Management of Technology PDF

01 CHAPTER Management of Technology Knowledge Component A Management of Technology 1.1 Introduction to 1.1.1 Identify the key concepts of Technology Management...

01 CHAPTER Management of Technology Knowledge Component A Management of Technology 1.1 Introduction to 1.1.1 Identify the key concepts of Technology Management Management of 1.1.2 Explain the concept of technology S-curve Technology BL8 | Chapter 1: Management of Technology 1.1.1 Introduction to Management of Technology What is Technology? There are a number of definitions and views on technology that could be used to understand this multifaceted, dynamic and evolving nature of subject. Technology can be thought as the society's pool of knowledge regarding the industrial arts. This includes the knowledge of the industry on the principles of physical or social phenomena and application of the above principles to production processes. Also, it includes the industry knowledge on day-to-day operations (Mansfield, 1968). Dahlman & Westphal (1981) define technology as the translation of technological knowledge into a set of production methods. Technology can be anything (technical knowledge, the skills, the experiences, the equipment, the information, and the processes) that it requires to convert resources or materials into products and/or services. According to Betz (1993), broadly the technology is the knowledge of the manipulation of nature for human needs. Technologies are classified based on their competitive advantage given to a particular firm. A firm must master base technologies to be an effective competitor in its chosen product-market mix. Base technologies are necessary, but not sufficient, to gain a competitive advantage. Majority of base technologies are widely known and readily available. (e.g.: Electronic ignition technology for automobiles). On the other hand, key technologies can provide a firm competitive advantage. Key technologies enable a firm to embed differentiating features in the products or services or to increase its production process efficiencies (e.g.: food-packaging technology that enables the purchaser to use microwave cooking). Pacing technologies are the technologies that can become tomorrow's key technologies. However, only a few firms in the industry can afford to invest in pacing technologies or emerging technologies. Such firms can differentiate themselves from others by becoming leaders. Management of Technology Definitions and Scope The US National Research Council (1987) defines the MOT as knowledge area that links Science, Engineering, and Management disciplines. MOT enables a firm to plan, develop and implement its technological capabilities to shape and achieve strategic, tactical and operational level objectives. So, it is clear that technology management deals with the decisions such as acquisition and utilization of technological assets, acquisition of technological capabilities and their impact on firm level, industry level and national level to provide the competitive edge. For example, at firm level, MOT integrates technology change with business strategy to continuously improve business performance and competitiveness. 02 CA Sri Lanka  BL8 | Chapter 1: Management of Technology Why Manage Technology? Traditional products and services would no longer be adequate for firms to secure their existence due to the current market dynamics. Product, service and process innovations have become new norms for long-term success and for achieving sustainable competitive advantage. It appears that MOT can response to both intense competition among firms and the rate of change of technologies seen in many sectors of the economy. Still, there is no simple answer to the question of how to use technology for competitive success. Technology is multidimensional and multifaceted and technological change can contribute to both positive and negative consequences, unless it is managed in a systematics manner. Components of Manufacturing Technology Manufacturing technology creates value through the production of goods and services and therefore it has a high price attached to it. As a result, transferring technology from the developed nations, the Newly Industrialising Countries (NICs) and industrially advanced developing nations (such as Brazil, China and India) to the firms in developing countries may not occur as an altruistic manner. Many international technology transfer arrangements to developing nations often face difficulties due to their lack of capability in the following: identifying technology needed, scanning the international technology sources; assessing the offered technologies, negotiating and selecting the suitable transfer mechanisms (Godkin, 1988). The manufacturing technology transfer involves the flow of product technology or process technology or both between nations and/or firms. The absence of a generic framework specifying the elements of product and process technology also can contribute to failures in technology transfer. Generally, manufacturing technology transfer refers to process technology transfer and product technology transfer. Process technology comprises of four elementary and interacting components.: (1) technoware: an object-embodied form, (2) humanware: a human-embodied form, (3) inforware: an information-embodied form and (4) orgaware: an institution-embodied form called (Ramanathan, 1994). Under, product technology transfer, it is crucial that product-related inforware to be transferred. Product related inforware relates to product design and product usage. 