2 DN Global Innovation Trend E Bkel 2slides Format

TECHNOLOGY AND INNOVATION MANAGEMENT
SESSION 2
Global trends, future research,
foresight and innovation
CLO.2 – Understand global trends

– Understand the way of viewing the future
– Understand the managing and creating the future
– Understand diffusion of Innovations
– Analyze technology-based industries and the management of innovation
Nguyen Thi Duc Nguyen, PhD. Email: ntdnguyen@hcmut.edu.vn

Instructor: Dr. Nguyen Thi Duc Nguyen, SIM-HCMUT
CLO.2
Understand global trends
Dr. Nguyen Thi Duc Nguyen, SIM-

HCMUT 1
Change of paradigm, e.g., companies
knowledge use
• Industrial revolution 1750 – 1880
• Production revolution 1880 – 1945
• Management revolution 1945 –
• Consciousness revolution 2000 –
Change of Era

HCMUT 2
Are these your questions, too?
• • How will your career turn out?

• • What risks might threaten your life?
• • What about the future of your child?
• • WHAT DOES YOUR FUTURE LOOK LIKE IN 2030?
2050?
• • What would kill that future?
Why futures research and foresight?
• We as human beings: future oriented, natural desire

in human mind to understand alternative futures –
yearning for certainty
• • Challenges and fears as social, cultural, economic

and ecological conditions are changing. The world is
changing, and fast.

HCMUT 3
Why futures research and foresight?
• For the sake of life-management we have to make

assumptions about the future
Imaginable, possible and probable futures

HCMUT 4
Old and new kind of future
• OLD: “Steady plodding of progress from one moment

to the next, punctuated by brief burst of innovation”
• NEW: Dynamic, disruptive and multi-dimensional
Affecting megatrends

HCMUT 5
Millennium Project
Innovations during the late nineteenth

century (1850 – 1911)
INNOVATIVE ACTIVITIES IN INNOVATIVE ACTIVITIES IN
TECHNOLOGY SOCIAL AND ECONOMIC
• Siemens – dynamo 1856 INSTITUTIONS
• Typewriter (Creation of new institutions)
• Automobile • Governments/states redefined
• Electric light bulb • American Universities
• Man-made fibers • Modern hospitals
• Tractors • Military forces
• Synthetic drugs
• Telephone
• Radio, airplane
• Modern electronic tube 1911

HCMUT 6
Innovations from the late twentieth
century onward...
INNOVATIVE ACTIVITIES IN INNOVATIVE ACTIVITIES IN SOCIAL

TECHNOLOGY AND ECONOMIC INSTITUTIONS
• Computer (massive institutions exist)
• Mobile communication • Government of metropolises
• Internet (urbanization)
• IT • People and environment (e.g.,
• Biotech climate change)
• New materials • Business enterprises; integrate
• Nanotechnology new knowledge to work
• Society and government (e.g.,
democracy)
What Makes These The Most Innovative

Companies?
2010 1st Time Over ½ of Companies Not EU or US
1. Apple 14. Research In Motion
2. Google 15. Volkswagen
3. Microsoft 16. Hewlett-Packard
4. IBM 17. Tata Group
5. Toyota Motor 18. BMW
6. Amazon.com 19. Coca-Cola
7. LG Electronics 20. Nintendo
8. BYD 21. Wal-Mart Stores
9. General Electric 22. Hyundai Motor
10. Sony 23. Nokia
11. Samsung Electronics 24. Virgin Group
12. Intel 25. Procter & Gamble
13. Ford Motor
www.competingvalues.com
BusinessWeek, April 15, 2010
BCG survey of 2,700 executives in 70 countries 14

HCMUT 7
What do Executives want from Innovation?
Priorities
Minor changes to existing
products & services
Cost reductions to existing
products & services
New to world products

Priorities
New proudcts & services to
expand new customers
New products & services for
existing customers
0 20 40 60 80 100
15
What Stops Them from Having Innovation?
Marketing or Communication Failure 18
Dearth of Ideas 18
Inadequate Measurement Tools 21
Poor Idea Selection 21
Limited Customer Insight 25
Risk-Averse Culture 26
Lack of Coordination 28
Lengthy Development Times 32
0 10 20 30 40
Barriers to Innovation
16

