires combining a creative idea with resources and expertise that make it possible to embody the creative idea in a useful form. We will first consider the role of individuals as innovators, including innovation by inventors who specialize in creating new products and processes, and innovation by end users. We then will look at innovation activity that is organized by firms, universities, and government institutions.The InventorThe familiar image of the inventor as an eccentric and doggedly persistent scientist may have some basis in cognitive psychology. Analysis of personality traits of inventors suggests these individuals are likely to be interested in theoretical and abstract thinking, and have an unusual enthusiasm for problem solving. One 10-year study of inventors concludes that the most successful inventors possess the following characteristics:1. They have mastered the basic tools and operations of the field in which they invent, but they have not specialized solely in that field; instead they have pursued two or three fields simultaneously, permitting them to bring different perspectives to each.2. They are curious and more interested in problems than solutions.Final PDF to printer

25sch87956_ch02_013-042.indd 25 11/05/18 01:32 PMTheory in Action Dean KamenIn January 2001, an Internet news story leaked that iconoclastic inventor Dean Kamen had devised a fantastic new invention—a device that could affect the way cities were built, and even change the world. Shrouded in secrecy, the mysterious device, code-named “Ginger” and “IT,” became the talk of the technological world and the general public, as speculation about the technology grew wilder and wilder. In December of that year, Kamen finally unveiled his invention, the Segway Human Transporter.a Based on an elaborate combination of motors, gyroscopes, and a motion control algorithm, the Segway HT was a self-balancing, twowheeled scooter. Though to many it looked like a toy, the Segway represented a significant advance in technology. John Doerr, the venture capitalist behind and Netscape, predicted it would be bigger than the Internet. Though the Segway did not turn out to be a mass market success, its technological achievements were significant. In 2009, General Motors and Segway announced that they were developing a twowheeled, two-seat electric vehicle based on the Segway that would be fast, safe, inexpensive, and clean. The car would run on a lithium-ion battery and achieve speeds of 35 miles per hour.The Segway was the brainchild of Dean Kamen, an inventor with more than 150 U.S. and foreign patents, whose career began in his teenage days of devising mechanical gadgets in his parents’ basement.b Kamen never graduated from college, though he has since received numerous honorary degrees. He is described as tireless and eclectic, an entrepreneur with a seemingly boundless enthusiasm for science and technology. Kamen has received numerous awards for his inventions, including the Kilby award, the Hoover Medal, and the National Medal of Technology. Most of his inventions have been directed at advancing health-care technology. In 1988, he invented the first self-service dialysis machine for people with kidney failure. Kamen had rejected the original proposal for the machine brought to him by Baxter, one of the world’s largest medical equipment manufacturers. To Kamen, the solution was not to come up with a new answer to a known problem, but to instead reformulate the problem: “What if you can find the technology that not only fixes the valves but also makes the whole thing as simple as plugging a cassette into a VCR? Why do patients have to continue to go to these centers? Can we make a machine that can go in the home, give the patients back their dignity, reduce the cost, reduce the trauma?”c The result was the HomeChoice dialysis machine, which won Design News’ 1993 Medical Product of the Year award.In 1999, Kamen’s company, DEKA Research, introduced the IBOT Mobility System, an extremely advanced wheelchair incorporating a sophisticated balancing system that enabled users to climb stairs and negotiate sand, rocks, and curbs. According to Kamen, the IBOT “allowed a disabled person, a person who cannot walk, to basically do all the ordinary things that you take for granted that they can’t do even in a wheelchair, like go up a curb.”d It was the IBOT’s combination of balance and mobility that gave rise to the idea of the Segway.a J. Bender, D. Condon, S. Gadkari, G. Shuster, I. Shuster, and M. A. Schilling, “Designing a New Form of Mobility: Segway Human Transporter,” New York University teaching case, 2003. b E. I. Schwartz, “The Inventor’s Play-Ground,” Technology Review105, no. 8 (2002), pp. 68–73. c Ibid. d The Great Inventor. Retrieved November 19, 2002, from They question the assumptions made in previous work in the field.4. They often have the sense that all knowledge is unified. They seek global solutions rather than local solutions, and are generalists by nature.22These traits are demonstrated by Dean Kamen, inventor of the Segway Human Transporter and the IBOT Mobility System (a technologically advanced wheelchair), profiled in the Theory in Action section on Dean Kamen. They are also illustrated in the following quotes by Nobel laureates. Sir MacFarlane Burnet, Nobel Prize–winning Final PDF to printer

