Technology, Innovation and Management PDF

WEEK 1: Technology, Innovation and Management Technology refers to the use of tools, systems, and knowledge to enhance operational processes, productivity, competitiveness, and the creation of value. Technology innovation is the act of introducing a new device, method, or material for commerci...

WEEK 1: Technology, Innovation and Management Technology refers to the use of tools, systems, and knowledge to enhance operational processes, productivity, competitiveness, and the creation of value. Technology innovation is the act of introducing a new device, method, or material for commercial or practical purposes. The growing importance of innovation is driven by globalization, which increases competition and pressures firms to continuously innovate in order to create new products, lower costs, and differentiate from competitors. This results in shortened development cycles, faster product introductions, and more flexible manufacturing. As a consequence, the market becomes highly segmented, and products quickly become obsolete. Technological Effects (could be asked as a short question. example: what is the productivity effect, provide an example) Name Definition Example Displacement Effect The phenomenon where the adoption of new The use of automated checkout technology or automation leads to the systems in supermarkets replacing replacement of workers, resulting in job losses cashiers. Reinstatement Effect The creation of new tasks or roles where The rise of jobs in AI development humans are more highly valued, leading to and maintenance, requiring human new job opportunities. expertise in technology. Productivity Effect When technological adoption improves The introduction of advanced productivity, increasing output per worker and manufacturing robots that increase potentially altering employment dynamics. production efficiency Composition Effect The shift in the structure of jobs, industries, The growth of tech-driven sectors and required skills due to technological (e.g., IT, data science) while advancements, leading to a reallocation of traditional manufacturing jobs economic activity. decline. Types of technologies: 1.​ Brilliant technologies: Technologies that significantly enhance productivity, creating new opportunities that outweigh the displacement. Example: Cloud computing: Revolutionized industries by enabling businesses to operate more efficiently, creating new jobs in IT, cybersecurity, and data management. 2.​ So-so technologies: Technologies that have a neutral or modest impact on productivity and employment, neither significantly replacing nor creating jobs. Example: Basic automation tools in office work that streamline tasks without greatly affecting employment Impact of technological innovation on society: Technological innovation has had a positive impact on society, contributing to steady economic growth, a decrease in extreme poverty, and improved living standards over the past 200 years. However, it has also led to negative externalities—costs or benefits experienced by those not responsible for the innovation. When technology is applied hastily, without considering its full consequences, it can cause harm, such as environmental damage. Despite these challenges, the  overall trend suggests that having more knowledge and innovation will likely benefit society in the long run. Creativity, invention, innovation Creativity Invention Innovation The ability to generate new The creation of a new product, process, The act of introducing a new and useful ideas system, or concept that has not existed device, method, or material for before. It is the act of conceiving and application to commercial or developing something entirely new or practical objectives. original The innovation funnel Many studies suggest that only one out of several thousand ideas result in a successful new product. The innovation process is thus often conceived as a funnel, with many potential new product ideas going in the wide end, but very few making it through the development process. Success of technological innovation Technological innovations typically start with technical inventions, but their success depends on more than just the technology itself. First, they need to match technological and market opportunities, ensuring the innovation addresses a real need or problem in a way that outperforms existing solutions. This alignment with market demand is essential for long-term viability. Additionally, innovations require the integration of multiple components at different levels. Technically, the invention must be refined to be practical and scalable. Organizationally, businesses must adapt their processes and structures to implement the technology effectively. Market-wise, the innovation must be positioned to reach the right audience, considering pricing, distribution, and competition. At the social level, the impact on society must be considered, addressing ethical concerns, regulatory issues, and broader societal trends. Successful innovation depends on effectively integrating these technical, organizational, market, and social factors. Types and Patterns on Innovation: The technology trajectory refers to the path a technology takes over time, including its development and adoption. It shows how a technology evolves and how quickly it is accepted in the market, known as the rate of adoption. Product Innovation v s Process Innovation Refers to innovations embodied in the outputs of an Refers to innovations in the way an organization conducts organization, such as goods or services its business, particularly improvements in the production or delivery processes. This innovation enhances the effectiveness or efficiency of the organization. New processes may enable the production of new products. Radical Innovation v s Incremental Innovation  A significant, often disruptive change that is very A relatively minor change or improvement on existing new and different from prior solutions. Radical practices, typically focusing on small, gradual innovation introduces completely new technologies improvements rather than a complete transformation. This