1. Copyright © 2011 by Professor D.J. LEE, Kyung Hee University. All rights reserved. Chapter 1 Introduction

2. 1-2 Importance of Technological Innovation Technological innovation now the single most important driver of competitive success in many industries Many firms earn over one-third of sales on products developed within last five years (Johnson & Johnson, 3M) Product innovations help firms protect margins by offering new, differentiated features.(Toyota, Nokia, Sony) Process innovations help make manufacturing more efficient.

3. 1-3 Importance of Technological Innovation Advances in information technology have enabled faster innovation CAD/CAM systems enable rapid design and shorter production runs Importance of innovation and advances in information technology have lead to: Shorter product lifecycles (more rapid product obsolescence) More rapid new product introductions Greater market segmentation

4. 1-4 Importance of Technological Innovation Sales Time Introduction Growth MaturityDecline Ex) Home electronics Before 1920 : 34 yrs,1920 – 1939: 22yrs, 1940 – 1959: 8 yrs Now: 12 – 24 months (18-36 months for large appliances) Shorter product lifecycles

5. 1-5 Importance of Technological Innovation More rapid new product introductions Shortening of the period from invention to product development YearTechnologyPeriod 1852Fluorescent lamp82 yrs 1887Radar46 yrs 1891Zipper34 yrs 1907TV29 yrs 1940Transistor10 yrs Automobiles : 33 months (Hyundai, 2010)

6. 1-6 Impact on Society Innovation enables a wider range of goods and services to be delivered to people worldwide More efficient food production, improved medical technologies, better transportation, etc. Increases Gross Domestic Product by making labor and capital more effective and efficient (Solow residuals) However, may result in negative externalities, E.g., pollution, erosion, antibiotic-resistant bacteria

7. 1-7 Innovation by Industry: The Importance of Strategy Successful innovation requires carefully crafted strategies and implementation processes. Innovation funnel Most innovative ideas do not become successful new products.

8. 1-8 How long does new product development take? Study administered by the Product Development and Management Association found: Length of development cycle varies with innovativeness of project Incremental projects took 6.5 months from concept to market introduction “More innovative” projects took just over 14 months. New-to-the-world products took 24 months. On average, firms reported 12% to 40% shorter cycle times than they reported in 1995. Research Brief

9. 1-9 The Strategic Management of Technological Innovation Part One: The foundations of technological Innovation Sources of innovation Types and patterns of innovation Standards battles and design dominance Timing of Entry Part I: Industry Dynamics of Technological Innovation Chapter 2 Sources of Innovation Chapter 5 Timing of Entry Chapter 4 Standards Battles and Design Dominance Chapter 3 Types and Patterns of Innovation

10. 1-10 The Strategic Management of Technological Innovation Part Two: Formulating Technological Innovation Strategy Defining the organization’s strategic direction Choosing innovation projects Collaboration strategies Protecting innovation Part II: Formulating Technological Innovation Strategy Chapter 6 Defining the Organization’s Strategic Direction Chapter 8 Collaboration Strategies Chapter 7 Choosing Innovation Projects Chapter 9 Protecting Innovation

11. 1-11 The Strategic Management of Technological Innovation Part Three: Implementing Technological Innovation Strategy Organizing for innovation Managing the new product development process Managing new product development teams Crafting a deployment strategy Part III: Implementing Technological Innovation Strategy Chapter 10 Organizing for Innovation Chapter 13 Crafting a Deployment Strategy Chapter 12 Managing New Product Development Teams Chapter 11 Managing the New Product Development Process

12. 1-12 Supplementary Topics 1. What is technology? 2. What is MOT?

13. 1-13 Technology & Science Science: (activities to find) A set of systematic knowledge which is established by general natural laws or truth Technology: By utilizing scientific knowledge system, (1) process of transforming inputs into outputs (2) all kinds of activities with regard to producing “more outputs” or “better products” (3) any knowledge or information which makes it possible to perform the tasks, provide the services, and produce the products Technology is usually the outcome of development activities to put (scientific) inventions and discoveries to practical use

14. 1-14 Technology & Science Nature Observation, Rational understanding Science Technology Practical utilization Relationship between science and technology MOT is more interested in technology !

15. 1-15 Classification of Technology Tech. Products R&D intensity = R&D investment/Revenue High technology / Medium tech. / Low tech. There is no rigorous definition In general, technology which is necessary for products requiring (more than 4% / 1~4% / less than 1% ) of R&D intensity is called as (High tech. / Medium tech. / Low tech.) (1) By the level of technological complexity

16. 1-16 Classification of Technology

17. 1-17 Classification of Technology (2) By the significance in firm’s competitive advantage Base( 기반 ) tech.: These are technologies that a firm must master to be an effective competitor in its chosen product-market mix. They are necessary, but not sufficient, to achieve competitive advantage. These technologies are widely known and readily available. Key( 핵심 ) tech.: P rovide competitive advantage. They may permit the producer to embed differentiating features or functions in the product or to attain greater efficiencies in the production process. Pacing( 선도 ) tech.: Could become tomorrow's key technologies. Not every participant in an industry can afford to invest in pacing technologies. Emerging( 신생 ) tech. : R epresent progressive developments within a field for competitive advantage, however, the degree of impact, status, and economic viability of them are not proven yet.

18. 1-18 Definition of MOT - MOT links engineering, science and management disciplines to address the planning, development, and implementation of technological capabilities to shape and accomplish the strategic and operational objectives of an organization.(Task Force on MOT, National research council, 1987) Engineering Or science ManagementMOT

19. 1-19 Concepts of MOT Management: activities that acquire, control, and allocate the (managerial) resources to achieve the purpose of organization efficiently MOT: firm’s general management/supporting activities regarding the effective acquisition, control, and utilization of technological resources BusinessR&DProductionSales ManagementMOT Operations Management Marketing

20. 1-20 Process of MOT Tech. Strategy & Planning Tech. Strategy & Planning Investment in R&D projects Investment in R&D projects Evaluation & Selection of R&D Evaluation & Selection of R&D R&D Management Tech. asset Mgmt. Commercialization Organization Schedule Cost Production Strategic decision makingOperational decision making