If we find a better product, process, or procedure to accomplish our task, we have an innovation. Innovation is a change in method or technology—a positive, useful departure from previous ways of doing things. Two fundamental types of innovation are process and product innovation. Process innovations are changes that affect the way outputs are produced. In Chapter 9 we discussed flexible manufacturing practices such as just-in-time, mass customization, and simultaneous engineering. Each of these innovations has changed the way products are manufactured and distributed. In contrast, product innovations are changes in the actual outputs (goods and services) themselves.3 These two categories cover a multitude of creative new ideas, which in businesses can involve changes in product offerings, the basic “platforms” or common features and processes that underlie product creation, the customer problems the organization can solve, the types of customers the organization serves, the nature of the experience provided by the organization, the way the organization earns money from what it does, the efficiency and effectiveness of its processes, the structure of the organization, the supply chain through which it delivers goods and services, the physical or virtual points at which it interacts with customers, the ways the organization communicates, and the brand associated with the organization and its products.4 innovation
A change in method or technology; a positive, useful departure from previous ways of doing things. There are definable and predictable patterns in the way technologies emerge, develop, and are replaced. Critical forces converge to create new technologies, which then follow well-defined life cycle patterns. Understanding the forces driving technological development and the patterns they follow can help a manager anticipate, monitor, and manage technologies more effectively. • First, there must be a need, or demand, for the technology. Without this need driving the process, there is no reason for technological innovation to occur. • Second, meeting the need must be theoretically possible, and the knowledge to do so must be available from basic science. • Third, we must be able to convert the scientific knowledge into practice in both engineering and economic terms. If we can theoretically do something but doing it is economically impractical, the technology cannot be expected to emerge. • Fourth, the funding, skilled labor, time, space, and other resources needed to develop the technology must be available. • Finally, entrepreneurial initiative is needed to identify and pull all the necessary elements together. Technology Life Cycle
Technological innovations typically follow a relatively predictable pattern called the technology life cycle. Figure 17.1 depicts the pattern. The cycle begins with the recognition of a need and a perception of a means by which the need can be satisfied through applied science or knowledge. The knowledge and ideas are brought together and developed, culminating in a new technological innovation. Early progress can be slow in these formative years as competitors continually experiment with product design and operational characteristics to meet consumer needs. This stage is where the rate of product innovation tends to be highest. For example, during the early years of the auto industry, companies tried a wide range of machines, including electric and steam-driven cars, to determine which product would be most effective. Eventually the internal combustion engine emerged as the dominant design, and the number of product innovations leveled off. technology life cycle
A predictable pattern followed by a technological innovation, from its inception and development to market saturation and replacement. Once early problems are resolved and a dominant design emerges, improvements come more from process innovations to refine the technology. At this point managers can gain an advantage by...
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