HCMUT 8
Why innovate?
• ”The only way to beat the competitor is to stop trying to

beat the competitor” (Kim & Mauborgne)

HCMUT 9
Other examples of value innovation
• STARBUCK ”affordable luxury”

• IKEA – the home is the most important place
• Ryanair –
• ....
• ....
Why and where to innovate? Why strategic

foresight?
• “As for the future, your task is not to foresee it, but to
enable it.”
Instructor: Dr.
Nguyen Thi Duc

HCMUT 10
CLO.2
Understand the way of viewing the future
What is the future?
Does the future exists?

Can we know the future?

HCMUT 11
How much do you need the bigger picture?
How to develop futures intelligence
• How to develop collective intelligence

• Which methods to use, in which combination?
• KNOWLEDGE GROWTH
• BLACK & WHITE EXPLANATION
• Sources: ?

HCMUT 12
What kills the future?
Ways of viewing the future(s)
• Analogy thinking
• Trend thinking
• Scenario thinking
• ...

HCMUT 13
CLO.2
Understand
the managing and creating the future
Managing/creating the future

• From foreseeing possible and probable future
steering towards a preferable future -what do we
need to do so?
• IN ORDER TO MANAGE AND CREATE THE FUTURE WE NEED

TO FORESEE IT

HCMUT 14
Foreseeing the future
• For knowledge about what is going to happen and

prepare for it – not change
• Examine what would appear likely to happen if

certain assumptions hold
• Prone to error – essentially passive

HCMUT 15
CLO.2
Understand diffusion of Innovations
Purpose
Explain the dominant stylized fact

that the usage of new technologies over time typically follows an S-curve
Epidemic model
the most popular explanation of S-curve
what limits the speed of usage is the lack of information available about the
new technology, how to use it and what it does.
Probit model
argues that differences in adoption time reflect differences in the goals, needs
and abilities of firms
different firms, with different goals and abilities, are likely to want to adopt
the new technology at different times.
diffusion occurs as firms of different types gradually adopt it.

HCMUT 16
Purpose
=>the twin forces of legitimation and competition help to

establish new technologies and then ultimately limit their
take-up
Look at models in which the initial choice between

different variants of the new technology affect the
subsequent diffusion speed of the chosen
technology.
=> models often rely on information cascades, which drive herd
like adoption behaviour when a particular variant is finally
selected
Purpose
=> examine how typically think about what gives rise to S-curve
diffusion patterns.
=> explore two ways of thinking about diffusion

*－Epidemic model, probit model
*－drawn from the literature on organizational ecology, and

argues that the primary drivers of S-curves are the processes of
legitimation and competition.
*－based on the phenomena of information cascades, aided and

abetted by network externalities

HCMUT 17
Epidemic models
- If, on the other hand,

α<1, then information
spreads gradually and
so, therefore, does
usage of the new
technology.
A transmitter that contacts α%

of the current population of non-
users, {N-y(t)} at time t over the
time interval △t
increases awareness or usage. by
an amount △ yt= α {N-y(t)}△t,
and, taking the limit as △t->0
and solving for the time path of
usage
Epidemic models
=> one rarely encounters symmetric S-curves in the actual

diffusion of new technology
=> the later stages of diffusion occur much more slowly than
would be predicted by a symmetric S-curve
=> The basic premise of the epidemic model is that information

diffusion drives technology diffusion

HCMUT 18
Epidemic models
=> concentrate on the individual adoption decisions made by particular

firms,
=> examine the effects that information transfer costs, risk aversion
and other firm specific factors have on the decisions made by
particular firms.
=> abstract from differences in the goals, capabilities or actions of

individual members of the population in order to focus on the diffusion
of information in a simple, tractable, non-strategic setting
Probit models
Use a probit model to analyze individual

adoption decisions
Suppose:
individuals differ in some characteristic, xi which affects
the profitability of adopting the new technology
If xi exceeds some threshold level, x*
=>Individuals differ in their characteristics, and x
I i
is distributed across the population according

to some function f(x)

