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Strategic Management of

Technology-based Innovation

TM 721 – Managerial Economics---------------------------------------------------------------------

Ms. Sheryl B. Satorreursuladesk@gmail.com 1

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Innovation

“the process whereby new and improved products, processes, materials, and services are developed and transferred to a plant and/or market where they are appropriate”

-David Rubenstein, Co-Founder The Carlyle Group 2

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Types of Innovation1.Product Innovation

Developing a new productIt is concerned with increasing the revenue.

2.Process Innovation improving the processes employed to

produce or deliver the product, and to make it more efficient or productive 

It is concerned with reducing the costs. 3

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Innovation MatrixCustomer need

Technologyold

new

new

IncrementalInnovation

Market Breakthrough

Technology Breakthrough

RadicalInnovation

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Innovation Matrix + examplesCustomer need

Technologyold

new

new

Airplanes > Superbody Airbus new Gillete razorSolid > Liquid soap

Propeller planes > jet planesLaser hair treatmentRadio tubes > Transistor>IC

Air-conditionerCellphoneDisposable diapersElectric coffee makerInstant photographyPost-it-notes

Hand sanitizer Likas papaya soapSUVsPaper shredderremote control

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Why are theseRadical Innovations?

Air-conditionerCellular phoneDigital cameraDVDDisposable diapers

Electric coffee maker

Elevator

Instant photography

Microwave oven

MP3PDAsPCsTVThe web

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Effect of Innovations

•“Sustaining innovation”

•“Disruptive innovation”

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Sustaining Innovation

improves the performance of existing products along values of mainstream customers

hardly results in the downfall of established companies

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Disruptive Innovation will often have characteristics that

traditional customer segments may not want, at least initially

appear as inferior or riskier vs. existing products

eventually changes consumer behavior and preferences, and industry hierarchy

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Adoption Curve

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Q ui ckTi me™ and a decompressor

are needed to see thi s pi cture.

ice harvestingindustry

ice factories

refrigeratorcompanies

Jumping the Curves

Time

turbulenceperiod

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Strategic Management of Technology-based Innovation involves:

PLANNING IMPLEMENTATION EVALUATION AND CONTROL

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Planning for Innovation

• Summarizes what the business is aboutDetermine the

Vision

• Summarizes the firm’s vision itself, its values, and what it values

Set the Mission

• Establishes how the firm will carry out its mission

Establish Goals and Objectives

• Delineates the specific operational activities the firm will undertake to achieve its goals and objectives

Set Strategy 13

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Innovation Concerns for Different Levels of Strategy

Strategic Coordinate entire organization; Exploit new technologies; Assess external factors; Maximize returns; Determine which technologies and units to emphasize process.

Business Coordination and implementation of innovation of individual business unit; Manage product and technical innovation; Ensure cost-effectiveness of that unit and relevant technologies.

Operational Manage change at operational level; Provide training; Assist marketing; Control costs; Supply technical support.

Levels of Strategy and their Innovation Concerns

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Factors to be considered when Planning for Innovation1. Creativity

AdventuringConfrontingPortfolio of Skills

2. Organization-wide issuesCommunicationReward SystemOrganizational Assumptions

3. Political issues 15

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Managerial Guidelines: Planning for Innovation

1. Recognize that innovative individuals exist throughout the organization.

2. Periodically reconsider how work is being accomplished.

3. Encourage “turning the prism” to put a new light on problems.

4. Ask employees what their biggest aggravations are.

5. Train people to recognize their creative abilities and participate in the planning innovation.

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Guiding Questions: Planning for Innovation

1. As the planning process begins, have the firm’s current activities been examined to determine whether they are providing leverage for the firm to maintain a sustainable competitive advantage?

2. In the planning process, are concepts being developed that provide an immediate measurable and discernible competitive advantage?

3. Does the process of innovation add to the firm’s value for shareholders and other stakeholders? How? If not, can the planning process be changed to ensure that it does?

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Guiding Questions: Planning for Innovation

4. Do employees feel encouraged about their importance in the innovation activities of the firm, particularly the planning process?

