Summary: Strategic management of technological innovation Chapter 1: Introduction
The importance of technological innovation
Technological innovation: The act of introducing a new device, method, or material for application to commercial or practical objectives.
In many industries technological innovation is now the most important driver of competitive success. The increasing importance of innovation is due in part to the globalization of markets. Foreign competition has put pressure on firms to continuously innovate in order to produce differentiated products and services. Also, advances in information technology have played a role in speeding the pace of innovation. Computer-aided design and manufacturing have made it easier and faster for firms to design and produce new products, while flexible manufacturing technologies have made shorter production runs economical and have reduced the importance of production economies of scale. As firms increase their pace of innovation, they raise the bar for competitors, triggering an industry wide shift to shortened development cycles and more rapid new product introductions. The impact of technological innovation on society
Gross Domestic Product (GDP): The total annual output of an economy as measured by its final purchase price. Externalities: Costs (or benefits) that are borne (or reaped) by individuals other than those responsible for creating them.
The push for innovation has a clearly net positive effect on society. Innovation enables a wider range of goods and services to be delivered to people worldwide. The average world GDP has risen steadily since 1971. The growth of GDP could not be accounted for entirely by growth in labour and capital inputs. Solow argued that this unaccounted –for residual growth represented technological change. This residual is also known as the Solow Residual.
Sometimes technological innovation results in negative externalities. However, technology is, in its purest essence, knowledge – knowledge to solve our problems and pursue our goals. Sometimes this knowledge is applied to problems hastily, without full consideration of the consequences and alternatives, but overall it will probably serve us better to have more knowledge than less. Innovation by industry: the importance of strategy
The majority of effort and money invested in technological innovations comes from industrial firms. However, many firms charge headlong into new product development without clear strategies or well-developed processes for choosing and managing projects. Such firms often initiate more projects than they can effectively support, choose projects that are a poor fit with the firm’s resources and objectives, and suffer long development cycles and high project failure rates as a consequence. The innovation funnel
Most innovative ideas do not become successful new products. Many projects do not result in technically feasible products and, of those that do, many fail to earn a commercial return. Figure 1: The innovation funnel
The strategic management of technological innovation
A firm’s innovation projects should align with its resources and objectives. A firm’s organizational structure and control systems should encourage the generation of innovative ideas while also ensuring efficient implementation. A firm’s new product development process should maximize the likelihood of projects being both technically and commercially successful. To achieve these things, a firm needs: 1) An in-depth understanding of the dynamics of innovation
2) A well –crafted innovation strategy.
3) Well-designed processes for implementing the innovation strategy. Chapter 2: Sources of Innovation
Innovation: The practical implementation of an idea into a new device or process.
Innovation can arise from many different sources. It can originate with individuals, who design solutions for their own needs, but it can also come from the research efforts of...
Please join StudyMode to read the full document