1.1.2 Technology S Curve Technology forecasting is important for nations and firms (public and private) to make smart decisions. The relationship between technology performance parameter and time / effort can be constructed after a several rounds of observations on changes of technology over a period of time. It gives us an s-shape diagram known as ‘Technology S-curve’ (example: evolution of computer hard-disk capacity or aircraft speed during the last 50 years). Figure 1.01 shows the technology S-curve where the technology has three major stages in its life cycle. CA Sri Lanka 03  8 ha ter 1 Management of Technology Figure 1.01: Technology r e Embryonic stage A ne technology is orn in this stage There is a slo gro th of an emerging technology hich may not e isi le to o tsiders in f ll scale irms engage in eliminating technology related iss es s ch as de gging and im ro ing the rate of erformance It re ires a s stantial effort and time to do a marginal im ro ement of the rod ct ser ice irm s cash flo may e negati e d e to relati ely high in estment on D Growth stage (technology improvement period): A s ccessf l in ention leads to an introd ction of the technology to o tsiders and there ill e an increase in demand Technology transfer ill hel the firm to f rther im ro e its technology ased on transferee feed ac Transferor s re en e increases t additional in estment is re ired to sec re the gro th and s r i al of technology irms foc s on rocess inno ations rather than rod ct inno ation d ring this stage rogress of the technology is isi le and meas ra le Maturity period (mature technology period): D ring this stage technology reaches its nat ral and or hysical limit and there is less a en e for f rther im ro ements io sly firm s cash flo sho s a declining trend ote The factors s ch as the amo nt of effort t into the de elo ment and the nat re of the technology determine the rate of im ro ement and the nat ral or hysical limits of the c r e 04 CA Sri Lanka  BL8 | Chapter 1: Management of Technology Additional References Betz, F. (1993), Strategic Technology Management, McGraw-Hill, New York, NY. Dahlman, C. J., & Westphal, L. E. (1981). The meaning of technological mastery in relation to transfer of technology. The Annals of the American Academy of Political and Social Science, 458(1), 12-26. Godkin, L. (1988). Problems and practicalities of technology transfer: a survey of the literature. International Journal of Technology Management, 3(5), 587-603. Harrison, N. and Samson, D. (2002), Technology Management: Text and International Cases, McGraw-Hill Inc, Khalil, T. (1998), Management of Technology: Future Directions and Needs for the New Century, A Report of the Workshop on Management of Technology, National Science Foundation, Arlington, September 14-15. Khalil, T.M. (2000), Management of Technology: The Key to Competitiveness and Wealth Creation, McGraw Hill. Mansfield, E. (1968), Industrial Research and Technological Innovation, W.W. Norton & Company Inc. New York. McGinn, R. E. (1991), Science, Technology, and Society, Englewood Cliffs, N.J.: Prentice- Hall. Ramanathan, K. (1990), Management of Technology: Issues of Management Skill and Effectiveness, International Journal of Technology Management, 5(4), pp. 409-422. Ramanathan, K. (1994), The Polytrophic Components of Manufacturing Technology, Technology Forecasting and Social Change, 46, pp. 221-258. CA Sri Lanka 05 BL8 | Chapter 1: Management of Technology 06 CA Sri Lanka  BL8 | Chapter 1: Management of Technology Knowledge Component A Management of Management of Technology Technology 1.2.1 Explain the concept of strategy in the context of 1.2 Strategic technology management Management of 1.2.2 Discuss the alignment of technology strategy with Technology Business Strategy 1.2.3 Technology Development CA Sri Lanka 07  8 ha ter 1 Management of Technology 1.2.1 What is Strategy? The follo ing citations ro ide a good definition on strategy Strategy is a rule for making decisions under conditions of partial ignorance, whereas policy is a contingent decision. Business strategy is the broad collection of decision rules and guidelines that define a business’s scope and growth direction Ansoff 1965 Strategy is the pattern of objectives, purposes or goals and major policies and plans for achieving those goals