HCMUT 19
Probit models
the distribution of abilities
across the population is
normal.
-
Those agents with levels of
x larger than x* choose to
i
adopt the shaded area while

the rest don’t.
- If x* falls (i.e., shifts left) at
a constant rate over time,
the
rate of adoption will
gradually rise (as climb up
the right hand side of the
distribution function) and
then fall (as go down the left
side)
=> generate an S-shaped diffusion
curve.
Probit models
• The trick with probit models is to identify

interesting and relevant characteristics xi
• Firm size turns out to be a very commonly explored
variable in the empirical literature on diffusion
• Firm size is not the only interesting characteristic of firms

which might be thought to drive decisions to adopt new
technology

HCMUT 20
Probit models
• Suppliers are also interesting because:

• often key players in the competition
• control both technologies
Probit models
Sort of incremental innovations of the existing

technology will clearly slow the diffusion of the new
technology
Technological expectations are likely to have a major

impact on diffusion

HCMUT 21
Probit models
One final class of exogeneous drivers of diffusion
worth considering are costs.

Firms who initially have high expectations about the new
technology those in the shaded area of Fig. 2. are willing to make
the investment, while others are unwilling to invest in search
=>more firms become familiar with the new technology,
search costs fall and x* shifts to the left
Probit models
A variety of factors lock firms into existing technologies,

raising switching costs and slowing the diffusion of new
technologies
=> depend on the often very long learning process which a firm
must go through in order to use the new technology to its fullest
=>The costs of adopting a new technology include those

associated with developing the new competencies needed to
make the most of the new technology=>Switching costs can also
be affected by government regulations

HCMUT 22
Probit models
• Opportunity costs are also important, and can be

created by previous investments in machinery which
have not fully depreciated
• Distinguish the probit model of diffusion from what

one might call population models of diffusion
Reflection on technology policy
• The nature of ‘‘competition’’:

• changes over the product life cycle,
• shift from competition between alternative variants of the new
technology to competition from a user population.

HCMUT 23
Models of diffusion which focus on legitimation or
information cascades open up several new insights
destroy any clear presumption that diffusion is ‘‘too slow’’
suggest that there is only a limited window in which policy can
have important effects, and that is during the choice process
although the policy window is small, the effects of policy are
potentially very large
• => technology policy must necessarily be selective if

it is to have any substantive effects
• Non-selective policies like subsidies or running technology fairs
• forums are administratively convenient
• => very blunt policy tools, and hard to believe that one cannot
do better

HCMUT 24
Epidemic and probit models

point to information provision and subsidies as the major
tools of policy, and these alternative models add at least
three further tools to the public policy portfolio.
Legitimation and information cascade models of

diffusion
challenge the basis of the commonly made distinction
between technology policies
CLO.2
Technology-based industries and

the management of innovation

HCMUT 25
Objectives
Competitive Advantage in Technology-intensive

Industries
• Innovation process
• Profitability of innovation
• Which mechanisms are effective at protecting
innovation?

HCMUT 26
• Innovation process
Creation of new products, processes through:

• development of new knowledge
• new combinations of existing knowledge
Initial commercialization of invention by:

• producing and marketing a new good or service
• using a new method of production
• Profitability of innovation

HCMUT 27
• Which mechanisms are effective at protecting
innovation
Strategies to Exploit Innovation:

How and When to Enter
• Alternative strategies to exploit innovation

• Timing innovation: to lead or to follow?
• Managing risks

HCMUT 28
• Alternative strategies to exploit innovation
How should a firm maximize the returns to its innovation?
Choice of strategy mode

depends on two main sets
of factors:
Characteristics of the
innovation,
Resources and
capabilities of the firm
• Timing Innovation: to Lead or to Follow?