sch87956_ch02_013-042.indd 26 11/05/18 01:32 PM26 Part One Industry Dynamics of Technological Innovationimmunologist, noted, “I think there are dangers for a research man being too well trained in the field he is going to study,”23 and Peter Debye, Nobel Prize–winning chemist, noted, “At the beginning of the Second World War, R. R. Williams of Bell Labs came to Cornell to try to interest me in the polymer field. I said to him, ‘I don’t know anything about polymers. I never thought about them.’ And his answer was, ‘That is why we want you.’”24 The global search for global solutions is aptly illustrated by Thomas Edison, who did not set out to invent just a lightbulb: “The problem then that I undertook to solve was ... the production of the multifarious apparatus, methods, and devices, each adapted for use with every other, and all forming a comprehensive system.”25Such individuals may spend a lifetime developing numerous creative new devices or processes, though they may patent or commercialize few. The qualities that make people inventive do not necessarily make them entrepreneurial; many inventors do not actively seek to patent or commercialize their work. Many of the most well-known inventors (e.g., Alexander Graham Bell, Thomas Alva Edison, Albert Einstein, and Benjamin Franklin), however, had both inventive and entrepreneurial traits.26Innovation by UsersInnovation often originates with those who create solutions for their own needs. Usersoften have both a deep understanding of their unmet needs and the incentive to find ways to fulfill them.27 While manufacturers typically create new product innovations in order to profit from the sale of the innovation to customers, user innovators often have no initial intention to profit from the sale of their innovation––they create the innovation for their own use.28 Users may alter the features of existing products, approach existing manufacturers with product design suggestions, or develop new products themselves. For example, the extremely popular small sailboat, the Laser, was designed without any formal market research or concept testing. Instead it was the creative inspiration of three former Olympic sailors, Ian Bruce, Bruce Kirby, and Hans Vogt. They based the boat design on their own preferences: simplicity, maximum performance, transportability, durability, and low cost. The resulting sailboat became hugely successful; during the 1970s and ’80s, 24 Laser sailboats were produced daily.29Another dramatic example is the development of Indermil, a tissue adhesive based on Super Glue. Super Glue is a powerful instant adhesive, and while its strength and speed of action were a great asset in most product applications, these features also caused a key product concern—its tendency to bond skin. Managers at Loctite, the company that developed Super Glue, wondered if this tendency could be exploited to develop an alternative to sutures for surgical applications. In the 1970s, the company experimented with developing a version of the adhesive that could be packaged and sterilized, but the project failed and funding for it was canceled. In 1980, the project was resurrected when Loctite was approached by a pharmaceutical company that wanted to collaborate on developing a wound closure product. The two companies spent three years attempting to develop special Super Glues that would degrade quickly in thebody, but ultimately shelved the project again. By this point most managers in the company no longer wanted to be involved in developing an alternative to sutures—it was considered far too risky. However, in 1988, Bernie Bolger of Loctite was contacted by Professor Alan Roberts, a worldwide figure in reconstructive surgery. Roberts proceeded to give the managers at Loctite a stunning presentation about doctors who had Final PDF to printer

