MB 08-01 : STRATEGIC TECHNOLOGY MANAGEMENT 1.2

3. What are the types of innovation? Explain. Give an example in each case?

Innovation involves the creation of a product, service, or process that is new to an organization. It is the introduction into the marketplace, either by utilization or by commercialization, of a new product, service, or process. It does not have to be New World: rather it is viewed as the first use of an idea within an organization, whether or not the idea has been adopted by other organizations already. The technology need not be novel or ground breaking .An innovation may be a change in industrial practice, which improves productivity .The innovation process involves integration of existing technology and inventions to create a new or improved product, process, or system.

TYPES OF INNOVATION
Innovations can influence a product, a process, or a system. Technological innovation in service is as important as it in products. It includes enhancing existing service by introducing a good idea or developing a new technological agent such as software. System innovations may involve the development of different components that are integrated into a system. To gain marketplace acceptance, an innovation must contribute to the creation of value.
Innovations may be classified as:
 Radical or fundamentally new innovation
 Architecture or configurational innovation and
 Incremental or evolutionary innovation
Radical breakthrough innovations are usually based on an invention for example: the transistor. They change or create new industries. They are relatively rare and start outside the boundaries of a firm.
Architectural or configurational innovation involves simply reconfiguring existing components, for example: miniaturizing a hearing aid.
Incremental, or evolutionary, innovations are small but important improvements in a product, process, or service. They are relatively common and are created within the firms of an industry, for example: thinner mechanical watches.
By actively managing the above streams of innovation, firms will be able to shape industry’s standards (through incremental innovation), take advantage of fundamentally new markets for existing technology (through architectural innovation) and proactively introduce substitute products with radically new technology which cannibalize existing products, create new products, markets and competitive rules (through radical innovation).

4.What are the steps involved in assets approach to strategic technology management?
ASSETS process is a systematic process to develop and implement a technology strategy.
ASSETS are designed to be an ongoing process. New ideas or technical areas should be added continuously and out-dated ones dropped as needed. The first three steps in this process represent the strategy development or formation stage; the last three steps represent the strategy implementation stage. A variety of tools are available to facilitate the conduct of each of the steps. The steps in the process are:
Step1: Assess current situation
A full understanding of the company’s performance and current position is the intended outcome. Since goals are usually expressed in the form of business performance a review of fundamental company goals is also important to establish the proper basis for all other aspects of the business.
It is also essential to develop a full understanding of the future business environment; that is, the customers, suppliers, competitors, demand for product, industry financial ratios and economic trends. At the same time it is also important to develop a similar understanding of the technology environment, including items such as patents, key technologies, centers of research excellence and capability, levels of funding, the potential for breakthroughs and barriers to technology deployment. The convergence of business and technology planning begins to occur as the environment for each is established and relationships between the two environments are drawn.
An important element of the self-examination process is to review the firm’s Strategic Technology Areas (STAs). These are the areas of functional technology expertise in the firm’s operations, which give the firm an advantage in the market place for serving particular customer needs. The firm’s current and desired STAs are the basic building blocks, which form the targets of technology investments. Documentation of the company’s situation is completed and a description of the future business and technological environment is included. This forms an input to step2 while the ideas for the specific investment portfolio go to step3