or concepts, breaking from traditional methods. The type of innovation is less risky and builds upon existing radicalness of innovation is sometimes defined in knowledge or technology. terms of risks and costs. -It often refers to the improvements in performance Competence-Enhancing Innovation v s Competence-Destruction Innovation An innovation that builds upon an organization’s An innovation that does not build on the firm's existing existing knowledge base, strengthening or competencies or makes them obsolete. It can disrupt improving its current competencies and skills. It current capabilities and force companies to adapt to new leverages what the company already knows or skills or technologies. does well. Component Innovation v s Architectural Innovation Involves innovation in one or more components of Involves changing the overall design of a system or the a product or system without significantly altering way that components interact with each other. This type of the overall design or configuration of the system. innovation may involve significant restructuring and This type of innovation affects parts of a system redesign, often leading to entirely new systems or rather than its structure. configurations. ► In your opinion, who are the workers that are most at risk of being replaced by AI? (might be MCQ) Medium-wage workers are most at risk of being replaced by AI, which can be explained by polarization. This division creates two distinct groups: high-wage workers, who drive technological advancements and are less likely to be replaced, and low-wage workers, who are less cost-effective to replace. Medium-wage workers, whose tasks are more routine and automatable, face the greatest risk of displacement. As a result, the labor market is becoming increasingly polarized, with high-wage workers benefiting from innovation while medium-wage workers are more vulnerable. ► How does automation affect employment in a country? (Typical essay question) Automation can have a positive impact on employment in a country by creating new job opportunities and boosting economic growth. As technology advances, new industries and sectors emerge, especially around AI, robotics, and data analysis, which can lead to the creation of highly skilled jobs. Additionally, automation can provoke a productivity effect, where increased efficiency in automated tasks leads to greater demand for labor in areas that still require human involvement. Furthermore, automation can make products and services cheaper, driving higher disposable income, increased consumption, and more investment. This economic stimulation can result in the creation of more jobs across various sectors, improving overall employment levels. On the other hand, the impact of automation on employment can also be neutral, depending on the context and the balance between technological advancement and the adaptation of the workforce. While some jobs may be lost due to automation, the increase in productivity could lead to economic growth that creates new job opportunities in other sectors. The net effect may vary based on the speed at which automation is adopted, the ability of workers to transition into new roles, and the policies in place to support this transition. For instance, if automation leads to job displacement in certain industries but simultaneously creates jobs in others, the overall effect on employment could remain stable or balanced. However, automation can also have negative consequences for employment in a country. One of the primary risks is the displacement of workers whose jobs are easily automated, particularly in low- and medium-wage sectors. This can lead to higher unemployment rates if displaced workers are unable to transition to new roles or industries. Furthermore, automation can push businesses towards bankruptcy if they are unable to compete with more efficient, automated rivals. As companies invest in technology to reduce labor costs, the demand for human workers in certain sectors decreases, exacerbating income inequality and reducing job security for those affected by automation. In conclusion, the impact of automation on employment is complex and multifaceted, with both positive, neutral, and negative consequences. While it can drive economic growth, create new jobs, and increase productivity, it can also result in job displacement, especially in industries that rely on repetitive tasks. The overall effect depends on factors such as the pace of technological adoption, the ability of workers to adapt, and the policies and context within which automation is implemented. Governments and businesses must work together to ensure that the benefits of automation are maximized, while mitigating its potential negative impacts on employment. WEEK 2: Technology, core competencies and capabilities In today’s turbulent markets, companies seek stability by looking inward rather than focusing solely on external factors. A key approach to identifying appropriate strategies is assessing resources, capabilities, and core competencies. This approach is known as the Resource-Based View (RBV), a strategic management theory that emphasizes the importance of a firm’s unique internal resources and capabilities in achieving sustainable competitive advantage. Resources are the productive assets owned by the firm, such as machinery, intellectual property, and brand reputation. Capabilities refer to what the firm can do with its resources, like operational efficiency or innovation. Competitive advantage: a firm’s ability to outperform its rivals or a firm’s superiority in creating value for its stakeholders. 