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Welcome to this class, let us look at a few more points on technology management. So,
as I have mentioned in the previous classes, you can look at technology driving the market,
you can also look at market driving the technology, how is it?
So, advances in technology, help companies to put out new products into the market. So,
when the consumer looks at these new products, he keeps on giving a constant feedback to
the companies. This consumer communication or this consumer feedback results in technology
improvements. So, this technology improvements or technology
changes work both ways. One, technology advances coming to the market, market provides a feedback
and when market provides a feedback, may be it asks something more. Then, again technology
improvements start coming in. So, this is a very continuous process.
So, in other words, you can look at technology, initially to be a driver of the markets, but
market to come back to technology again to call for, to make improvements further improvements.
So, in that sense, it becomes a driver again to technology. So, initially technology is
driving markets, but markets are also driving technology.
So, what does this mean? This means that you have to continuously monitor this technology.
This calls for technology management and this is due to market changes. Suppose, you do
not do it; that is, as a company you do not do it, it is very possible that your competitor
will do it. Then, when your competitor does it, you will
lag behind; your market share gets affected. All those types of things will follow. So,
in other words, technology management is becoming important in the present day context. So,
this is what the present day markets are driving technology towards.
This chapter 14, in my book on strategic management, gives you with respect to technology management.
It is given, in other strategic issues, some points it tries to tell you - I just read
from this book - some ideas of this technology changes. This is from page number 218 and
219 of the book. Changes in technology which are rapidly taking place due to market changes
or making it crucial, to manage technology better for corporate success.
Companies have to think of methodologies by which they can generate significant return
on investment in R and D. This calls for innovative approaches from R and D personal and their,
and their, ability to bring out new products. It calls for risks on the part of management.
Some of the well-known companies have included innovation in their mission statement.
3 M's policy is to generate at least 25 percent of its revenue from products, introduced in
the preceding 3 years towards this end. The company spends 1 billion dollars on R and
D. It is very important that the top management laid emphasis on technology and innovation
and this is reinforced throughout the company. The top management should not only encourage
new product development, but also ensure the technologies are developed using the costumer
interest in mind. According to a study in the US, of the 11000
new products marketed by 77 manufacturing service and consumer product firms, only 56
percent were still sold; 5 years later only 1 in 13 new product ideas made it to test
markets. However, this should not deter well-known companies from going in for thrush R and D
and innovation. Exhibit 14.1, here in this book on page number
219, gives some examples of innovation emphasis in mission statements. I read a few of them;
one is A T and T. According, to their mission statement, we believe innovation is the engine
that keeps us vital and growing. Our culture embraces creativity, six different perspectives
and risks perceiving new opportunities. We create and rapidly convert technology into
products and services, constantly searching for new ways, to make technology more useful
for customer. I read the mission statement of Intel - to
succeed, we must maintain our innovative environment; we strive to embrace change, challenge the
status quo, listen to all ideas and viewpoints, encourage and reward informed risk taking
and learn from our successes and mistakes. I read another form, that is Hallmark - we
believe that creativity and quality in our concept, products and services are essential
to our success. The well-known blade manufacturing company Gillette - we invest in and master
the key technologies, vital to category success. So, this is, in other words, what I was trying
to say, till now that is initially you, your R and D makes changes in technology and those
changes in technology are reflected in the changes in the attributes of the products.
They are put into the market. The market calls for something, additional something, more.
This is, this is, given back to the company, through what is called the customer feedback.
So, the consumer feedback or the customer feedback provides the company what does the
consumer want further? So, initially it looks as though technology is driving the market.
But as soon as a new technology starts making forays into the market, the market always
calls for something more and then becomes the market driving the technology.
So, your force to go into changes in technology. So, in other words, the technology management
is a continuous process, which the company has to keep its eyes open towards So, the
technology management essentially taking place due to market changes again crucial for the
corporate success or the company success.
Now, why are we looking at all this? We are looking at all this, for technology changes
or technology management, because you invest so much of money in R and D that R and D investment
should generate a reasonable ROI. So, that requires that the R and D personal
and also the personal from other department, especially the marketing department, they
provides innovative approaches or they come out with innovative approaches. So, that becomes,
that is becoming, in fact, the order of the day.