stated in such a way as to define what business the company is in or to be in and what kind of company it is or is to be hristensen et al 1973 Strategy formulation involves the interpretation of the environment and the development of consistent patterns in streams of organisational decisions Mint erg 1979 Strategy is a broad-based formula for how business is going to compete, what its goals should be, and what policies will be needed to carry out those goals. The essence of formulating competitive strategy is relating a company to its environment orter 1980 1.2.2 Strategic Decisions and Management trategic decisions refer to the sco e of a firm s acti ities ho to match firm s acti ities to its en ironment and reso rce ca a ility reso rce allocation al es goals that infl ence organi ational strategy and the long term direction that the firm mo es n the other hand strategic management in ol es de elo ing the goals and strategies of an organi ation and im lementing organi ational strategy trategies are in 3 le els cor orate strategies siness strategies and f nctional strategies see ig re 1 0 Figure 1.02 e els of strategy 0 CA Sri Lanka  8 ha ter 1 Management of Technology siness strategy de elo ment re ires thoro gh nderstanding of ision mission and al es of an organi ation rgani ation s ision refers to hat it ants to achie e in the f t re e am le 5 years 10 years Mission defines the ty e of siness a com any is in and ho it engages sta eholders al es reflect firm s eliefs in its commitments and ethics to ards sta eholders ne can erform a strategic analysis after gaining a dee nderstanding of the a o e see ig re 1 03 Figure 1.03 trategic Analysis rocess The a o e strategies can hel an organi ation to create a com etiti e ad antage o er its ri al firms CA Sri Lanka 0  8 ha ter 1 Management of Technology Competitive Advantage Industrial Organization (IO) om etiti e ad antage can e assessed sing oth e ternal and internal factors of a firm Ind strial rgani ation I model e am le orter s i e orces Model of om etition e lains the com etiti e ad antage y determining the factors o tside firm I foc ses on ind stry str ct re attracti eness According to orter s i e orces Model of om etition theoretically factors affect all firms in ind stry equally ros ects for all com anies in the ind stry remain nchanged orter s fi e forces model can e sed to erform ind stry analysis to select the right ind stry refer to ig re 1 04 Figure 1.04: orter s i e orces Model of om etition This model is idely sed to analy e an organi ation's ind stry str ct re in strategic lanning rocesses The a o e forces determine the intensity of com etition and assess the attracti eness of an ind stry The o ecti e of cor orate strategy is to im ro e the osition of the organi ation y assessing these com etiti e forces argaining o er of yers or c stomers stomers loo for ality rod cts at lo er rices or e am le in a erfectly com etiti e mar et setting yers argaining o er ill force to lo er the rices hich can negati ely im act on the organi ation s rofita ility The argaining o er of c stomers de ends on one or more of the follo ing yer concentration to firm concentration ratio argaining le erage yer ol me yer s itching costs relati e to firm s itching costs yer information a aila ility a ility to ac ard integrate a aila ility of e isting s stit te rod cts yer rice sensiti ity and rice of total rchase argaining o er of s liers liers can infl ence the mar et nder the follo ing circ mstances s lier s itching costs relati e to firm s itching costs degree of differentiation of in ts resence of s stit te in ts s lier concentration to firm concentration ratio threat of for ard integration y s liers relati e to the threat of ac ard integration y firms cost of in ts relati e to selling rice of the rod ct and im ortance of ol me to s lier 0 CA Sri Lanka  BL8 | Chapter 1: Management of Technology Threat of potential or new entrants: New entrants can increase the competition among players by bringing additional volumes with respect to the type of industry. This depends on the existence of barriers to entry, economies of product differences, brand equity, switching costs, capital requirements, access to distribution, absolute cost advantages, learning curve advantages, expected retaliation and government policies. Threat of substitute products: A substitute product satisfies the same customer / buyer needs fully or partially but produced by a different industry (example: tea versus coffee). Still, a substitute will influence the price that one can charge from firm’s customer. The level of threats of a substitute depends on the following factors: buyer propensity to substitute, relative price performance of substitutes, buyer switching costs and perceived level of product differentiation. Intensity of competitive rivalry: The profitability of the industry mainly depends on the intensity of competitive rivalry amongst existing firms. In a perfectly competitive