3M and Its Innovation Trajectory Technological innovations often begin within a company, with the focus initially on developing internal capabilities, followed by identifying market opportunities. For example, 3M started with abrasive materials but later expanded into adhesives and tapes. This shift demonstrates the company's innovation trajectory, where its core competencies evolved over time. As 3M developed expertise in adhesives, coatings, and films, its innovation trajectory shifted towards leveraging these capabilities across various industries, allowing it to diversify its product offerings and remain competitive. This trajectory highlights how firms can build on their internal strengths and adapt to new market opportunities. Core competencies: the unique and distinctive set of capabilities, knowledge and resources that a company possesses and leverages to excel in its specific market. Innovation trajectories have strong inertia, making it hard to change direction. The core competencies approach suggests it’s wiser to start with internal capabilities and then seek market opportunities, rather than the other way around. Dynamic capabilities: organizational capabilities that allow an organization to reconfigure its resources and modify its operating capabilities in order to adapt and change. Sustainable Competitive Advantage Once the key strengths and weaknesses are identified, the firm can assess which strengths have the potential to be a source of sustainable competitive advantage. To be a source of this type, resources must be: useful, rare, durable and inimitable. Criteria for an inimitable capability: 1.​ Tacit: difficult to formalize, express or transfer though written or verbal means, as it is deeply rooted in an individual’s personal experiences, insights, intuition and skills, often acquired through practical, hands on experience Example: A chef's unique cooking style, developed through years of personal experience, is hard to teach or replicate. 2.​ Socially Complex: skills that arise from social interactions, relationships and organizational culture. They are complex because they rely on the interplay of multiple factors, deeply ingrained. Example: The strong teamwork and culture at Zappos, which fosters exceptional customer service, is difficult to imitate because it’s based on internal relationships and values. 3.​ Causally Ambiguous: when the sources of a firm’s competitive advantage are unclear or difficult to identify (unclear how the resource gives rise to value).  Example: Apple’s brand loyalty is driven by a mix of product quality, marketing, and design, making it unclear what exactly causes the loyalty, and hard for competitors to replicate ►How can a capability lead a company to have a competitive advantage? A capability can lead a company to a competitive advantage when it is unique, valuable, and difficult for competitors to replicate. Tacit capabilities, rooted in personal experience and intuition, are hard to formalize or transfer, making them inherently unique. Socially complex capabilities arise from relationships, culture, and interactions within the organization, which are deeply ingrained and challenging to imitate. Additionally, causally ambiguous capabilities provide an edge when the exact source of their success is unclear, making it difficult for competitors to replicate. Together, these factors enable firms to deliver distinct value to customers and sustain their competitive position. WEEK 3: Technological Innovation and the gale of creative destruction 3 MCQ From this week 1 essay question Routine: patterns of coordinated activity through which an organization is able to perform tasks regularly and predictably. Core Competencies Core competencies are unique strengths that allow a company to achieve and sustain a competitive advantage. To be effective, core competencies should meet the following criteria: 1.​ Significant Source of Competitive Differentiation:​ They must provide unique value that sets the company apart from competitors. 2.​ Difficult to Imitate:​ Core competencies should be inimitable, ensuring that competitors cannot easily replicate them. 3.​ Cover a Range of Business:​ A single core competency should be applicable across multiple lines of business, enabling the company to leverage its strengths in diverse product lines. Limitations of the “core competency: theory: 1.​ Transmission Challenges:​ Core competencies do not clearly show how they are transmitted or developed within the organization. While it is easy to identify a competency retrospectively, it can be difficult to recognize or build it in real time or to understand how it is learned and integrated across the organization. 2.​ Neglects Competitors:​ The framework focuses inward on the organization’s strengths but often overlooks the competitive landscape. It fails to account for how competitors might develop similar or alternative capabilities to erode the company’s advantage.  3.​ Management Difficulties:​ Managing core competencies can be challenging. Managers may overestimate their capabilities or mistakenly view ordinary abilities as core competencies, leading to poor strategic decisions and misplaced confidence. ►Criticize the resource based view describing these limitations. The Resource-Based View (RBV) is a widely recognized framework in strategic management, emphasizing the importance of a firm’s unique resources and capabilities in achieving competitive advantage. However, despite its strengths, the RBV has notable limitations that undermine its practical application. One major critique is the difficulty in identifying and transmitting core competencies. While RBV focuses on leveraging a firm’s unique strengths, it provides little guidance on how these competencies are recognized, developed, or shared within the organization. Retrospective identification of competencies is often easier, but in real-time, organizations may struggle to pinpoint which resources hold long-term strategic value or understand how they are acquired and integrated. This challenge complicates the process of building sustainable competitive advantages. Another limitation is RBV’s inward focus, which neglects the competitive landscape. By concentrating on internal resources, RBV fails to adequately consider external factors such as competitors, substitutes, and market dynamics. Competitors may develop similar capabilities, innovate, or create alternative strategies that diminish the value of a firm’s resources. Without addressing external pressures, the RBV risks oversimplifying the complexity of competitive advantage. Finally, RBV assumes that managers can effectively identify and utilize