IPPTChap001_rev_6th_ed_MDOforstudents.pptx

Strategic Management of Technological Innovation Textbook Cover 6th Edition

Melissa
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Chapter 1
Introduction

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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
Product innovations help firms protect margins by offering new, differentiated features.
Process innovations help make manufacturing more efficient.

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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
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Figure 1.2 GDP per Capita, 1969-2014

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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
However, may result in negative externalities,

E.g., pollution, erosion, antibiotic-resistant bacteria
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Designer babies

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.
E.g., The New Product Development Funnel in Pharmaceuticals
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5,000 Compounds
125 Leads
2-3 drugs tested
1 drug

Rx

Discovery & Preclinical
3-6 years
Clinical Trials
6-7 years
Approval
½-2 years

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Chapter 1 Summary
Technological innovation is now often the single most important competitive driver in many industries. Many firms receive more than one-third of their sales and profits from products developed within the past five years.
The increasing importance of innovation has been driven largely by the globalization of markets and the advent of advanced technologies that enable more rapid product design and allow shorter production runs to be economically feasible.
Technological innovation has a number of important effects on society, including fostering increased GDP, enabling greater communication and mobility, and improving medical treatments.
Technological innovation may also pose some negative externalities, including pollution, resource depletion, and other unintended consequences of technological change.
While government plays a significant role in innovation, industry provides the majority of R&D funds that are ultimately applied to technological innovation.
Successful innovation requires an in-depth understanding of the dynamics of innovation, a well-crafted innovation strategy, and well-developed processes for implementing the innovation strategy

Research Brief
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.
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The Era of Open Innovation

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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

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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

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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

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Discussion Questions
1. Why is innovation so important for firms to compete in many industries?

2. What are some of the advantages of technological innovation? Disadvantages?

3. Why do you think so many innovation projects fail to generate an economic return?

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Part One: Industry Dynamics of Technological Innovation
The sources from which innovation arises, including the role of individuals, organizations, government institutions, and networks,

Types of innovations, and common industry patterns of technological evolution and diffusion,

The factors that determine whether industries experience pressure to select a dominant design, and what drives which technologies dominate others,

Effects of timing of entry, and how firms can identify (and manage) their entry options.

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