Lecture 01 Introduction
TECHNOLOGICAL CHANGE
Technological developments can
lead to improved products and
processes, reduced costs and
ultimately better commercial
performance and competitive
advantage, BUT firms
Must possess the capability to
understand and use the technological
developments to its own advantage
Need to anticipate of future
technological developments and
incorporate this knowledge to
strategic business planning
“… technological change is one of the
principal drivers of competition. It plays
a major role in industry structural
change, as well as in creating new
industries. It is also a great equalizer,
eroding the competitive advantage of
even well-entrenched firms and
propelling others to the forefront. Many
of today’s great firms grew out of
technological changes that they were
able to exploit. Of all the things that can
change the rules of competition,
technological change is among the
most prominent.’’ - Porter
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INNOVATION

Schumpeterian View of Innovation

Ability to use knowledge to develop and apply new ideas that result in changes in
the production and organizational structure of the firm
Five types of innovation
New products │New methods of production │New sources of supply │Exploitation of
new markets │New ways to organize business
Distinction between invention and innovation
Invention is an act of intellectual creativity but “is without importance to economic
analysis”
Innovation is an economic decision: a firm applying an invention or adopting invention

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INNOVATION IS …

New Innovation is all about asset creation,

whether tangible or intangible
Technological change new to both
enterprise and the economy Output
Change that has diffused into the Product or service that result from the
economy and is adopted by the firm innovation

Creates value Process

Means to achieve technological solutions;
Over-all positive benefit to the society transform ideas, knowledge and inventions
Innovation is NOT synonymous to into solutions
“new” Success criteria are COMMERCIAL

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INNOVATION

Non-technical Innovation
Based on the 2005 edition of the Oslo Manual, two new types of innovation
that can be considered "non-technological”
Marketing innovation
Implementation of a new marketing method involving significant changes in
product design or packaging, product placement, product promotion or pricing
Organizational innovation
Implementation of a new organizational method in a firm's business practices,
workplace organization or external relations

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VALUE

Commercialization
Process of extracting financial value from a new invention or innovative idea
through turning it into a commercial tradable and profit-generating product
Can be made through the inventor himself or though selling or licensing the
right to an investor who will, in turn, do the commercialization
Pre-requisites include (1) industrial applicability (2) technical validity (3) market
viability (4) patentability and (5) feasibility

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UNCERTAINTY

Highly innovative products have an inherent high degree of uncertainty

about exactly how an emerging technology may be formulated into a usable
product and what the final product application will be
Must take the customer's view and experience of the product into account → may result in a
product that is at odds with the market's perception of it

Need to bridge the technology uncertainty and the market need for a
commercially viable new product
Advanced technology presents significant technical and market uncertainty, especially when the
technology is emerging and industry standards have yet to be established
Challenge is to appreciate and understand the potential new technology and uncover what the
market will and will not embrace

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GROWTH OPPORTUNITIES

Growth Opportunities
Does not exist because a company has a certain competency or has
created something → exists because customers are struggling to get a job
done
Unmet customer need
Important to the customer, but customer is not well satisfied with the solutions
currently available
Goal of innovation is to create products and services that address unmet
customer needs

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GROWTH OPPORTUNITIES

Technology lens
What are the proposed features of the technology, advantages compared to other
approaches or to substitutes

Market lens
What group of customers want this?

Competitive lens
Inventor & entrepreneur don’t always capture the value from ideas
Do I control my ideas?
Do I control other assets in the value chain? If not, who does, what are the dynamics?

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IMPACT OF INNOVATION

Kondratiev (K) wave

Theory in business that showing supposedly cycle-like phenomena in the
modern world economy, driven by technological innovation
Also called super-cycles, great surges, long waves, K-waves or the long
economic cycle
Observation was first put forward by Soviet economist Nikolai Kondratiev
(Kondratieff)
Period ranges from 40 to 60 years, consisting of alternating intervals of high-
sectoral growth and of relatively slow growth

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End of Presentation