So, when you are taking innovative approaches, what is required or what is called for from
the management side? From the management side it must be willing to take risks. So, in other
words, a certain entrepreneurial attitude is called for on the part of the management.
The management should be willing to take risks. So, what is this going to translate into,
if you really start wondering the top management should stress upon new product development.
It should have costumer needs and wants in mind. So, the top management should be willing
to take risks and they should be looking at new product development whole .
This calls for environmental scanning. This scanning requires, scanning both the internal
and the external environment. Internal environment is within the organization. External environment
outside that is a business landscape. So, internal, you are doing it for your strengths
and weakness. External is for the opportunities and threats. Together, they constitute, what
we call is this this is what. Now, using this scanning, you should be able
or company should be able to come up with, what is called a marketing intelligence system?
This marketing intelligence system is where you try to understand, what is happening in
the markets with respect to your products, product lines. What you are putting out in
the market, vis-a-vis what the competitor is putting out in the market? So, all these
constituting, what is called the marketing intelligence and perhaps what the competitor
plans to put out further into the market. Now, all this should help in building a technology
road map. It should help in building a technology road map for you. And what is more important
or crucial for the Indian firms is that in this ongoing process of globalization, our
firms should learn to listen not only to their current customers but also look at new costumers.
This is especially true of the IT industry, because the IT industry should be willing
to look at other countries apart from the United States.
So, because, the other economies are also growing, the US economy is the, whereas the
US economy till very recently it was the main business opportunity for most of the IT majors
in the country. The opportunities or the business opportunities coming from the US is now getting
reduced. So, in order to keep up this market growth rate at which they have been growing,
it is essential for these IT companies to look at other markets also.
So, most of the other companies, IT majors are looking at Europe. So, this is what is
happening for firms to escape, to always escape, from technological discontinuity. So, a firm
should always keep abreast of technological changes. So, suppose something happens and
you are not able to keep in phase with the technology changes, it is very possible that
the market will dump you. It is also very possible that the firm will
get caught in this dooms loop, which we have discussed earlier. So, keeping in, keeping
all this in view, the company has to decide on the strategy formulation. This strategy
formulation can take different forms.
What are the forms it can take? It can say, the company has to decide whether it will
go in for product R and D or process R and D. What type of R and D it wants to go through?
The source technology, whether it wants to source the technology from outside or develop
it inside and whether it has the technological competence to make use of sourced technology
and product portfolio. Suppose, you source it from outside, do you
have the technological capability to manage it? This is the question that comes in; so
all this is brought out again in this figure, product and process R and D in my book on
page number 220. So, this book has a diagram which is figure 14.1, where it lists the product
and process R and D in the innovation life cycle. So, according to this figure, if you
see the product and process R and D in the innovation life cycle, the proportion of this
varies as the products moves along the life cycle.
Product innovations are most important in the interdictory stages, but later on process
innovation such as product quality manufacturing facilities become important. So, this is one
important lesson for the Indian firms. Initially, the product R and D is very important, in
this competitive scenario, but later on when the product stabilizes in the market, so reaches
this growth phase, it is very important the company moves or shift from product R and
D, to process R and D. Because that is the one which enables you to improve the attributes
or the product quality and further, and so that your life of the product in the market
place can be enhanced. So, the objective of any company would be to prolong the life of
its product in the market, to the extent that it is possible. No company, would like to
see its products die out very soon in the market place.
So, in order to do that, R and D is now playing a role and initially it can be product R and
D. Later on, when you move in the product life cycle, that is, the PLC the process R
and D takes over and starts making improvement in the product quality with respect to its
attributes. So, as I mentioned, all this calls for a certain
amount of risk from the management. So, the risk taking ability of the management, the
top management comes out into the fore in this whole process. So, this is precisely
the scenario in which the Indian firms are operating now.
What does it mean? The top management with respect to Indian firms should also be willing
to take risks, which are not shy away from this risk. It is very possible that some of
these risks may boomerang and for that you should again have backup options, so that,
even if it boomerangs, you would not these sinks; that is, the company would not sink.