HCMUT 29
• Managing Risks
Competing for Standards
• Types of standard
• Why standards appear: network externalities
• Winning standards wars

HCMUT 30
• Types of standard
Implementing Technology Strategies:

Creating the Conditions for Innovation
Managing creativity: From invention to innovation
•While innovation requires certain resources-people,

facilities, information, and time:
there is no predetermined relationship between
R&D input and innovation output.
•Productivity of R&D depends heavily on the

organizational conditions that foster innovation.
•While invention depends on creativity:

innovation requires collaboration and cross-
functional integration.

HCMUT 31
Conclusion

HCMUT 32

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TECHNOLOGY AND INNOVATION MANAGEMENT

CLO.2 – Understand global trends

Nguyen Thi Duc Nguyen, PhD. Email: ntdnguyen@hcmut.edu.vn

Understand global trends

Instructor: Dr. Nguyen Thi Duc Nguyen, SIM-HCMUT

Dr. Nguyen Thi Duc Nguyen, SIM-

• Industrial revolution 1750 – 1880

• Production revolution 1880 – 1945

• Management revolution 1945 –

• Consciousness revolution 2000 –

Instructor: Dr. Nguyen Thi Duc Nguyen, SIM-HCMUT

Instructor: Dr. Nguyen Thi Duc Nguyen, SIM-HCMUT

Dr. Nguyen Thi Duc Nguyen, SIM-

• • How will your career turn out?

• • What would kill that future?

Instructor: Dr. Nguyen Thi Duc Nguyen, SIM-HCMUT

Why futures research and foresight?

• We as human beings: future oriented, natural desire

• • Challenges and fears as social, cultural, economic

Instructor: Dr. Nguyen Thi Duc Nguyen, SIM-HCMUT

Dr. Nguyen Thi Duc Nguyen, SIM-

• For the sake of life-management we have to make

Instructor: Dr. Nguyen Thi Duc Nguyen, SIM-HCMUT

Imaginable, possible and probable futures

Instructor: Dr. Nguyen Thi Duc Nguyen, SIM-HCMUT

Dr. Nguyen Thi Duc Nguyen, SIM-

• OLD: “Steady plodding of progress from one moment

Instructor: Dr. Nguyen Thi Duc Nguyen, SIM-HCMUT

Instructor: Dr. Nguyen Thi Duc Nguyen, SIM-HCMUT

Dr. Nguyen Thi Duc Nguyen, SIM-

Instructor: Dr. Nguyen Thi Duc Nguyen, SIM-HCMUT

Innovations during the late nineteenth

Instructor: Dr. Nguyen Thi Duc Nguyen, SIM-HCMUT

Dr. Nguyen Thi Duc Nguyen, SIM-

INNOVATIVE ACTIVITIES IN INNOVATIVE ACTIVITIES IN SOCIAL

Instructor: Dr. Nguyen Thi Duc Nguyen, SIM-HCMUT

What Makes These The Most Innovative

Dr. Nguyen Thi Duc Nguyen, SIM-

New to world products

What Stops Them from Having Innovation?

Marketing or Communication Failure 18

Inadequate Measurement Tools 21

Poor Idea Selection 21

Limited Customer Insight 25

Lengthy Development Times 32

Dr. Nguyen Thi Duc Nguyen, SIM-

Instructor: Dr. Nguyen Thi Duc Nguyen, SIM-HCMUT

• ”The only way to beat the competitor is to stop trying to

Instructor: Dr. Nguyen Thi Duc Nguyen, SIM-HCMUT

Dr. Nguyen Thi Duc Nguyen, SIM-

• STARBUCK ”affordable luxury”

Instructor: Dr. Nguyen Thi Duc Nguyen, SIM-HCMUT

Why and where to innovate? Why strategic

Dr. Nguyen Thi Duc Nguyen, SIM-

Understand the way of viewing the future

Instructor: Dr. Nguyen Thi Duc Nguyen, SIM-HCMUT

What is the future?

Does the future exists?

Instructor: Dr. Nguyen Thi Duc Nguyen, SIM-HCMUT

Dr. Nguyen Thi Duc Nguyen, SIM-

Instructor: Dr. Nguyen Thi Duc Nguyen, SIM-HCMUT

How to develop futures intelligence

• How to develop collective intelligence

• BLACK & WHITE EXPLANATION