Step2: Specify Technology Strategy
Specifying a ‘game plan’ for technology development and use is important because it deals with the conversion of the information and concepts developed in step1 into realistic plans and actions. This game plan is technology strategy : customers, competitive approach, investments and organizational culture. The strategy should provide guidelines or criteria for selecting and implementing specific actions or tactics. This involves the simple act of answering questions such as:
 What technologies to develop, license, or buy
 Whether to seek technology leadership
 How to protect property rights
 How to capture economic returns.
Technology strategy must be a consistent part of overall business strategies. The following are fundamental business strategies that have important technology components:
 Market competence: what value to offer the customer?
1. Product differentiation
2. Low cost producer
 Market scope: which market boundaries to target?
1. Largest market share
2. Specialized niche player
 Market timing: when to introduce innovations?
1. First mover or leader
2. Wait and improve
Ultimately, strategy must break down to action and actions must be assignable in such a way that the responsible individual can be held accountable for whether there is success or not. These actions must also be expressed in such a way that they can actually be accomplished. Thus the definition of decision criteria regarding future customers, product markets capabilities and resources are essential for this step.
This step technology strategy provides approaches to gain product-market advantage, decision criteria for the next step of selecting a technology investment portfolio and areas of technical concentration for target applications. It also implies use of selected organizational practices, such as ‘innovation teams’ and systems, as well as some attention to contingency planning.
Step3: Select Technology Portfolio
Before selecting technical areas for research, it is necessary, it is necessary to identify suitable candidates. The identification process can begin with the output from step1: a routine scanning of literature; observing the technical environment, monitoring competitors, suppliers and customers; attending conferences, symposia and other meetings on technical subjects. Sometimes it is useful to make assignments to particular technical areas for review and consideration .In addition to the simple process of observation it is necessary to connect what is happening, or may happen, in a technical area and the implications for the company or organization.
Having identified, creatively a series of potential candidates for future development, a process of evaluation and selection of a mix of activities supporting company goals and consistent with company business and technological risk preference is necessary. If the screening process is difficult or expensive, there is a tendency to limit the list of candidates. This raises doubt regarding the adequacy of the subjects being considered. The development of the efficient, thorough screening process encourages consideration of all ideas that are discovered. Thus, it is very important for confidence building to have a screening process that is comprehensive and decisive.
A few criteria for this step include: pay back-cost benefit ratio, market or spin off potential, business sector priority, continuing availability of funding, technological risk, potential, business sector priority, continuing availability of funding, technological risk, potential for high innovation and the like. The main result prioritized list of attractive technology investment projects.
Step4: Execute Technology Investments
Resource commitments to technology investments are made is step 4 and the utilization of the resources to conduct the planned project work is undertaken. The basic approach is embodied in the project management knowledge base and includes the following functions:
Organizing the work team
• Planning the details of the work
• Staffing the work activities
• Directing and leading the effort
• Controlling the activities to ensure compliance with plans and needs

Generally, considerable effort is required to keep programs moving along rapidly. There is a strong tendency for time frames to be extended and for decisions to be prolonged. Milestones for success are established and periodic review of expectations compared with what actually take place. The results of effectively completing this task will be to produce well-developed prototypes and technical products that are satisfactory for pushing through the next stage transferring results of actions.
Step 5:Transfer Results for Deployment
Ultimately, the efforts of technology acquisition and development must have a pay-off. The utilization of the results in production process and products is the ultimate goal. The following activities are needed: prototype development, scale-up, production or purchase, distribution or installation. These latter steps are very expensive in comparison with the cost of the technology acquisition. In addition this is frequently a long and difficult path because of the internal objections and resistance by those who stand to lose as a result of the adoption of a new technology.
The results of this step should complete the innovation process and should bring the new technology to use in beneficial application such as production process or products.

Step6: Secure Long Term Position
The final step is a monitoring, review and feedback activity. In managing technology in a rapidly changing environment it is vital to monitor continually the activities of others, and business and technical trends. Such monitoring is needed to provide long term insurance against unpredictable changes in technology, markets or institutions that can unseat even a well-conceived plan f action.
Moreover, because environments and goals change, business and technology strategies will also change. Thus, step6 includes activities to acquire routine data on performance and trends modifications and to communicate to relevant users in the firm, particularly where in investments (step3) are required. This step also provides information inputs back to step1 to initiate the process in future technology efforts.
The principal output of step5 is information, which is stored for the future use and which provides inputs to the current situation assessment in the first step. In general, the information needs are tied to how the firm monitors the environment and revises its plans and programs.