market setting, at least in the short run, firms will increase their marketing budget to sustain their market share contributing negatively to their bottom-line. However, firms could still see a market growth, if the demand can be stimulated by the competition. The factors such as number of competitors, rate of industry growth, intermittent industry overcapacity, exit barriers, diversity of competitors, informational complexity and asymmetry, brand equity, fixed cost allocation per value added, level of advertising expense, brand switching customers and strategic importance. Resource Based View Model (RBV) Resource Based View Model (RBV) uses internal factors of a firm to determine competitive advantage. The main idea behind the RBV is that competitive advantage is a function of the resources and capabilities of the firm (Wernerfelt, 1984; Conner, 1991). RBV is a 3-step framework. Step 01: Identify the firm’s key resources Step 02: Evaluate whether the above resources fulfill VRIN criteria (Valuable, Rare, Imperfectly imitable, Non-substitutable). Step 03: Develop and secure resources that pass Step 01 and Step 02. For example, competitive advantage of a firm depends on its resources, capabilities and competencies (See Figure 1.05). CA Sri Lanka 11  8 ha ter 1 Management of Technology Figure 1.05 eso rces a a ilities and om etencies eso rces are relatively easy to imitate and often tangi le reso rces are a aila le for rchase on o en mar et A firm co ld de elo intangi le reso rces n the other hand ca a ilities are not isi le o tsiders and dee rooted in a firm a a ilities are hard to imitate a a ilities can e e loited sing com etencies This can e achie ed y e ternal colla orations forge alliances for technology access and consolidating internally lend s ills technologies Ta le 1 1 sho s a reso rce a raisal of a ty ical firm Table 1.1 eso rce haracteristics and Indicators model eso rce haracteristics Indicators Tangi le eso rces inance orro ing ca acity De t ity ratio Internal f nd generation redit rating et Mar et al e cash flo hysical lant e i ment si e and location and ildings a materials Intangi le Technology atents o yrights no m er of atents eso rces ho D facilities oyalty income Technical scientific D e endit re em loyees D staff CA Sri Lanka  BL8 | Chapter 1: Management of Technology Reputation Brands, Customer loyalty Brand equity, Price premium, Recognition Human Resource Training, Experience, Employee Adaptability and qualifications, Pay Commitment rates, Labour turn- over Technology Strategy In general, a technology strategy focuses on the issues such as the type of distinctive technological capabilities that can be sources of the firm’s competitive advantage, level at which a firm should invest in technology development, sources of technology (internal or external), timing of introducing new technologies to market place and managing and organizing technology and innovation. Content of Technology Strategy: BMW Framework BMW framework identifies 4 major elements of technology strategy: Competitive strategy stance, Value chain stance, Resource commitment stance and Management stance. Competitive strategy stance focuses on the technology decisions that essentially support the corporate and business level strategies of the firm (example: technologies to support a firm’s product-market strategy, technologies to enable a positioning / differentiation). Table 1.2: Technology decisions under competitive strategy stance Technology Decision Orientation Explanation Differentiation Choice of technologies to be included related within the firm’s products or services Technology choice Choice of technologies used internally Cost related within the firm, to reduce cost of its operations Technology leadership Leader / follower on each technology Technology entry Timing of a new technology into the timing market Technology commercialization or offer Technology licensing under license CA Sri Lanka 13 BL8 | Chapter 1: Management of Technology Value chain stance refers to the use of technology across various activities and functional entities of a firm. Porter’s value chain model (Figure 1.06) decomposes activities of a firm into 2 categories: ▪ Activities that directly add value for the firm’s customers ▪ Activities that support above value adding activities The value chain stance can be used to decide the kind of activity and the level of technology capabilities need to be developed. Figure 1.06: Porter’s Value Chain (source: Porter, 1985) Primary activities in Figure 1.06 refer to inbound logistics (example: deliver materials to warehouse, material handling, storage and stock control), operations (example: convert resource inputs such as materials and people into final products), outbound logistics (example: handling the passage of finished goods to distributors, retailers and consumers), marketing and sales (example: advertising, promotions and other marketing activities), services (example: customer services and after sale services). Support activities are required to support the primary activities of a firm. They are firm infrastructure, human resources management, technology development and procurement. 