1. Technological Innovation
© 2002 McGraw-Hill Companies

2. Key Concepts
At the origin of technological innovation process are inventions or discoveries.
Webster: “We discover what before existed, though to us unknown; we invent what did not before exist.” The criteria for success regarding inventions and discoveries are technical (Is it true/real?) rather than commercial (Does it provide a basis for economic rents?)
Technology refers to the theoretical and practical knowledge, skills, and artifacts that can be used to develop products and services as well as their production and delivery systems. The criteria for success regarding technology are also technical (Can it do the job?) rather than commercial (Can it do the job profitably?). Technologies are usually the outcome of development activities to put inventions and discoveries to practical use.
Some innovations are technology-based; other, are facilitated by new technology. The criteria for success of technological innovation are commercial rather than technical.
Technological entrepreneurship refers to activities that create new resource combinations to make innovation possible, bringing together the technical and commercial worlds in a profitable way.
© 2002 McGraw-Hill Companies

3. The Relationship Between Key Concepts
Technical world
Technological entrepreneurship
Commercial world 
Administration Capabilities 
Results
Inventions/discoveries/technologies
Technological innovations
Research
activities
Development
activities
Product/
Process
development
activities
Market
development
activities
Activities
Tinkering/
experimenting

4. The Strategy-Environment
Shifting From an Industry Focus to a Resource Focus
THE FIRM
Goals and Values
Resources and
Capabilities
Structure and
Systems
THE
INDUSTRY
ENVIRONMENT
Competitors
Customers
Suppliers
STRATEGY
STRATEGY
The Firm-Strategy
interface
The Strategy-Environment
Interface

5. Resources and capabilities
Resources as the Basis for Superior Profitability
(Tangible and Intangible)
Rate of Profit
in Excess of the
Competitive Level
Brands
Product technology
Marketing
capabilities
Process technology
Plant size
Low-cost inputs
Bargaining power
with suppliers
Market share
Patents
Retaliatory
capability
Differentiation
Advantage
Cost
Vertical Power
Monopoly
Barriers to Entry
Industry
Attractiveness
Resources and capabilities

6. Technology Allan Afuah: Codified versus tacit knowledge
Technology is in a broad sense the knowledge and skills used by an organization to transform inputs into outputs.
Technology in this broad sense can be viewed as an organization’s ‘knowledge base’
Most organizations can be better viewed as having multiple technologies - a technology exists for every flow of activities that require knowledge and skills and transforms inputs to outputs.
Codified versus tacit knowledge
© 2002 McGraw-Hill Companies

7. Technology and Product-Market Strategy
Product A
Product B …
Product N
Technology 1
Technology 2 .
Technology K
(*)
Note: Each entry (*) should establish the firm’s relative strength vis-à-vis the state of the art. This matrix should be followed by more detail explanation about the strength of firm’s capabilities.

8. Matching Business and Technology Portfolios
STAR
QUESTION MARK
CASH COW
DOG
BET
DRAW
CASH IN
FOLD B B A A
Attractiveness
Importance
Competitive
position
Position
Harris, Shaw, Somers suggest examining the relationship between the traditional portfolio business matrix and the technology portfolio matrix. Such analysis offers the possibility of investigating the match (or mismatch) of a firm’s business and technology portfolios and resulting technology investment priorities.

9. Technological Evolution and Forecasting
Technology Life Cycle
Stages in Technology
Life Cycle
Importance of Technologies for Competitive Advantage I
Emerging Technologies
Have not yet demonstrated potential for changing the basis of competition. II
Pacing Technologies
Have demonstrated their potential for changing the basis of, competition.
III
Key Technologies
Are embedded in and enable product/process.
Have major impact on value-added stream (Cost, performance, quality)
Allow proprietary/patented positions IV
Base Technologies
Minor impact on value-added stream; common to all competitors; commodity.

10. Assessing Innovative Capabilities
At least three question must be addressed by the assessors:
1. How has the firm been innovative in the areas of product and service offerings and/or production and delivery systems?
2. How good is the fit between the firm’s current business and corporate strategies and its innovative capabilities?
3. What the firm’s needs in term of innovative capabilities to support its long-term business and corporate competitive strategies?

11. Innovative Capabilities
Innovative capabilities can be defined as the comprehensive set of characteristics of an organization that facilitate and support innovation strategies.
Innovative capabilities exist at the business unit and corporate levels.
Business Unit: a unit for which a particular strategy and resource commitment posture can be defined because it has a distinct set of product markets, competitors, and resources.
Corporate: an audits at this level identifies the critical variables that influence both the relationships between corporate and business unit levels in term of innovative capabilities and the formulation and implementation of overall corporate innovation strategy.

12. Business Unit Level Audit
Timing of market entry
Technological leadership or followership
Scope of innovativeness
Rate of innovativeness
Resource availability
Understanding competitors’ innovative strategies and industry evolution
Understanding business unit technological environment
Business Unit innovative strategy
Business unit structural and cultural context
Business unit strategic management capacity

13. Corporate Level Audit
The scope and rate of development of new product and services and /or production and delivery systems that are derived from combining innovative capabilities across existing business unit.
The scope and rate of new business development based on corporate R&D and technology development effort.
Timing of entry with respect to the above.
Resource availability and allocation
Understanding competitors’ innovative strategies and multi-industry evolution
Understanding corporate technological environment
Corporate innovative strategies
Corporate structural and cultural context
Corporate strategic management capacity