Integrating technology and strategy

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Integrating technology and strategy

• V. Mangematin

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Outlines

• 1. Key issues in management of innovation
• Innovation and competitive advantage
• Types of innovation
• Innovation is not easy but imperative
• How to innovate
• New challenges, old responses?
• 2. Innovation as a management process
• What is innovation?
• Evolving Models of the process
• Consequence of partial understanding of the
  innovation process
• Can we manage innovation?
• 3. Framework for an innovation strategy

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1.1. Innovation and competitive advantage

• Sources of competitive advantages
• Traditionally size, possession of assets,
  proximity of sources of energy
• Recently capacity to mobilize knowledge and
  technological skills, experience to create new
  products processes and services

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1.1. Innovation and competitive advantage

• Innovation contributes to competitive advantages
  in several ways
• Evidences of correlation between market
  performance and new products
• Maintaining market shares
• Mature markets, influence of non price-factors
  (differentiation)
• New products Adaptation to the environment and
  gain of market positions
• Role of process innovation (car Toyota product
  system)
• Role of process innovation in service industry
  (ATM, on line reservation, Benetton IT led
  production system)
• Low cost and south West airlines reservation
  system

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1.1. Innovation and competitive advantage
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1.2. Types of innovation

• Definitions
• Change Two forms
• In the things (product or service) that an
  organisation offers
• In the ways in which they are created and
  delivered

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1.2. Types of innovation
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1.2. Types of innovation

• Variations on the innovation theme
• Continuous and discontinuous change
• Ex of typewriter and PC incumbents and new
  entrants
• Building business through innovation
• Architectural and component innovation
• Change the way in which the components of a
  product are linked together while leaving the
  core design concepts untouched Architectural
• Destroys the usefulness of the firms
  architectural knowledge but preserves the
  usefulness of its knowledge about the products
  components
• Component physically distinct portion of the
  product that embodies a core design concept and
  performs a well defined function

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1.2. Types of innovation

• Radical innovation change of the core concept
  and the components
• Architectural reinforcement of basic concept and
  change the organisation of the components
• Incremental Innovation of components.
  Reinforcement of existing concepts and unchanged
  linkages
• Modular changes of components and unchanged
  linkages.

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1.2. Types of innovations

• Variations on the innovation theme
• Technology fusion (convergence of technologies)
• Ex nanotechnologies
• Intangible innovations
• Riding two horses
• Innovation
• Day to day activity
• Ex Pharmaceutical industry

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1.3. Innovation is not easy

• 1952 Edsel car
• 1952 long distance planes
• 1960s Concorde?
• 1990s Iridium project
• 2000s OS exploitation system

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1.3. but imperative
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1.4. How to innovate?

• Management of four phases
• Scan and search their environment
• Strategically select from this set of potential
  triggers for innovation those things the
  organisation will commit resources
• Resource the option
• Implement the innovation
• Reflect about what happened in the previous phases

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1.5. New challenges, old responses?

• Living with discontinuous change
• Impacts vary from niches to the whole economy
• Rules and regulation
• External choc (energy crisis)
• Etc.
• Knowledge is becoming central to competitiveness
• Creation and/or replication of knowledge
• Technological and/or market knowledge

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1.5. New challenges, old responses?

• Living with discontinuous change
• Change, whilst dramatic may not affect the entire
  business
• Extent to which disruption is seen as a
  technology driven event.
• Innovation in a global environment
• Innovation in a virtual world
• The challenge of networking
• The challenge of the oil shortage

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Guidelines to read bulb lights and Kodak cases

• Invention/innovation/system
• How does the organisation build around the
  invention?
• Identify uncertainties and threats

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What do we learn from class 1?

• Competitive advantage
• temporary and localised
• Variety of sources
• Innovation two dimensions
• Product/process/service
• Degree of innovativeness

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What do we learn from class 1?

• Managerial implications
• Managing radical and incremental innovations on
  the same product or process
• Managing four phases
• Scan and search the environment
• Select of potential triggers for innovation and
  commit resources
• Resource the option
• Implement innovation

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Outlines

• 1. Key issues in management of innovation
• Innovation and competitive advantage
• Types of innovation
• Innovation is not easy but imperative
• How to innovate
• New challenges, old responses?
• 2. Innovation as a management process
• What is innovation?
• Evolving Models of the process
• Consequence of partial understanding of the
  innovation process
• Can we manage innovation?
• 3. Framework for an innovation strategy

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2.1. What is innovation?

