Technology-Based Industries Chapter 6: Technology-Based Industries and the Management of Innovation Team 3 2/ 13/19 at 10:00 AM Kaitlyn Thompson, Marcos Acosta, Jess Francis, Anthony Greer

Technology as a Competitive Advantage The Process: Basic Knowledge - a starting point for invention Invention - creation of new products or knowledge Innovation - new methods of producing inventions Diffusion - spread of information Protection: Copyrights, Patents, Trademarks, Trade Secrets

Development of Technology Basic Knowledge Invention Innovation Diffusion Adoption Imitation Supply Side Demand Side

Property Rights in Innovation Innovation highly depends on the ability to establish property rights. Patents: exclusive rights to a new and useful product, process, substance or design. Obtaining a patent requires that the invention is novel, useful and not excessively obvious. Patent law varies from country to country. In the US, a patent is valid for 17 years (14 for a design). Copyrights: exclusive production, publication or sales rights to the creators of artistic, literary, dramatic or musical works. Examples include articles, books, drawings, maps, photographs and musical compositions. Trademarks: words, symbols or other marks used to distinguish the goods or services supplied by a firm. In the US and UK, they are registered with the Patent Office. Trademarks provide the basis for brand identification. Trade Secrets: offer a modest degree of legal protection for recipes, formulae, industrial processes, customer lists and other knowledge acquired in the course of business.

Staying Ahead in the Industry Complementary Resources - A technique applied to develop, manufacture, market and/or distribute innovation. Core Innovation Competitive Manufacturing Complementary Technology Finance Marketing Other Service Distribution

Strategies to Exploit Innovation: How and when to enter Licensing Risk & Return: Little investment risk but investment is also limited. Outsourcing certain functions Risk & Return: Limits capital investment, but may create dependence on suppliers. Strategic Alliance Risk & Return: Benefits of flexibility. Risks of informal structure. Joint Venture Risk & Return: shares investment & risk. Risk of partner disagreement & culture clash. Internal Commercialization Risk & Return: Biggest investment requirement & corresponding risks. Benefits of control.

Resources & Capabilities of the Firm Start up firms possess few of the complementary resources and capabilities needed to commercialize their innovations. They will be attracted to licensing or assessing the resources of larger firms through outsourcing, alliances or joint ventures. Large or established corporations can draw on their wealth of resources and capabilities so they are better placed for internal commercialization.

Timing innovation: To lead or to follow? The extent to which innovation can be protected by property rights or lead-time advantages If an innovation is appropriable through a patent, copyright. Or lead-time advantage, there is an advantage in being an early mover The importance of complementary resources The more important are complementary resources in exploiting an innovation, the greater the risks of pioneering The potential to establish a standard The greater the importance of technical standards, the greater the advantages of being an early mover in order to influence those standards and gain the market momentum needed to establish leadership

Managing Risks Emerging industries are risky. That risk is classified as two main sources: Technological uncertainty Arises from the unpredictability of technological evolution and the complex dynamics through which technical standards are dominant designs are selected Market uncertainty This relates to the size and growth rates of the markets for new products Strategies for limiting risk: Cooperating with lead users: careful monitoring of and response to market trends from lead users can be a source of leading market indicators. Limiting risk exposure: financial risks can be reduced by financial practices that minimize exposure to adversity; avoiding debt and keeping costs low. Flexibility: rapid response to unpredicted events, keeping options open and delaying commitment to a specific technology until its potential is clear.

Types of Standards A standard is a format, an interface or a system that allows interoperability. It is compliance with standards that allows us to browse millions of different web pages. Public standards: available to all either free or for a nominal fee. They are set by public bodies and industry associations. Private standards: Also known as Proprietary standards are those where the technologies and designs are owned by companies or individuals. Mandatory standards: Set by the government and have a force of law behind them. De facto standards: emerge through voluntary adoption by producers and users. An issue is that they may take a long time to emerge and that results in duplication of investments and delayed development in the market.

Winning Standards wars A key issue is to determine whether we are competing in a market w=that will converge on a single technical standard Before you got to war assemble allies: You’ll need the support of consumers, suppliers of complements, and even competitors; not even the strongest companies can afford to go it alone in a standards war. Pre-empt the market: Enter the market early, achieve fast-cycle product development, make early deals with key customers and adopt penetration pricing Manage expectations: Convince customers, suppliers and producers of complementary goods that you will emerge as the victor.

Implementing technology strategies: creating the conditions for innovation Managing creativity: Individual creativity/innovation depends on the organizational environment in which people work-- creativity is stimulated by human interaction Organizing for creativity: In order for creativity to take hold, thus encouraging innovation, there must be enough space and resources to provide the opportunity to be spontaneous. Balancing creativity and commercial direction: For creativity to create value, both for the company and society, it must be directed and harnessed Balancing creative freedom with discipline and integration is key

Summary Emerging and Technology-based Industry Competitive advantage: Nurturing Innovation Exploiting Innovation Strategy Formulation Fundamental Strategic Issues: Drivers of Competition Resources and Capabilities Design of Structures and Systems