core competencies, yet this is not always the case. Managers may overestimate their capabilities or misinterpret ordinary skills as core competencies. Such overconfidence can lead to flawed strategies and an inability to adapt to changes in the market. This misjudgment highlights the practical challenges of resource evaluation and strategic implementation within the RBV framework. While the RBV offers valuable insights into leveraging internal resources, its limitations suggest the need for complementary frameworks that account for external competition, dynamic market conditions, and the practical difficulties of managing resources effectively. By addressing these gaps, firms can develop more balanced and adaptive strategies. Creative Destruction: Creative destruction, a concept introduced by economist Joseph Schumpeter, describes the process by which new technologies and innovations render old technologies and firms obsolete, as they can no longer compete in the evolving market. This dynamic process is central to capitalism, leading to a constantly changing economic structure. In simpler terms, creative destruction occurs when unprofitable industries and firms shut down, enabling their resources—such as capital and labor—to shift into more productive processes. This simultaneous creation and destruction of economic value fuels progress and economic growth, as new ideas and businesses displace older, less efficient ones. Schumpeter emphasized that the innovations driving creative destruction are not minor or incremental but radical, striking at the very foundations of existing firms and industries. These disruptive innovations  fundamentally reshape markets, enabling significant advancement while displacing outdated systems. Creative destruction highlights the dual nature of innovation, where progress inevitably leads to the obsolescence of what came before. ►What is meant by creative destruction? Which part is the creative and which destructive? Creative destruction refers to the process in which new technologies and innovations replace outdated ones, driving economic progress while simultaneously making older firms and industries obsolete. This concept, introduced by Joseph Schumpeter, is central to understanding how capitalism fosters continuous renewal. The destructive aspect involves the closure of firms and industries that can no longer compete effectively, leading to the displacement of resources like capital, land, and employees. However, this destruction is what enables the creative aspect: the release and reallocation of these resources into more productive and innovative uses. When a company shuts down, its capital can be invested in emerging industries, its land can be repurposed for new ventures, and its employees, though initially displaced, can contribute their skills to sectors with higher growth potential. Radical Innovations: Competence-Destroying Competence - Enhancing Competence-enhancing innovations build upon the Radical innovations that render the existing existing technical expertise required in a product class. technical expertise within a product class obsolete. These innovations often disrupt industries by Such innovations: fundamentally altering the required skills, knowledge, or processes, making established businesses ​ Do not destroy businesses: They leverage vulnerable if they cannot adapt. and build upon existing knowledge and competencies. Such innovations can: ​ Do not affect technical expertise: Firms can integrate these innovations without needing to ​ Destroy existing expertise: They invalidate abandon their current skills or processes. the technical competencies firms rely on. ​ Create turbulence: Entire industries face Example: The addition of a fan to the turbojet engine disruption as businesses must adapt or risk is a good example. While it improved the performance failure. and efficiency of the engine, it did not undermine the ​ Focus on technical aspects: These existing expertise in jet propulsion; rather, it enhanced innovations typically attack the technical it by incorporating an additional component into the foundations of products or processes. design. Example: The invention of the calculator made the slide rule, a widely used computational tool, completely obsolete. This innovation not only destroyed the competence tied to slide-rule manufacturing but also disrupted the industry by requiring businesses to shift toward electronic computation technology. Disruptive Innovations: Disruptive innovations are innovations that undermine incumbent businesses by requiring changes in business models, markets, and organizational processes. These innovations challenge existing routines and organizational competencies, often making older technologies or practices obsolete. An example of this is Polaroid, which was once a leader in instant photography. Although Polaroid produced a digital camera in response to the rise of digital photography, they failed to effectively adapt their business model and organizational processes to the digital landscape. Sustaining Innovations: Sustaining innovations reinforce incumbents' positions by building on existing core competencies. These innovations improve existing products, helping companies serve their best customers with better offerings. For example, continuous upgrades to smartphones (like improved cameras or faster processors) are sustaining innovations that allow companies like Apple and Samsung to maintain their competitive edge without disrupting the market. ►Why Do Big Companies Struggle with Disruptive Innovations?" Big companies often fail at disruptive innovations because they tend to stick with what they are good at, focusing on their established strengths and core competencies. It's also risky for these companies to allocate resources toward disruptive innovations, as they often involve uncertainty and can disrupt their existing profitable models. Additionally, large companies tend to prioritize profits and short-term returns, which makes them less willing to invest in the long-term, uncertain potential of disruptive technologies. In contrast, big companies excel at sustaining innovations, as they have well-established processes and values designed for incremental improvements, which align with their existing products and markets. Always remember to mention to whom the innovation may be disrupting! WEEK 4: Sources of Technological Innovation Triple Helix: The Triple Helix model highlights the collaborative interplay among government, academia, and industry as key drivers of innovation and economic development. This framework emphasizes the importance of an innovation ecosystem where these three actors actively engage and influence one another. Governments shape policies that impact industries, industries drive demands that inform academic research, and universities generate knowledge that supports both policy-making and technological advancement. By working collaboratively, this dynamic ecosystem fosters economic growth, knowledge creation, and technological innovation. 