sch87956_ch02_013-042.indd 27 11/05/18 01:32 PMChapter 2 Sources of Innovation 27responded to the Bradford football stadium fire of 1983. Roberts and many other doctors had been called in to carry out surgery and skin grafting in makeshift tents around the stadium. Because stitching was too slow and skin damage was such that sutures would be ineffective, the doctors had used standard tubes of Super Glue to repair the skin and stick skin grafts in place! Roberts showed pictures of doctors in green garb standing around with Super Glue tubes stuck to their aprons, and pictures of people with large areas of skin missing and then those same people years later, with almost perfect skin repairs. Roberts begged the Loctite managers to continue their work on developing a version of Super Glue for tissue adhesion. Roberts’s presentation was so compelling that the company again took up the project, this time with support from the CEO and serious funding. Approval from the U.S. Food and Drug Administration was won in 2002, and by 2003 the product was selling well in over 40 countries.30Research and Development by FirmsAcross all nations, one of the most obvious sources of firm innovation is the firm’s own research and development efforts. In most developed countries, firms account for the majority of R&D performed (see Figure2.2).Though the terms research and development are often lumped together, they actually represent different kinds of investment in innovation-related activities. Research can refer to both basic research and applied research. Basic research is effort directed at increasing understanding of a topic or field without a specific immediate commercial application in mind. This research advances scientific knowledge, which may (or may not) turn out to have long-run commercial implications. Applied research isdirected basic researchResearch targeted at increasing scientific knowledge for its own sake. It may or may not have any long-term commercial application.applied researchResearch targeted at increasing knowledge for a specific application or need.FIGURE 2.2Percent of R&D That Is Basic, Applied, or Experimental, by Country, 201590. Basic % Applied % Experimental development % OtherChina Japan SouthKoreaFrance India UnitedKingdomFinal PDF to printer

sch87956_ch02_013-042.indd 28 11/05/18 01:32 PM28 Part One Industry Dynamics of Technological Innovationat increasing understanding of a topic to meet a specific need. In industry, this research typically has specific commercial objectives. Development refers to activities that apply knowledge to produce useful devices, materials, or processes. Thus, the term research and development refers to a range of activities that extend from early exploration of a domain to specific commercial implementations. A firm’s R&D intensity (itsR&D expenditures as a percentage of its revenues) has a strong positive correlation with its sales growth rate, sales from new products, and profitability.31Figure2.2 shows the percent of R&D that was basic, applied, or experimental for a selected number of countries in 2015. As shown, China, Japan, and Korea placed much higher emphasis on development than the other countries.During the 1950s and 1960s, scholars of innovation emphasized a science-pushapproach to research and development.32 This approach assumed that innovation proceeded linearly from scientific discovery, to invention, to engineering, then manufacturing activities, and finally marketing. According to this approach, the primary sources of innovation were discoveries in basic science that were translated into commercial applications by the parent firm. This linear process was soon shown to have little applicability to real-world products. In the mid-1960s, another model of innovation gained prominence: the demand-pull model of research and development. This approach argued that innovation was driven by the perceived demand of potential users. Research staff would develop new products in efforts to respond to customer problems or suggestions. This view, however, was also criticized as being too simplistic. Rothwell, for example, points out that different phases of innovation are likely to be characterized by varying levels of science push and demand pull.33Most current research suggests that firms that are successful innovators utilize multiple sources of information and ideas, including:∙ In-house research and development, including basic research.∙ Linkages to customers or other potential users of innovations.∙ Linkages to an external network of firms that may include competitors, complementors, and suppliers.∙ Linkages to other external sources of scientific and technical information, such as universities and government laboratories.34Firm Linkages with Customers, Suppliers, Competitors, and ComplementorsFirms often form alliances with customers, suppliers, complementors, and even competitors to jointly work on an innovation project or to exchange information and other resources in pursuit of innovation. Collaboration might occur in the form of alliances, participation in research consortia, licensing arrangements, contract research and development, joint ventures, and other arrangements. The advantages and disadvantages of different forms of collaboration are discussed in Chapter Eight. Collaborators can pool resources such as knowledge and capital, and they can share the risk of a new product development project.The most frequent collaborations are between firms and their customers, suppliers, and local universities (see Figure2.3).35 Several studies indicate that firms consider developmentActivities that apply knowledge to produce useful devices, materials, or processes.Final PDF to printer