14 CA Sri Lanka  8 ha ter 1 Management of Technology Figure 1.07 al e et or s In addition a firm s al e chain e ists ithin a al e chain net or The in o nd logistics is connected to stream firms layers in the al e chain one or more s liers and the o t o nd logistics is connected to the do nstream firms layers distri tors retailers in the al e stream see ig re 1 07 Resource commitment stance determines the amo nt of reso rces committed to enhance technological ca a ilities as a art of the technology strategy Management Stance is a o t the organisational str ct re management systems and leadershi styles 1.2.3 What Technologies to Develop? What technologies to develop is one of the im ortant estions to e ans ered in technology strategy de elo ment e ercise There is an inter lin and inter lay et een the technology strategy and the siness strategy siness strategy aims to achie e s staina le com etiti e ad antage Technologies to e de elo is in line ith the siness strategy A firm s relati e osition ithin its ind stry is determined y com aring its rofita ility against the ind stry a erage This a erage rofita ility reflects a firm s com etiti e ad antage in the long r n orter s generic siness strategy model orter 1985 ro ides a set of rocesses that can e sed to gain a com etiti e ad antage at the siness strategy form lation see ig re 1 08 CA Sri Lanka  8 ha ter 1 Management of Technology Source of Competitive Advantage Cost Uniqueness Breadth of Competitive Broad Cost Differentiation Target Leadership Market Scope Narrow Focused Low Cost Focused Target Differentiation Market Figure 1.08: eneric siness e el trategies Generic Business Strategies Cost leadership strategy refers to a firm stri ing to e lo est rod cer A firm o erates at lo est costs rod ction and distri tion and it ecomes the rice setter in the mar et Differentiation strategy is here a firm creates ni e rod cts or ser ices for the roader mar et segments or e am le rod ct differentiation incl des high erformance ality fast deli ery c stomi ation and added ser ice Focus strategy targets a s ecific mar et segment e am le niche mar et and the firm tailors its rod cts ser ices meet the needs of a s ecific mar et segment Ta le 1 3 elo sho s ho rod ct and rocess technological changes res ond to each generic strategy disc ssed a o e Table 1.3: rod ct and rocess Technology and the eneric trategies o rce erera 008 Cost Leadership Differentiation Cost Focus Differentiation Focus rod ct ed ce rod ct nhance Design in only rod ct design Technological cost y lo ering rod ct ality eno gh to meet the hange material content feat res erformance for need of a lo cost deli era ility the target artic lar man fact re or s itching segment s needs segment etter sim lify logistical costs than roadly re irements targeted com etitors CA Sri Lanka  8 ha ter 1 Management of Technology rocess earning c r e rocess rocess rocess technological rocess de elo ment to de elo ment to de elo ment to hange im ro ement to s ort high t ne the al e t ne the al e red ce material tolerances chain to a chain to sage or lo er greater ality segment s needs segment need in la o r in t control more in order to order to raise relia le lo er the cost yer al e rocess sched ling of ser ing the de elo ment to faster res onse segment enhance time to orders economics of scale and other dimensions that raise yer al e ater orter introd ced his acti ity ositioning strategies These incl de the aths that a firm can ta e in order to gain com etiti e ad antage ithin its al e chain is ositioning frame or contains fo r acti ity ositioning strategies ariety ased need ased access ased and ariety and need ased orter 1996 14 Figure 1.09: orter s Acti ity ositioning trategies ariety ased strategy see Figure 1.09 refers to a firm rod cing a s set of rod ct ortfolio co ering an entire ind stry s rod cts or ser ices This strategy hel s firms to de loy their reso rces to s ecific areas to cater demand at a lo er cost eed ased ositioning strategy targets a artic lar c stomer segment to f lfill their needs A firm has to orient its f ll al e chain to nderstand c stomer needs and to create al e to its c stomers to ens re ma im m c stomer lifetime al e Access ased ositioning is a o t targeting c stomers that ha e similar needs o e er these c stomers do not ha e similar access ro tes to the rod ct or ser ice CA Sri Lanka BL8 | Chapter 1: Management of Technology Additional References Andrews, K. R., Christensen, C. R., Andrews, K. R., & Bower, J. L. (1973). Business policy: Text and cases. Homewood, IL: RD Irwin. Ansoff, H. I. (1965). Corporate strategy: An analytic approach to business policy for growth and expansion. Conner, K. R. (1991). A historical comparison of resource-based theory and five schools of thought within industrial organization economics: do we have a new theory of the firm? Journal of management, 17(1), 121-154. Johnson, G., Scholes, K., & Whittington, R. (2008). Exploring corporate strategy: Text and cases. Pearson education. Mintzberg, H. (1989). The structuring of organizations (pp. 322-352). Macmillan Education UK. Porter, M. E., & Strategy, C. (1980). Techniques for analyzing industries and competitors. Competitive Strategy. New York: Free Porter’s, V. C. M. (1985). What Is Value Chain. E-Commer., 1-13. Porter, M. E. (1996). What is strategy? (https://dms.uom.lk/s/ ZxfC4y3bbfDafjc) Wernerfelt, B. (1984). A resource-based view of the firm. Strategic management journal, 5(2), 171-180. 