So, you have other fall back options. So, all that requires what is called a corporate
entrepreneurship coming to the fore and more importantly so, with respect to Indian companies.
This corporate entrepreneurship is also known as this corporate entrepreneurship. Many definitions
have been given; I quote one or two definitions; the one definition given by Guth and Ginsberg's
is that: "The birth of new businesses within existing organizations, that is, internal
innovation or venturing: and the transformation of organizations through renewal of the key
ideas on which they are built, that is strategic renewal."
So, this is something which is internal you start doing, what is called churning in the
organization. This internal churning in the organization, acts as a motivator for internal
innovation or venturing. And this internal innovation or venturing helps in transforming
organizations through renewal of key ideas. So, this is the strategic renewal which these
people are talking about. There are three measures of R and D success,
which are listed here: one is improving technology transfer from research to business unit. This
is what we call or what I have been emphasizing in the throughout this different sessions.
Now, the companies are looking at applied research. Pure research is fine, but for a
company it wants to benefit from this pure research, it says pure research you did up
to this point. Now, help me in coming out with a product through this pure research
that is what the business units are looking at, so, the technology transfer from research
to business units. So, business units are more keen or keened up on this applied R and
D. So, they want this R and D to be applied to the market scenario.
Now, what is this getting translated to? They want this to get translated to accelerating
the time to product for new products or process. In other words, the time to market that is
the time to come out with the new product to enter the market, they want it to get shrunk.
So, it should not to take a very long period to come out with new products; it should be
it should get reduced. So, this is what is happening in the present day manufacturing
industry. Whether you take the with respect, whether
you take the automotive industry or whether you take the electronic industry or whether
you take the telecommunication industry, the way the models are getting changed, new models
getting introduced in to the market place; so, new models always coming with newer attributes.
So, consumer gets use to this newer model. So, by the time he gets, he masters this model,
he finds that another new model has already been introduced by the company into the market.
So all this contributing to what is called this applied R and D helping coming out with
new products. So, the third aspect of this R and D success
is institutionalizing cross functional participation in R and D. So, what does this mean? It means
that R and D should not keep itself aloof. So, it should be able to interact with other
departments many times proactively. So, the first thing it should be able to do
is to interact with the marketing department. So, find out what is happening with respect
to the R and D, that it has done in the market place, that can come through the market feedback.
So, in other words, the R and D should constantly interact with the marketing department and
the marketing department and the R and D department together should interact with the production
department to translate the changes into production changes.
So, this is where the whole process of new product development is heading towards and
this new product development. The new changes in this whole process, it is now getting translated
into a study by itself, that is called the quality function deployment.
So, the quality function deployment, you are basically relying on the market feedback with
respect to your products. So, the products are put out by the companies applied R and
D. The companies, applied R and D, helps you to put out the products into the market. The
market gives you feedback; both the R and D and the marketing of the depart company
work on this feedback and the feedback is the... R and D then makes the required changes
puts it in to production department to find out whether it can be put through the production
process. So, this is what was also being mentioned,
whereas initially you are looking at the product R and D. Later on the process R and D becomes
quite important.
Now, given this type of a relationship, that is, a corporate entrepreneurship, a few ideas
on this corporate entrepreneurship is mentioned in this book again. So, it gives in exhibit
14.2, 13 best practices for R and D improvement.
I just read these 13 best practices, the one the corporate and business units strategies
are well defined and clearly communicated. Then core technologies are defined and communicated
to R and D. This whole 13 best practices for R and D improvement has, is a result or is
based on a study of third 15 MNCs with successful R and D operations included major firms like
HP, Bell Labs, etcetera. Then, investments are made in developing multinational
R and D capabilities to tap ideas throughout the world. Then, funding for basic research
comes from corporate sources to ensure a long term focus. Funding for development comes
from business units to ensure accountability. Kindly note this funding for basic research
comes from corporate sources to ensure a long term focus. Funding for development comes
from business units to ensure accountability. Basic and applied research are done either
at a central facility or at a smaller number of labs, each focused on a particular discipline
of science or technology. Development works takes place at the business
unit sight. Then formal cross functional teams are created for basic applied research and
developmental work, formal mechanism exist for scientist to interact regularly and among
R and D and other functions. Analytical tools are used for selecting projects
and also for evaluation of ongoing projects. Then, the transfer of technology to business
units is the most important measure of R and D performance. Effective means of career development
are in place at all levels of R and D. Recruitment of new people is from diverse universities
and from other companies, when specific experience and skills required would take a long time
to develop internally. Some basic research is performed internally,
but there are also university and third party relationships. Formal mechanisms are used
for monitoring external technological developments. This is a taken from this benchmarking R and
D and productivity by these two and .