sch87956_ch02_013-042.indd 29 11/05/18 01:32 PMChapter 2 Sources of Innovation 29users their most valuable source of new product ideas. The use of such collaborations is consistent across North America, Europe, and Japan, though Japanese firms may be somewhat more likely to collaborate extensively with their customers (see Figure2.3).Firms may also collaborate with competitors and complementors. Complementorsare organizations (or individuals) that produce complementary goods, such as lightbulbs for lamps, chargers for electric vehicles, or applications for smartphones. In some industries, firms produce a range of goods and the line between competitor and complementor can blur.In some circumstances, firms might be bitter rivals in a particular product category and yet engage in collaborative development in that product category or complementary product categories. For instance, Microsoft competes against Rockstar Games in many video game categories, yet also licenses many Rockstar Games to play on its Xbox models. Rockstar is thus both a competitor and complementor to Microsoft. This can make the relationships between firms very complex—firms may have to manage a delicate balance between its roles of competitor versus complementor, or complementors might refuse to cooperate. For example, when Google bought Motorola Mobility in 2011, makers of mobile phone handsets that used Google’s Android operating system such as Samsung and HTC were watching closely to see if Google would give Motorola handsets preferential access to Google software. Many analysts speculated that Samsung and HTC would begin developing more phones based on Microsoft’s mobile operating system. To avoid the ire and defection of its complementors, Google announced that Motorola would be run as a separate entity and be given no advantages over makers of other Android-powered handsets. Android was to remain an equal-opportunity platform where any handset maker had a shot at making the next great Android phone.36External versus Internal Sourcing of InnovationCritics have often charged that firms are using external sources of technological innovation rather than investing in original research. But empirical evidence suggests that external sources of information are more likely to be complements to rather than substitutes for in-house research and development. Research by the Federation of British Industries indicated firms that had their own research and development were also the heaviest users of external collaboration networks. Presumably doing in-house R&D helps to build the firm’s absorptive capacity, enabling it to better assimilate complementorsProducers of complementary goods or services (e.g., for video game console producers such as Sony or Nintendo, game developers) are complementors.absorptive capacityThe ability of an organization to recognize, assimilate, and utilize new knowledge.FIGURE 2.3Percentage of Companies That Report Extensive Collaboration with Customers, Suppliers, and UniversitiesSource: E. Roberts, “Benchmarking Global Strategic Management of Technology,” Research Technology Management, March–April 2001, pp. 25–36.North America (%) Europe (%) Japan (%)Collaborates with: Customers 44 38 52Suppliers 45 45 41Universities 34 32 34Final PDF to printer

sch87956_ch02_013-042.indd 30 11/05/18 01:32 PM30 Part One Industry Dynamics of Technological Innovationand utilize information obtained externally.37 Absorptive capacity refers to the firm’s ability to understand and use new information (absorptive capacity is discussed in more detail in Chapter Four).Universities and Government-Funded ResearchAnother important source of innovation comes from public research institutions such as universities, government laboratories, and incubators. A significant share of companies report that research from public and nonprofit institutions enabled them to develop innovations that they would not have otherwise developed.38UniversitiesUniversities in the United States performed $64.6 billion worth of R&D in 2015, making them the second largest performer of R&D in the United States after industry, and making the United States the place where universities spend the most money on R&D, on an absolute basis, in the world (see Figure2.4). Of that, over $40 billion was for basic research (versus applied research), making universities the number one performer of basic research in the United States. The nation where universities perform the highest share of R&D, on the other hand, is the United Kingdom, where universities spend $11.9 billion, accounting for 25.6% of total R&D performance in the country. Many universities encourage their faculty to engage in research that may lead to useful innovations. Typically the intellectual property policies of a university embrace both patentable and unpatentable innovations, and the university retains sole discretion over the rights to commercialize the innovation. If an invention is successfully commercialized, the university typically shares the income with the individual inventor(s).39FIGURE 2.4Total R&D Expenditures and Percent of R&D Funds by Performing Sector, by Country 201590. R&D expenditures (PPP $billions)% of total R&D performance0.0UnitedStatesChina Japan Germany SouthKoreaFrance India UnitedKingdomR&D performance: Share of total (%) BusinessR&D performance: Share of total (%) GovernmentR&D performance: Share of total (%) Higher educationR&D performance: Share of total (%) Private nonprofitTotal R&D Expenditures (PPP $billions)Final PDF to printer