18 CA Sri Lanka  BL8 | Chapter 1: Management of Technology Knowledge Component AA Management Managementof ofTechnology Technology 1.3.1 Identify the concept of technology transfer 1.3 Knowledge Explain the modes and routs of technology Management & 1.3.2 transfer Technology Identify the formation and importance of Transfer 1.3.3 knowledge CA Sri Lanka 19 BL8 | Chapter 1: Management of Technology 1.3.1 Introduction Technology transfer is a series of processes that enables the flow of technology from a source / transferor (example: owner or holder of the knowledge) to a receiver / transferee (example: the beneficiary of such knowledge). Transferor and transferee can be an individual, a company, or a country. Technology transfer as a “process by which science and technology are transferred from one individual or group to another that incorporates this new knowledge into its way of doing things.” (Jain and Triandis, 1990). Technology transfer can be divided into the following categories: ▪ International technology transfer, in which the transfer is across national boundaries. (example: technology transfer from industrialized countries to developing countries). ▪ Regional technology transfer, in which technology is transferred from one region of the country to another. ▪ Cross-industry or Cross- sector technology transfer, in which technology is transferred from one industrial sector to another (example: transfer of technology from the space program to commercial applications such as Space-X project). ▪ Interfirm technology transfer, in which technology is transferred from one firm to another. ▪ Intrafirm technology transfer, in which technology is transferred within a firm from one location to another. Over the last few decades, the Least Developed Countries (LDC) have changed their attitude towards technology transfer due to substantial contribution from private sector to economy, increased liberalisation, globalisation trends, and the success of newly industrialised countries (NICs) such as Korea, Singapore, Taiwan and Hong Kong. Many firms in LDCs have acquired know-how from the firms in developed nations. As a result, firms can build upon the imported know-how using their own scientific and technological capabilities. Today, the concept of international technology transfer is thought as an international technology trade and it has become a simple commercial transaction. In some cases, know-how is even given features of a commodity where it is available in the international market. As a result, instead of "donor" and "recipient", there exists only "buyers" and "sellers" or alternatively be known as "transferees" and "transferors". However, the policy-makers in LDCs are continuously debating over issue of striking a balance and harmony between importing technologies and developing locally. 20 CA Sri Lanka  BL8 | Chapter 1: Management of Technology Channels of Technology Flow Technology is an intangible asset and given the channels of flow are available, it can flow easily across boundaries of countries, industries, departments, or individuals. General channels of technology transfer make a transfer unintentionally and sometime without the involvement or knowledge of the source / transferor. This is because sometimes information is made freely available in the public domain with any restrictions to access. General channels of technology transfer are education, training, publications, conferences, study missions, and exchange of visits. In reverse-engineering channels a traditional receiver of a technology breaks or attempts to break the code of a technology and develops the capability to duplicate it in some form. In most cases, transfer occurs with no active contribution from the transferor. Technology transfer through reverse-engineering channel is feasible if the transferee has the knowledge to perform the re-engineering and there is no violation of laws of intellectual or property rights. Planned channels of technology transfer is performed intentionally where there is an established agreement between the technology owner and receiver. 