So, this is the way things have changed in the present day competitive scenario. All
this resulting in this three measures of R and D success, which has been listed here,
that is, improving technology transfer from research to business, then accelerating time
to market for new products or processes and then institutionalizing cross functional participation
in R and D. Now, there are a few things which when you
are looking at Indian organizations, you have to look at, you cannot always be looking at
the only major companies. Now, you can always ask the question, what happens to small business
units? How should they really survive in this type
of hyper competitive space, business space, and land space? So, what should be the strategy
that should be adopted. So, a few points on this is again mentioned in my book; so just
trying to give you a few points. So, if you look at the Indian context, SME employs less
than 200 people with an annual turnover of rupees 5 crore; that is small and business
units are refer to as a SMEs. The entrepreneurial side of this SMEs, though
having its primary goals as profits, that is, the entrepreneurial venture and growth
is characterized by innovative strategic planning. So, what does this mean? It is not that strategic
planning is something confined to well established or large units. Even in the case of small
and medium scale units, innovative strategic planning is the key for survival in the present
market scenario. So, in the present market scenario where you
are having hyper competition, so in order to survive, even an SME has to look at innovative
strategic planning; so this is the key for not just for the large and the major business
units, but also for the smaller business, smaller and medium business units, not only
to survive but also to grow in the market place.
So, the difference between a small firm and an entrepreneurial venture, a small definition
is a small characterization is given. Most firms start with just a single product; those
oriented towards growth, immediately start looking for another one. It is the planning
approach that separates the entrepreneur from the small business owner. So, this is what
is referred to as innovative strategic planning. SMEs in the Indian context have to recognize
that the use of strategic planning is not confined to large scale enterprises.
So, if you really see in the US, 500 small business firms, 86 percent perform strategic
planning and reported improved profits. So, there is no reason as to why an Indian SME
should not also report improved profits through strategic planning. So, this becomes very
essential right now, even for our Indian companies. So, this is another words, the strategic management
process which we have gone through in the earlier classes, whether it is the total process
or whether it is the step and ladder approach, whatever we listed, all these points become
applicable even to SMEs; this is the point, one has to keep in mind.
Now, SMEs in India have to develop entrepreneurial characteristics, in order to survive in the
changing market scenario. How are these characteristics going to help or how are they going to become
key for the success of the firm? So, they can help in identifying potential opportunities
better; that is, the innovative strategic planning can improve the firm's ability to
identify potential opportunities better. Then can infuse a sense of urgency making them
action oriented. So, there is always this hyper competition,
keeping the company on its toes. So, the result is you have a sense of urgency with respect
to the actions of the company and knowledge of key to success in the industry. So, you
keep on looking at what is happening; this is what I said, R and D and market interactions.
Initially, technology you can say is the driver, but now when it becomes hyper competition
you think that market is driving technology; so both are true.
So, initially technology drives the market. A market asks for more and then it looks as
the market is driving technological improvements. So, this is what the market wants. So, the
result is you have a very close link between R and D and marketing, which has to be forged
in a company and both have to work in tandem, to see what could be the type of improvements,
that could be brought about in the product attributes already in a market place.
So, this is required to be along at the product life in the market place. So, this is what
the PLC; the study of the PLC helps you. So, the marketing department should be able to
communicate with the markets better and this communication should be made understandable
to R and D also better. So, this is where you have the knowledge of
what is called the industrial marketing. Taking the key or taking the key place in the present
day set up, so when you are looking at manufacturing industries, you look at industrial marketing.