sch87956_ch02_013-042.indd 31 11/05/18 01:32 PMChapter 2 Sources of Innovation 31Toincrease the degree to which university research leads to commercial innovation, many universities have established technology transfer offices.In the United States, the creation of university technology transfer offices accelerated rapidly after the Bayh–Dole Act was passed in 1980. This act allowed universities to collect royalties on inventions funded with taxpayer dollars. Before this, the federal government was entitled to all rights from federally funded inventions.40 Several European and Asian countries subsequently followed the U.S. lead and established legislation similar to Bayh–Dole, including Denmark, Austria, Finland, Norway, Germany, France, United Kingdom, Japan, China, and India. Sweden and Italy, on the other hand, still have a policy of “professor’s privilege” where university faculty retain sole ownership rights over their inventions. While the revenues from the university technology transfer activities are still quite small in comparison to university research budgets, their importance is growing. Initially, many anticipated that businesses would flock to license the intellectual property created by universities, leading to a substantial flow in licensing revenues. This “if you build it they will come” mindset turned out to be wrong, and licensing revenues were far less than expected. Now universities are taking a much more active role in helping to create start-ups based on their intellectual property, and in proactively forging relationships with the commercial sector.41 Universities also contribute significantly to innovation through the publication of research results that are incorporated into the development efforts of other organizations and individuals.Government-Funded ResearchGovernments of many countries actively invest in research through their own laboratories, the formation of science parks and incubators, and grants for other public or private research entities. For example, the U.S. Small Business Administration manages two programs that enable innovative small businesses to receive funding from federal agencies such as the Department of Defense, the Department of Energy, the Department of Health and Human Services, and others. The first is the Small Business Innovation Research (SBIR) program. Under the SBIR program, agencies award grants of up to $1,150,000 to small businesses to help them develop and commercialize a new innovation. The second is the Small Business Technology Transfer (STTR) program, which awards grants of up to $1,150,000 to facilitate a partnership between a small business and a nonprofit research institution—its objective is to more fully leverage the innovation that takes place in research laboratories by connecting research scientists with entrepreneurs.Notable examples of science parks with incubators include:∙ Stanford Research Park, established near Stanford University in 1951.∙ Research Triangle Park, established in North Carolina in 1959.∙ Sophia Antipolis Park, established in Southern France in 1969.∙ Cambridge Science Park, established in Cambridge, England, in 1972.These parks create fertile hotbeds for new start-ups and a focal point for the collaboration activities of established firms. Their proximity to university laboratories and other research centers ensures ready access to scientific expertise. Such centers also help university researchers implement their scientific discoveries in technology transfer officesOffices designed to facilitate the transfer of technology developed in a research environment to an environment where it can be commercially parksRegional districts, typically set up by government, to foster R&D collaboration between government, universities, and private firms.incubatorsInstitutions designed to nurture the development of new businesses that might otherwise lack access to adequate funding or advice.Final PDF to printer


What is strategy in technology and innovation management? ›

An effective strategy for managing innovation and technology usually involves making use of comprehensive analysis tools. These tools ensure the team can manage risk to minimize negative impact and exploit opportunities.

What is managing technology in strategic management? ›

The management of technology encompasses the management of research, product and process development, and manufacturing engineering. Put simply, research expands the firm's grasp of science and engineering skills. Development makes this knowledge relevant to part of the firm's business.

What are the different strategies involved in technology management? ›

Strategic Technology Management
  • Management Tools for Decision Support. ...
  • Early Stage Technology acquisition and protection. ...
  • Roadmapping. ...
  • Industrial emergence. ...
  • Make or buy. ...
  • Technology intelligence. ...
  • Technology evaluation and marketing.

What are the 4 types of innovation strategy? ›

Innovation strategies can be classed as proactive, active, reactive and passive (Dodgson et al.

What are the 5 methods of innovation? ›

Here are the five most-effective methods we've found thusfar.
  • Brainstorming: the Walt Disney method. We love brainstorming, and the Walt Disney Method is a simple technique for everyone to take part in. ...
  • Empathy Mapping. We are continuously looking for new methods. ...
  • Belbin Characters. ...
  • Remember the Future. ...
  • A Day In the Life.