5. Have the leaders of innovation been identified at all levels of the organization? Are these individuals involved in the planning process?

6. Does the result of the planning process indicate what needs to be done next, who needs to do it, and when it needs to be done?

7. How are “newness” and “failure” handled by the firm?

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Implementation in InnovationLeadership

• Install supportive systems and policies

• Create mechanisms for innovation

• Allocate ample resources to critical activities

Alignment• Tie rewards to

achievement• Build “fit”• Build a capable

organization

Engagement• Build a knowledge-

based culture• Training and

development• Mentoring

Extension• Develop and share

lessons learned• Monitor

organizational competencies

• Look for other opportunities

What to do now versus later?

What is the timing, human resources, and existing platforms that are necessary or useful?

What should be delegated and to whom?

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Managerial Guidelines: Implementation of Innovation

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Checklist for Innovation Implementation

Vision Leadership• Does the team have a clearly

articulated vision, mission, or set of objectives?

• Is the vision (objectives) clearly stated?• Did everyone participated in creating it

(them)?• Is this vision (objectives) attainable?

• Is excellence of central importance to the team?

• How does the manager monitor and improve performance levels?

• Are all team members committed to excellence?

• Does the leader encourage open idea exchanges?

Processes Resources• Do team members share information

fully?• Do all team members participate

decision making?• Are team members comfortable

proposing new ideas?• Are team members able to challenge

standard practice?• Is there a climate of trust within the

group?

• Does management support new ideas?• Do team members support new ideas

by giving time, cooperation, and resources?

• Does the team leader offer practical help and resources for the development of new ideas?

• What happens when a new idea fails?21

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Evaluation and Control in Innovation

Establish Objectives (control)

Establish Standards (control)

Measure Performance (evaluation)

Compare Performance to Standards (evaluation)

Take Corrective

Action (control)

Do nothing or Reinforce

actions (control)

inadequate

adequate

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Managerial Guidelines: Evaluation and Control in Innovation

1. A balance among various approaches in evaluation and control.

2. Involvement of top management.3. A focus on the ends.4. Objectives should be specific and

understood.5. Feedback is an integral part of the

innovation process; it is not a one-year occurrence.

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Guiding Questions: Evaluation and Control in Innovation1. Is the evaluation and control process future

oriented?2. Are costs and benefits being properly weighed

against each other?3. Are a number of innovative ideas being

generated?4. Is the proper amount of funding available to the

best potential projects?5. Are the product and process features that are

being implemented appropriate and necessary?6. Do the people in the organization “feel good”

about what the expectations, rewards, and outcomes are?

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The World’s 50 Most Innovative Companies 2012

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Most Innovative Company 2012

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Steve Jobs’ 7 Principles of Innovation

1. Do what you love. 2. Put a dent in the universe.3. Connect things to spark your

creativity.4. Say no to 1,000 things. 5. Create insanely different

experiences. 6. Master the message. 7. Sell dreams, not products.  

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"When all think alike, then no one is thinking."

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--Walter Lippman (American public intellectual writer, reporter, and political commentator)

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Thank you

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Sources:1. Bruton, Grarry D. and Maragaret A. White. Strategic

Management of Technology and Innovation. Canada: South-Western CENGAGE Learning, 2011.

2. Posadas, Dennis. Rice & Chips: technopreneurship and innovation in Asia. Singapore: Prentice Hall, 2007.

3. Gonzales, Federico C. Technopreneurship Basics.4. Gallo, Carmine. What makes Steve ‘Steve’? Forbes

Online Magazine. December 5, 2012 http://www.forbes.com/sites/carminegallo/2011/08/24/what-makes-steve-steve/

5. Greeley, Matthew. Innovation Essentials: 10 Basic Principles of Innovation - Everyone Should Know. Customer Think. December 3, 2012 http://www.customerthink.com/blog/innovation_essentials_10_basic_principles_of_innovation_everyone_should_know

6. The World’s 50 Most Innovative Companies 2012. Fast Company. December 1, 2012 http://www.fastcompany.com/most-innovative-companies/2012/full-list

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