So, if you have your engineering knowledge, it always comes in handy to understand the
markets better. So, this is what it comes to.
The fourth aspect, supplementing through the outside helps skills, knowledge and ability.
So, the result is, suppose, you internally you do not have the skills. Let us say, then,
what is required is you may have go in for external assistance; it can come from well-established
institutions or universities or R and D labs, things like that or it can also come through
the help of well-known scientist or consultants in whatever form the company might make to
make use of . So, there is an exhibit which is given here,
that is, this exhibit 14.3 on page number 222 and 223, just reading a few of these guide
lines. One is focus on industries facing sustained technological or regulatory changes, especially
those which witness exists by established competition.
Seek industries whose smaller firms have relatively weak competition. Seek industries that are
in early high growth stages of evaluation, then seek industries in which it is possible
to create high barriers for subsequent entry. Just go back on these things once more, focus
on industries facing sustain technological or regulatory changes, especially those which
witness exists by a established competition. What are you trying to understand by this?
You can know what really the cause was for these firms exiting the market. What type
of competition made them exit the market? So, that you are prepared better, that is,
the firm is prepared better then seek industries, whose smaller firms have relatively weak competitive
position. So, suppose you are able to improve upon this
firm and come out with your new product developments better. Then, you are on much better wicket
actually, and then seek industries that are in early high growth stages of evaluation.
So, this is what, we discussed also earlier, so applicable both to the new products and
also to the industry. So, you have the product life cycle applying
to new products. So, you are going through introduction growth maturity and decline applies
also to industries as well as. So, you are at different stages of, in the evaluation
with respect to the industry. The growth then the industry mature some and you should ensure
that the industry keeps going as long as possible, not allowed to the industry to die, because
of this hyper competition. Suppose, it is required for the industry to
diversify come out whatever, is required to prolong the life. So, then, seek industries
in which it is possible to create high barriers for subsequent entry. So, this is, where you
put some leads on competition, and then seek industries with heterogeneous products that
are relatively unimportant to the costumers overall. Success, do not keep on looking,
at homogeneous products, also look at heterogeneous products.
Seek to differentiate your products from those of your competitors in ways, that are meaningful
to your costumers; in other words, costumer should be able to appreciate the changes that
the R and D has done with respect to your product or your innovative strategic planning
has done with respect to your products product attributes.
Then seek to dominate the market segments you compete in; if necessary segment the market
differently or change the nature and focus of your differentiation efforts to increase
the domination of the segments you serve. Seek to dominate the market segments you compete
in, if necessary segment the markets differently or change the nature and focus of your differentiation
efforts to increase the domination of the segments you serve.
So, in other words, what is required for the success of a new venture is to dominate the
market. So, in other words, an SME should try to become a leader in the market place
as quickly as possible; so it can be through the different new products or new product
lines whatever, is required. It should try to occupy the leadership position.
Then stress innovation especially new product innovation that is built on existing organizational
capabilities, seeks natural organic growth through flexibility and opportunism that builds
on organizational strengths. So, this is, very important, you cannot be outsourcing;
this innovation always it should also come from within.
So, you should try to promote this internal innovation to the maximum possible extent.
Now, note that all these are required not only for the success of the SMEs per say,
it is also required for the industrial development of the country at large. So, if the manufacturing
sector has to record - a good growth. The contribution of the SMEs also becomes vital.
So, you cannot just be accepting only the contributions to come from the major industries.
So, if you really look at the rate of growth of our country, we are growing at about 8.5
percent on an average over the last 5 years, which is in fact, what do you call the highest
growth rate recorded with respect to its GDP, in highest growth recorded with respect to
the country, since independence. So, if you really see, we are growing at about 8.5 percent,
which is quite good; considering, that there has been recession in the global economy,
all the types of things which have come in. So, to keep up this growth or even to further,
this growth what is required is a thrust on this innovative strategic plan. So, this is
where all this SMEs the success of this SME's is also going to matter a lot.
So, we will stop here. We will continue in the next class. Thank you.