What are the 7 steps of the strategic management process? ›

How to Strategic Plan in 7 Steps
  1. Step 1: Environmental Scan. ...
  2. Step 2: Internal Analysis. ...
  3. Step 3: Strategic Direction. ...
  4. Step 4: Develop Goals and Objectives. ...
  5. Step 5: Define Metrics, Set Timelines, and Track Progress. ...
  6. Step 6: Write and Publish a Strategic Plan. ...
  7. Step 7: Plan for Implementation and the Future.
26 Apr 2022

What are the three main tasks of technology management? ›

Technology strategy (a logic or role of technology in organization), Technology forecasting (identification of possible relevant technologies for the organization, possibly through technology scouting), Technology roadmap (mapping technologies to business and market needs), and.

What are the five strategic elements? ›

These five elements of strategy include Arenas, Differentiators, Vehicles, Staging, and Economic Logic. This model was developed by strategy researchers, Donald Hambrick and James Fredrickson.

What are the benefits of technology management in an organization? ›

Technology Business Management offers accurate, real-time reporting through automation, improves decision making for key IT initiatives, helps executives manage the cost and quality of the services they consume, allocates IT resources to the most relevant business priorities, and transforms IT from a cost-center to a ...

What are the 4 types of technology? ›

Types of technology include mechanical technology, medical technology, communications technology, electronic technology, and industrial and manufacturing technologies.

What are the 3 greatest innovations of All Time? ›

The Greatest Inventions In The Past 1000 Years
1Printing PressJohannes Gutenberg
2Electric LightThomas Edison
3AutomobileKarl Benz
4TelephoneAlexander Graham Bell
6 more rows

What are the 10 innovative technologies? ›

Their best answers are below:
  • 5G networks. ...
  • Mainstream blockchain apps. ...
  • More AI-enabled platforms for automated work. ...
  • Machine learning for customer service. ...
  • 3D printing. ...
  • New security measures. ...
  • Augmented reality. ...
  • More AI solutions for small- to medium-sized businesses.

Who made the 4 types of innovation? ›

These four types of innovation are a version created by Greg Satell, an entrepreneur & innovation expert. Previously many scholars had created their own version types of Innovation. Clayton Christensen called his categories- Performance Improving, Efficiency, and Market Creation.

What are the 4 stages of technological development? ›

Technology development cycle describes the process of a new technology through the stages of technological maturity: Research and development. Scientific demonstration. System deployment.

What are the 4 key elements of innovation discuss? ›

The Four Key Elements of Innovation: Collaboration, Ideation, Implementation and Value Creation. Innovation requires collaboration, ideation, implementation and value creation. Community developers actively engaged in innovation illustrated each of these elements during breakout sessions.

What are the 5 discovery skills of innovators? ›

Our research on roughly five hundred innovators compared to about five thousand executives led us to identify five discovery skills that distinguish innovators from typical executives. These skills are associating, questioning, observing, networking, and experimenting.

What are the 7 elements of strategy? ›

Here are the 7 basic elements of a strategic plan: vision, mission, SWOT analysis, core values, goals, objectives, and action plans.

What are the 5 important terms in strategic management? ›

Five stages of strategic management process

identifying and analyzing internal and external strengths and weaknesses; formulating action plans; executing action plans; and. evaluating to what degree action plans have been successful and making changes when desired results are not being produced.

What are the 4 management tasks? ›

They were initially identified as five functions by Henri Fayol in the early 1900s. Over the years, Fayol's functions were combined and reduced to the following four main functions of management: planning, organizing, leading, and controlling.

What are the 3 elements of technology? ›

Technology has three major aspects: goods and services, human activities that create these products, and capabilities that enable technical activities. The aspects are interrelated and mutually reinforcing.

What are the benefits of technology in management and decision making? ›

Technology, through business information systems, supports decision-makers in a host of ways, allowing departmental heads to better make operational and strategic decisions.
  • Information Gathering. ...
  • Data Collection. ...
  • Processing Tools. ...
  • Collaboration. ...
  • Tracking Employee Efficiency. ...
  • Improving Products and Services. ...
  • Asset Management.
28 May 2020

What are the 4 characteristics of a strategic plan? ›

The following four aspects of strategy development are worth attention:
  • The mission. Strategic planning starts with a mission that offers a company a sense of purpose and direction. ...
  • The goals. Strategic planning involves selecting goals. ...
  • Alignment with short-term goals. ...
  • Evaluation and revision.

