The Importance of Technological Innovation
SYNOPSIS OF CHAPTER
The purpose of this chapter is to set the stage for the course by establishing the importance of managing technological innovation strategically. First the chapter overviews the importance of technological innovation for a firm’s competitive success and the advancement of society in general. The chapter points out that 1) many firms are relying on products developed in the previous three to five years for large portions of their sales and profits; 2) globalization has increased competition putting more pressure on firms to compete through innovation; 3) advances in information technology have enabled both process improvements and the efficient generation of product variants which facilitates the execution of a differentiation strategy at a reasonable cost; and that 3) the residual growth in the GDP can be attributed to technological change. Both the positive and negative effects of technological innovation are described. Advances in food production are an example of the first and pollution is an example of the latter. Next the innovation funnel is introduced to show students that on average 3,000 raw ideas must enter the funnel in order to arrive at 1 successful new product launch. Gestione dell'innovazione 2/ed
Melissa A. Schilling Copyright © 2009 - The McGraw-Hill Companies srl Second, the chapter discusses the risks and cost of innovation. On average, many more innovation projects fail than succeed. Firms are much more likely to be successful if they have a well-crafted strategy for technological innovation. The book is organized to follow the chronological sequence of developing and deploying a rigorous technological innovation strategy, leading the students through each of the primary aspects that should be considered. The final section of the chapter outlines the layout of the book, reviewing the contribution each chapter makes to our understanding of the innovation process. TEACHING OBJECTIVES
Introduce students to the role technological innovation plays in the competitive dynamics of industries and how technological innovation affects society both positively and negatively. 2.
Identify the drivers of technological innovation.
Discover the attributes of successful innovation strategies including an in-depth understanding of the dynamics of innovation, a well-crafted innovation strategy, and a well-developed process for implementing the innovation strategy. LECTURE OUTLINE
In many industries technological innovation is now the single most important driver of competitive success and because the pace of innovation has increased many firms now rely on products developed within the prior five years for a large Gestione dell'innovazione 2/ed
Melissa A. Schilling Copyright © 2009 - The McGraw-Hill Companies srl portion of their sales and profits. This period is reduced to three years for firms in fast-paced industries such as computers, software and telecommunications. b)
Innovation is also a very powerful driver of increased effectiveness and efficiency in producing goods and bringing them to market; firms that do not constantly innovate to make their development, production, and distribution processes more effective and efficient are likely to fall behind their competitors. c)
The globalization of markets has played a significant role in increasing the importance of innovation as a competitive strategy by increasing competitive pressure. d)
Advances in information technology have also played a role in driving up the pace of innovation. These technologies also help firms to develop and produce more product variants enabling them to out-focus their competitors. i)
For example, Nokia produces almost 80 models of wireless phones and Sony produces over 50 models of its portable audio players. e)
Adoption of these new technologies has triggered industry-wide shifts to shortened development cycles and more rapid new...
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