1.3.2 Mechanisms for the Transfer of Technology There are two transfer mechanisms to transfer technology from a transferor to a transferee. Market-oriented technology transfer mechanisms have a profit motive and market forces dominate in determining growth, competitiveness and profitability of stakeholders. For example, Purchases of plant, equipment and products, International joint ventures, Licensing (Franchise), Subcontracting, Turnkey contracts, Management contracts, Production sharing, Foreign direct investment (FDI), Expert services and Technical information services. Non-market-oriented mechanisms have less focus on financial considerations and not always driven by the market forces (example: Books, academic journals, business magazines, sales literature, Industrial fairs and exhibitions, Informal personal contacts, and participation in conferences, seminars and workshops, Training). Phases in Technology Transfer Key steps of technology transfer are as follows: Step 01: Recognizing the Need of Technology Step 02: Identification of Technology Needs / Gaps This is the most important step in the process of technology transfer. This may be performed either at country level or firm level. For country level technology transfer, transferring technologies should be able to meet the development goals of the country. Firm level technology transfer will make the firm more competitive by improving its products and processes. CA Sri Lanka 21 BL8 | Chapter 1: Management of Technology Both product technology and/or process technology can be transferred. The transferee should define the complete specifications of the product and/or process technology (Ramanathan, 1997). Step 03: Identification of Technology Options and Sources of Technology Step 04: Selection of Technology Transfer Mechanism Step 04: Technology Evaluation and Selection Typical criterion of technology evaluation and selection includes development benefits, environmental benefits and market potential. Step 05: Negotiation After selecting the suitable technologies, the transferee will engage in a negotiation process with the transferor. Outcomes of a negotiation process depends on the bargaining power of parties. In general, they will agree on the following: ▪ An acceptable basis for the valuation of the technology ▪ Payment terms and intellectual property protection ▪ Contribution and responsibilities towards the technology transfer project ▪ Methods related to the transfer of technology and training. ▪ Suitable mechanism(s) for transferring the technology components. ▪ Preparation of technology transfer agreement. Step 06: Technology Acquisition Technology acquisition phase is the stage where the technology is transferred from the transferor to the transferee through the selected transfer channel. Transferee identifies the changes to be made to the organizational structure and its policies to accept the new technology. She formulates a technology transfer project implementation plan with payment schedules. Transferee conducts user training with the support of transferor. organizational infrastructure of the transferee will be upgraded to accommodate new technology. Step 07: Technology Adaptation After the phase of technology acquisition, the transferee is required to create a suitable operating environment to harness the maximum benefits of the technology. It is also required to focus on other factors such as level of human skills, organizational practices, socio-economic conditions, culture, process of technological learning within the organization. As a result, training has become an essential element for proper adaptation of technology. Additional References. Jain, R. K., & Triandis, H. C. (1990). Management of R&D organizations: Managing the unmanageable. New York, NY: John Wiley&Sons. Ramanathan, K. (1994). The Polytrophic Components of Technology, Technological Forecasting and Social Change, 42(3), pp. 221 258. 22 CA Sri Lanka  BL8 | Chapter 1: Management of Technology Ramanathan, K. (1997). An Analytical framework for technology transfer, In: Contemporary Issues in Technology Transfer, Ed. Gougeon, P and Gupta, J. Eska Publishing. UNIDO (1993). Prospects and Dimensions of International Transfer of Technology, Proceedings of the Regional Workshop on Integration of Science and Technology in the Development Planning in the ESCWA Countries, Amman, Jordan. 