Is technology management a good degree? ›

The completion of a technology management degree can provide you with many job opportunities in different industries, including: Software or hardware companies: Graduates with a technology management degree may work in a variety of positions for a software or hardware company.

What are 4 types of digital tech? ›

There are four main types of digital transformation that organizations should consider taking advantage of in their own transformation strategy.
Types of Digital Transformation
  • Process Transformation. ...
  • Business Model Transformation. ...
  • Domain Transformation. ...
  • Cultural/Organizational Transformation.

What are the 4 C's of technology? ›

identifies 21st century skills as critical thinking and problem solving, communication, collaboration, and creativity and innovation- more commonly known as the 4Cs.

What are the three 3 major schools of strategy? ›

They are the planning school, the positional school, and the resource based school of strategy (Ritson, 2013).

What are the 4 types of business strategies? ›

What are the Types of Business Strategy?
  • Organizational (Corporate) Strategy.
  • Business (Competitive) Strategy.
  • Functional Strategy.
  • Operating Strategy.
7 Apr 2022

What are the 8 types of strategic planning? ›

8 strategic planning frameworks to hash out your strategy with confidence
  • SWOT analysis. ...
  • Issue-based strategic planning. ...
  • Balanced scorecard. ...
  • Strategy mapping. ...
  • Objectives and key results (OKRs) ...
  • Porter's five forces. ...
  • Gap planning. ...
  • PEST analysis.

What are 2 types of new technologies? ›

  • Computing Power. Computing power has already established its place in the digital era, with almost every device and appliance being computerized. ...
  • Smarter Devices. ...
  • Datafication. ...
  • Artificial Intelligence (AI) and Machine Learning. ...
  • Extended Reality. ...
  • Digital Trust. ...
  • 3D Printing. ...
  • Genomics.
7 Nov 2022

What are 6 types of technology? ›

While a single piece of technology often overlaps into different areas, there are generally six different categories of technology: communication, electrical, energy, manufacturing, medical and transportation.

What is a strategy in innovation? ›

An innovative strategy guides decisions on how resources are to be used to meet a business's objectives for innovation, deliver value and build competitive advantage. Strategies should include: an analysis of a business's competitive and technological environment. its external challenges and opportunities.

Why is strategy important for technology management? ›

An effective technology strategy will make it possible to prioritise resources and funds for all initiatives and projects that will benefit the organisation in a way that will allow it to grow and evolve.

What does innovation strategy mean? ›

Published January 14, 2021 By Alex Elkins. An innovation strategy is a common innovation mission and a detailed plan that aims to create new value, for which customers are willing to pay. It includes a set of policies or behaviors geared toward achieving future organizational growth.

What's innovation strategy mean? ›

What is an Innovation Strategy? An innovation strategy is a clearly-defined plan of structured steps a person or team must perform to achieve the growth and future sustainability goals of an organization.

What are the top strategic technology trends in 2022? ›

Hyperautomation enables scalability, remote operation and business model disruption. AI engineering automates updates to data, models and applications to streamline AI delivery. Combined with strong AI governance, AI engineering will operationalise the delivery of AI to ensure its ongoing business value.

What are the 5 benefits of strategic management? ›

The Advantages of Strategic Management
  • Discharges Board Responsibility. ...
  • Forces An Objective Assessment. ...
  • Provides a Framework For Decision-Making. ...
  • Supports Understanding & Buy-In. ...
  • Enables Measurement of Progress. ...
  • Provides an Organizational Perspective. ...
  • The Future Doesn't Unfold As Anticipated. ...
  • It Can Be Expensive.
21 Nov 2005

What are the 7 indicators for innovation? ›

1. The identified indicators are categorized into company-specific and contextual dimensions (Becheikh et al., 2006). The specific dimensions are innovation culture, strategy, organizational structure, R&D input and activities, competence and knowledge, financial performance and environment, market, and network.

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