1.​ Government: establishes policies and regulations that create a supportive environment. (example: financial incentives, research grants, tax benefits) -​ Government → Funding, strategic demands → Universities -​ Government → Policies, regulations, incentives → Industry 2.​ Universities: are centers of knowledge creation, research and talent development. They provide skilled workforce -​ Universities → Research, talent, innovation → Industry -​ Universities → Expertise, data → Government 3.​ Industries: focus on commercialization, helping to turn theoretical research into products, services or processes -​ Industry → Market needs, funding → Universities -​ Industry → Feedback, implementation → Government Strategic Demands: When something is required to achieve a goal. In terms of government strategic demand, we refer to economic growth, national security, social welfare, etc, all of which may require help of industries to be achieved Perspectives on sources of innovation 1.​ Policy Perspective (government): “Innovation is a public good that requires government involvement to ensure that both economic and social benefits are achieved. -​ Start-ups and large firms play complementary roles in innovation. Start-ups excel at radical innovations, while large firms focus on incremental improvements. They depend on each other: start-ups often receive funding and market access from large firms, while large firms benefit from start-ups’ agility and creativity. Many start-up founders also come from large firms, highlighting their close connection -​ The government supports innovation by funding basic research, shaping economic policies, and acting as a buyer of advanced technology. By fostering collaboration between start-ups and large firms, the government ensures innovation benefits both the economy and society  2.​ Managerial Perspective: the focus on sources of innovation is more operational and strategic, as managers look at harness and guide innovation to gain a competitive edge and meet organizational objectives. Sources of Innovation for a firm Internal External Employees Users (provide feedback) Lead Users: individuals or entities within a market who due to their unique needs, experiences or early recognition of emerging trends are at the forefront of innovation. (top performing) R&D Department Suppliers (provision of innovated parts) Design Offices (conceptualizing and prototyping Competitors new ideas) IT, Systems,Digital, Analytics departments Complementors Production (learning) Pavitt’s Taxonomy : A categorization of industries according to their main sources of innovation. This model identifies 5 categories of innovation: supplier dominated, scale-sensitive, specialized suppliers, science-based, information sensitive 1.​ Supplier dominated: firms reliant on suppliers for the development of their technologies and innovations. Example: Agriculture, manufacturing 2.​ Scale-Intensive: Focused on process improvements and scaling production. Example: Automobiles, Bulk Materials 3.​ Information Intensive: Driven by data, knowledge, and information. Example: financial services 4.​ Science Based: Driven by cutting-edge scientific research and technological advancements. Example: Pharma, electronics 5.​ Specialized Suppliers: Focused on developing specialized solutions for other industries. Example: Instruments Advantages Disadvantages Clear Classification: it provides a structured Limited Fit for Some Firms:A company may not framework for categorizing firms based on their neatly fit into any of the categories innovation activities Sector-Specific Insights: the model highlights the Doesn't Capture Modern Dynamics: The model unique innovation patterns in various sectors may not fully capture the complexities of rapidly evolving industries Guidance for Strategic Planning: the taxonomy aids Doesn't Capture Modern Dynamics:The model firms in developing targeted innovation strategies simplifies innovation strategies, which may overlook the nuanced and diverse ways firms innovate Helps Understand Technological Dynamics: Focus on Technological Leaders: some firms provides clarity on firms’ technological capabilities and that don't fit the innovation patterns of the top innovation focus. players in an industry may not be fully represented Knowledge push to innovation: This concept emphasizes the idea that innovation can be driven by advancing scientific knowledge. By pushing the boundaries of science and generating new ideas, firms or researchers create opportunities for innovation. These advancements provide the foundation for developing new technologies, products, or solutions that can later be applied across various sectors. Need pull to innovation: In contrast, the "need pull" focuses on the idea that innovation is often driven by specific market demands or societal needs. It suggests that the necessity for solving particular problems or fulfilling unmet needs prompts innovation. While knowledge push creates a pool of potential ideas, the demand pull ensures that these ideas are applied effectively and gain traction in the marketplace. Essentially, innovation requires both scientific advancement (knowledge push) and market or societal demand (need pull) for it to be successful and impactful.