Strategic ManagementStrategic Management

T9 Innovation strategies and T9 Innovation strategies and

high tech industrieshigh tech industries

Business AdministrationBusiness AdministrationProf.Dr. E.VatchkovaProf.Dr. E.Vatchkova

Contents Contents J&Sh,02J&Sh,02

1.1. Technology, innovation and strategic Technology, innovation and strategic successsuccess

2.2. Technological trajectories (paths)Technological trajectories (paths)

3.3. Strategic advantage trough innovationStrategic advantage trough innovation

4.4. Strategy and technologyStrategy and technology

5.5. The diffusion of innovationThe diffusion of innovation

6.6. Funding and location of R&D Funding and location of R&D

7.7. Enabling success through technologyEnabling success through technology

Innovation emphasis in mission statements (1)Innovation emphasis in mission statements (1)Willin,T, Hunger, DWillin,T, Hunger, D

AT&TAT&T:” :” We believe innovation is the We believe innovation is the engine that will keep us vital and engine that will keep us vital and growing. Our culture embraces creativity, growing. Our culture embraces creativity, seeks different perspectives and risks seeks different perspectives and risks perusing new opportunities. We create perusing new opportunities. We create and rapidly convert into products and and rapidly convert into products and services, constantly searching for new services, constantly searching for new ways to make technology more useful to ways to make technology more useful to customers” customers”

Innovation emphasis in mission statements (2)Innovation emphasis in mission statements (2)Willin,T, Hunger, DWillin,T, Hunger, D

Intel:Intel: ” ”To succeed we must maintain our To succeed we must maintain our innovative environment. We strive to: innovative environment. We strive to: embrace change, challenge the status embrace change, challenge the status quo, listen to all ideas and view points, quo, listen to all ideas and view points, encourage and reward informed risk encourage and reward informed risk taking, and learn from our successes and taking, and learn from our successes and mistakes”mistakes”

Innovation emphasis in mission statements (3)Innovation emphasis in mission statements (3)Willin,T, Hunger, DWillin,T, Hunger, D

Merck &Co:Merck &Co: ” ”We are dedicated to We are dedicated to achieving the highest level of scientific achieving the highest level of scientific excellence and commit our research to excellence and commit our research to maintaining human health and improving maintaining human health and improving the quality of life” the quality of life”

GilleteGillete: : “We will invest in and master the “We will invest in and master the key technologies vital to category key technologies vital to category success”success”

Innovation – the key strategic Innovation – the key strategic issueissue

1.1. What is the relationship between What is the relationship between technology, innovation and the strategic technology, innovation and the strategic success?success?

2.2. How the technology will assist in the How the technology will assist in the creation and sharing of knowledge in the creation and sharing of knowledge in the organization?organization?

3.3. What forms technological innovation can What forms technological innovation can take?take?

4.4. How this process will provide How this process will provide competitive advantage? competitive advantage?

Technological trajectoriesTechnological trajectories Supplier dominated innovationSupplier dominated innovation

Sale-intensiveSale-intensive

Information intensiveInformation intensive

Science-basedScience-based

Innovation, enabling Innovation, enabling strategic successstrategic success

How technology changes the competitive How technology changes the competitive situation?situation?

How technology influence the strategic How technology influence the strategic capacity?capacity?

How to organize technological change to How to organize technological change to achieve strategic advantage?achieve strategic advantage?

Strategic advantage through Strategic advantage through innovationinnovation

MECHNISMMECHNISM STRATEGIC ADVANTAGESTRATEGIC ADVANTAGE

Offering something:Offering something:

Novelty in product or serviceNovelty in product or service No one else canNo one else can

Novelty in processNovelty in process In ways others can’t match – faster, In ways others can’t match – faster, lower cost, more customizedlower cost, more customized

ComplexityComplexity Which others find difficult to masterWhich others find difficult to master

Legal protection of Legal protection of intellectual propertyintellectual property

Which others can not do unless they Which others can not do unless they pay you a license or other feepay you a license or other fee

Robust designRobust design Which provides the platform on which Which provides the platform on which other generations can be builtother generations can be built

Rewriting the rulesRewriting the rules Which represents a completely new Which represents a completely new product or process which makes the product or process which makes the old ones redundantold ones redundant

Strategy and technologyStrategy and technology

Strategy

Technology and the competitive situation

•Competitive forces•Technology diffusion

Technology and the strategic

capability•Core competences

•Developing/acquiringtechnology

Organizing technology

•Location and funding•Enabling processes

Diffusion of innovationsDiffusion of innovations(the extent and pace at which a market is likely to adopt new (the extent and pace at which a market is likely to adopt new

products)products)

Supply – side modelsSupply – side models: product features: product features Degree of improvement in performanceDegree of improvement in performance Compatibility with other factorsCompatibility with other factors ComplexityComplexity ExperimentationExperimentation

Demand - side modelsDemand - side models: the market : the market processes between consumersprocesses between consumers

Integration Integration of these two sets of of these two sets of knowledgeknowledge

Developing or acquiring technology Developing or acquiring technology -General principles-General principles

In – house developmentIn – house development- Gaining first mover advantagesGaining first mover advantages

AlliancesAlliances- Appropriate for “threshold” technologiesAppropriate for “threshold” technologies

Acquisition of current players or Acquisition of current players or rightsrights- if speed is important- if speed is important

Funding and location of Funding and location of R&DR&D

Assessing newAssessing new

technologiestechnologies

CommercializingCommercializing

New New technologies technologies

ExploratoryExploratory

Development ofDevelopment of

new new technologiestechnologies

Incremental Incremental product or product or process process improvementsimprovements

LOCATED AT

FUNDED BY

Corporate Divisional

Corporate

Divisional

Processes, enabling the success of Processes, enabling the success of strategiesstrategies

Scanning the business environmentScanning the business environment

Resourcing developments adequatelyResourcing developments adequately

Developing creative climate, where Developing creative climate, where innovation is fosteredinnovation is fostered

Creating learning organizationCreating learning organization

Corporate entrepreneurship Corporate entrepreneurship (Intrapreneurship)(Intrapreneurship)

“ “ the birth of new business within existing the birth of new business within existing organizations, that is, internal innovation organizations, that is, internal innovation or venturing; and the transformation of or venturing; and the transformation of organizations through renewal of the key organizations through renewal of the key ideas on which they are built, that is, ideas on which they are built, that is, strategic renewal” strategic renewal”

Guth, GinsburgGuth, Ginsburg

Organizational designs for corporate Organizational designs for corporate entrepreneurship (1)entrepreneurship (1)

Wheelen, HungerWheelen, Hunger

1.1. Direct integrationDirect integration

2.2. New product business departmentNew product business department

3.3. Special business unitsSpecial business units

4.4. Micro new ventures departmentMicro new ventures department

5.5. New venture divisionNew venture division

6.6. Independent business unitIndependent business unit

7.7. Nurturing and contractingNurturing and contracting

8.8. ContractingContracting

9.9. Complete spin-offComplete spin-off