1.3.3 Knowledge Management Definitions of Knowledge Management In the absence of a standard definition for Knowledge Management (KM), KM can broadly be defined as a business model incorporating knowledge as an organizational asset. Literature identifies several strategic levers of KM: Customer Knowledge, Knowledge in Processes, Knowledge in Products (and Services), Knowledge in People, Organizational Memory, Knowledge in Relationships, Knowledge Assets and Competitor Knowledge. Drivers of Knowledge Management There are several reasons why firms are interested in knowledge management. One of the main divers is continuous advancement of technology (example: e-commerce linking with c-commerce). Value of tangible assets in an organization is decreasing and on the other hand intangible assets are valued more. In particular, new organizational dynamics such as global customers, suppliers and partners, virtual firms with cloud computing, redefined employment contracts and firms striving for talents have become normal in post Covid era. As a result, KM is increasingly becoming a concern of the senior management of firms. What Benefits can Companies Expect from KM? Benefits of KM practice may be difficult to quantify. However, a good KM programme will help a firm to foster innovation (using free flow of ideas), reduce customer churn (improve customer services by analyzing the response rate), reduce employee churn (recognize and reward employee’s knowledge) and business process optimization. In addition, ignoring human knowledge will lead to loss of knowledge of organizational best practices, harm clients or supplier relationships and loss of income. CA Sri Lanka 23 8 ha ter 1 Management of Technology How does KM Create Value? M creates al e to im ro e rod ct ser ice leadershi c stomer intimacy em loyee ca a ility and o erational e cellence see ig re 1 10 Figure 1.10 M al e reation M ractice can hel firms to attain rod ct ser ice leadershi y deli ering the est rod cts and ser ices offerings to c stomers rea ing o n erformance o ndaries M le erages h man intellect al ca ital in rod ct ser ice design to enhance em loyee ca a ilities M hel s firms to stri e for o erational e cellence y deli ering rod cts ser ices at est rices ith less hassle to their c stomers M effecti ely manages c stomer no ledge to ens re firm s c stomer intimacy Understanding Knowledge: Constituents of knowledge-based assets All information may not create e al al e to a firm irms indi id ally determine the ty e of information that fall into the category of intellect al or no ledge ased assets no ledge ased assets are t o ty es e licit no ledge and tacit no ledge atents trademar s siness lans c stomer data ases and technical man als are some e am les for e licit no ledge licit no ledge refers to anything that can e doc mented archi ed and codified sing IT or other ise The conce t of tacit no ledge is not straight for ard Tacit no ledge refers to the no ho of em loyees of an organi ation e am le cogniti e s ills s ch as eliefs images int ition and technical s ills s ch as craft and no ho nli e e licit no ledge it is diffic lt to recogni e generate share and manage tacit no ledge 4 CA Sri Lanka  BL8 | Chapter 1: Management of Technology “The strength of Japanese manufacturing industries is at the technologies (based on) tacit knowledge. With the progress in Information Technology (IT), tacit knowledge is converted into explicit knowledge. Still, we need tacit knowledge. To build a car, we have to build people” (Hiroshi Okuda, Chairman of Toyota). A firm cannot simply replace a firm specific high-quality tacit knowledge by outsourced explicit knowledge. Absence of high-quality tacit knowledge will challenge the survival of a firm in the long run. KM process (knowledge creation, capturing, organizing and storing, transferring, sharing and using) enables a firm to recognize tacit knowledge embedded in people scattered across firm’s hierarchy. By synthesizing tacit and explicit knowledge and successfully integrating it with organizational activities can make learning and innovative organizations. Knowledge Management Use Cases Use Case 01: Knowledge Sharing KM for knowledge sharing and retention can be used to minimize the loss of tacit knowledge that eventually walks out of the organization. Alfa PLC, a large banking and financial institution, recently devised multi-facet knowledge transfer instruments to facilitate both direct and indirect KM. These instruments can handle knowledge sharing either one-to-one, one-to-many or many-to-many. Use Case 02: Onboarding and Learning Onboarding and learning are everything that an employee need to perform, from day one of her employment through the entire tenure of her employment. Effective onboarding and learning help employee retention and job satisfaction. Beta PLC designed and implemented an internal web-based interactive platform that integrates all aspects of learning and performance ecosystem. This enables employees devise their self-learning under close supervision of supervisors at different levels in the organization. Additional References Awad, E.M. & Ghaziri, H.M., 2003. Knowledge Management, Pearson Education, Inc. Perera, H.S.C., 2002. Knowledge Management: Tools and Technology, Paper Presented in the APO Study Meeting on Knowledge Management in Colombo, Sri Lanka, July 2002 Perera, H.S.C. 2004. Development of Knowledge Infrastructure: Role of Consultants, Sri Lanka Country Paper Presented in the Conference ‘Development of Knowledge Infrastructure: Role of Consultants’ New Delhi, India, October 2004 CA Sri Lanka 25 BL8 | Chapter 1: Management of Technology 26 CA Sri Lanka