• What is innovation?
• (discussion of the papers)
• Innovation as a Core business process
• Variation on a theme
• Innovations vary widely in scale nature degree of
  novelty
• Shocks trigger innovations change happens when
  people or organisations reach a threshold of
  opportunity or dissatisfaction
• Ideas proliferate after starting in a single
  directions, proliferation
• Setbacks frequently arise, plans are over
  optimistic
• Change frequently occurs from external sources
• Top management plays a role in sponsoring but
  also in criticizing and shaping innovation
• Innovation involves learning

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2.1. What is innovation?
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2.2. Evolving Models of the process
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2.2. Evolving Models of the process
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2.3. Consequence of partial understanding of the
innovation process

• Example
• Seeing innovation as a linear technology push
  leads in practice to one dimensional management
• Seeing innovation simply in terms of major
  breakthroughs leads to ignore incremental
  innovations
• Seeing innovation as an isolated change leads to
  misunderstanding of the market (systemic
  dimension of innovation)
• Seeing innovation as product or process only

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2.3. Consequence of partial understanding of the
innovation process
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2.4. Can we manage innovation?

• No easy recipe as uncertainty
• Underlying patterns of success
• Routines the way we do things here as a
  result or repetition and reinforcement
• Experiment, time, repetition
• Routines of the organisation OR routines on how
  projects are managed

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Successful innovations and innovators
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Blueprints for success
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Managing innovation
Effective implementation mechanisms
Strategy
Phases in the innovation process
Supportive organizational context
Effective external linkages
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Conclusions and managerial implications

• Innovation as a system which must be managed
  overtime (process management)
• Adaptation of the process to the context
• Routines as a way to manage innovation
• Creating convergence as early as possible

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Outlines

• 1. Key issues in management of innovation
• Innovation and competitive advantage
• Types of innovation
• Innovation is not easy but imperative
• How to innovate
• New challenges, old responses?
• 2. Innovation as a management process
• What is innovation?
• Evolving Models of the process
• Consequence of partial understanding of the
  innovation process
• Can we manage innovation?
• 3. Framework for an innovation strategy
• Rationalist or incrementalist strategies for
  innovation
• Implication for Management
• Technology and competitive analysis

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3.1. Rationalist or incrementalist strategies for
innovation

• Rationalist strategy
• Be conscious of trends in the competitive
  environment
• Prepare for a changing future
• Ensure that sufficient attention is focused on
  the longer term
• Ensure coherence in objectives and action in
  large organisations

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3.1. Rationalist or incrementalist strategies for
innovation

• Incrementalist strategy
• Make deliberate steps or change towards the
  stated objective
• Measure and Evaluate the effects of the steps
• Adjust (if necessary) the objective and decide on
  the next step
• i.e. trial and error, learning
• Or Symptom? Diagnosis ? Treatment ? Diagnosis ?
  Adjust treatment ? Cure (doctors and patients)
• Or Design ? Development ? Test ? Adjust design ?
  Retest ? Operate (engineers)

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3.2. Implication for Management

• Practice of corporate strategy
• Learning, from analysis to experience
• How to cope more effectively with complexity and
  change
• Given uncertainty, explore the implication of a
  range of possible future trends
• Ensure broad participation and informal channels
  of communication
• Encourage the use of multiple sources of
  information, debate and scepticism
• Expect to change strategies in the lights of new
  and unexpected evidences

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3.2. Implication for Management

• Successful management practices are never fully
  reproducible
• A critical reading of the evidence underlying any
  claims to have identified the factors associated
  with management success
• Careful comparison of contexts

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3.3. Technology and competitive analysis

• The five forces driving industry competition
• Relation with suppliers
• Relation with buyers
• New entrants
• Substitute products
• Rivalry amongst established firms
• Generic strategies for firms
• Overall cost leadership
• Product differentiation
• Cost focus
• Differentiation focus

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Threats and opportunities from changes in
technology in Porter's competitive analysis

• Potential entrants and substitute products
• Threats of new entrants can be increased through
  reducing economies of scale (e.g.
  telecommunications, publishing), and through
  substitute products (e.g. microcomputers,
  aluminium for steel tans).
• They can be decreased through lock-in' to
  technological standards (e.g. Microsoft), and
  through patent and other legal protection (e.g.
  most major ethical drugs).
• Power of suppliers over buyers
• This can be increased by innovations that are
  more essential to the firm's inputs (e.g.
  microprocessors into computers).
• It can be decreased by innovations that reduce
  technological dependence on suppliers
  (engineering materials).
• Rivalry amongst established firms
• Rival firms can establish a monopoly position
  through innovation (e.g. Polaroid in instant
  photography), or destroy a monopoly position
  through imitation (US General Electric in brain
  scanners).

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Innovation leadership versus followership
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Contexts

• Size matters
• Established product base matters
• Nature of the product and of the consumers

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Conclusion and managerial implications

• Incrementalist strategies even if rationalist
  strategies is in use
• Partial replicability of the conditions of
  success Idiosyncrasy of organisation and
  conditions of competition