6-DN-E - Bkel

TECHNOLOGY AND INNOVATION MANAGEMENT
SESSION 6
Managing Technological Innovation
in Organizations
- Understand the managing technological transitions

CLO.4
- Analyze the managing innovation through cycles of technological change
- Analyze the profiling from technological innovation
- Analyze the capturing value from technological innovation
- Understand the capturing learning from innovation
1
Instructor: Dr. Nguyen Thi Duc Nguyen, SIM-HCMUT Email: ntdnguyen@hcmut.edu.vn
Self study
(Technological Innovation)
- Understand the organizing for innovation: Organization structure and Culture

CLO.4
- Understand social networks and Informality in the innovation Process
-Understand the Transformative Capacity of innovation and innovation Systems
Dr. Nguyen Thi Duc Nguyen, SIM-

HCMUT 1
Technological transitions as
evolutionary reconfiguration processes
a multi-level perspective
Modern sociotechnical configuration
Instructor: Dr. Nguyen Thi Duc Nguyen, SIM-HCMUT

HCMUT 2
Approach
Integrative evolutionary multi-level

perspective on technological transitions

HCMUT 3


HCMUT 4


HCMUT 5
Empirical case-study: from sailing ships to

steamships, 1780–1900
The Savannah (320 tones)

was the first steamship to
make the Atlantic crossing in
1819. One of the earliest
steamers to cross the Atlantic
in a west-bound direction was
a little vessel called the Rising
Star, 1822 (Fig. 7). Steam
engines were an auxiliary add-
on to sailing ships, used at
times of little winds
(Dirkzwager, 1993: 73).

HCMUT 6
Empirical case-study: from sailing ships to
steamships, 1780–1900
• Problems for iron ships were
disturbance of the compass and
rapid fouling of the hulls by
marine growths.
• The early skepticism was
represented in formal insurance
rules. High insurance premiums
had to be paid for iron ships
and no design rules for the
construction of iron ships were
issued by Lloyds until 1855
(Smith, 1937).
• The Great Britain was a hybrid
form between sailing ships and
steamships.
Mechanism in technological transitions

HCMUT 7
Discussion and conclusions
Technology S-curve
• Emergent
• Growth
• Maturity

HCMUT 8
Three phase of technology S-curve
• Emergent
• Growth
• Maturity
Emergent Stage of S-curve

HCMUT 9
Growth Stage of S-Curve
Maturity Stage of S-curve

HCMUT 10
Elements of Technology S-curve
• Technical limits
• Technical potential
Technology S-curve as an forecasting tool
• The wide variety of empirical studies discovers that
the technology S-curve combines descriptive,
explanatory and predictive potential. It thus represent
a potential forecasting tool.

HCMUT 11
Implications of technology S-curve model
• It helps to monitor and map formulation.

• What sort of effort is needed that the model shows
some hints.
• It also determines the importance of technical limits
and technical potential of technology.
• Separate the idea of economic health to
technological health.
• Some of the cases innovative organizations to look
for alternative technologies.
Critique of the technology S-curve model
• Limitations • Complications
• it’s a input-output model • Dynamic factors affecting the
• nature of relationship not model
determine • its stylized or generalized

• Prior to mid point its difficult • component level and
to forecast (Becker and architectural level
Speltz) performance can change
• Nobody knows the technical • scores in technology

limits • nested level of technologies

HCMUT 12
Capturing Value from
Technological Innovation:
Integration, Strategic Partnering, and
Licensing Decisions
Phenomenon
Ｓｕｐｐｌｉｅｒｓ
Imitators
Customers Innovator
Other “followers”
Benefits from innovation, referred to as economic rents.

HCMUT 13
Phenomenon
• The EMI Scanner is a classic case of a losing

innovation [Martin 1984].
• EMI Ltd. （a UK firm) displayed advanced prototypes
of computerized axial tomography (CAT) scanners in
Chicago in November 1972.
• By the mid-’70s imitators had emerged, most notably

GE with faster scanners
• EMI was forced to sell its scanner business and in
April of 1980 announced a sale to GE.
Innovators
Some winning and losing innovators
Wining innovators: Losing innovators:

①Pilkington (Float Glass) ①RC Cola (diet cola)
②EMI (scanner)
②G. D. Searle
③Bowmar (pocket calculator)
(NutraSweet) ④Xerox (“Star” computer)
③Dupont (Teffon) ⑤De Havilland (Comet I jet)

HCMUT 14
Phenomenon
• There is lore, but little analytics, to explain when

and why innovators lose out to imitators and
followers.
• Xerox has been first to commercialize key computer

technologies developed in its Parc facility.
• The Comet I jet was introduced into the commercial

airline business 2 years or so before Boeing
introduced the 707.
Capturing Rent Stream
Appropriability regime
Distribution
of outcomes
Dominant design paradigm
Complementary assets

HCMUT 15
Regimes of Appropriability
• The term regime of appropriability refers to aspects

of the commercial environment
• The most important dimensions of such a regime are

the nature of the technology and the efficacy of legal
mechanisms of protection.
• Patents do not work in practice as they do in theory
• Patents often provide little protection
• In process innovations, trade secrets are a viable
alternative to patents.

HCMUT 16
1 2
“tight” “weak”
appropriability appropriability
regime regime
(technology is (technology is
relatively easy to almost impossible
protect) to protect)
Ex: formula for Coca Ex: Simplex algorithm in

Cola syrup linear programming
Dominant Design Paradigm
Kuhn [1970] suggests that there are two stages in the

evolutionary development of a given branch of a science:
Preparadigmatic Paradigmatic
stage stage
when there is no single generally which begins when a body of theory

accepted conceptual treatment of appears to have passed the canons
the phenomenon in a field of study of scientific acceptability.

HCMUT 17
Dominant designs
• At some point after considerable trial and error in the

marketplace, one design or a narrow class of designs
begins to emerge as the more promising.
• The Model T Ford, the IBM 360, and the Douglas DC-3
are examples of dominant designs。
Dominant designs
1 2 3
Reduced uncertainty Once the product

Once a dominant design stabilizes,
over product design
design emerges, provides an there is likely to be
opportunity to a surge of process
competition shifts to innovation as
amortize specialized
price and away long-lived producers attempt
investments. to lower production
from design. costs for the new
product.

HCMUT 18
Dominant designs
• When new technologies are commercialized, process innovation
often follows product innovation.
• The nature of competition and the requirements for marketplace

success shift dramatically.
Product innovation
Process innovation
Rate of innovation
Preparadigmatic design phase Paradigmatic design phase

Complementary Assets
• In order to innovate, firms need complementary assets and
technologies to support the commercialization of some core
technology.
• These assets typically include manufacturing, distribution, and

sales and service.

HCMUT 19
Complementary Assets
Generic Specialized Cospecialized
assets assets assets
general
those on
purpose those for
which the
assets that
innovation which there
do not need
depends,
to be is a bilateral
tailored to
tailored to
that dependence
the
innovation
innovation
Implications for Profitability
• Competition from imitators is thus muted in tight

appropriability regimes, (petrochemical industry).
• If an innovator comes to market in the pre-

paradigmatic phase with a sound product concept
but the wrong design, a tight appropriability regime
will afford it the time needed to get the design right.
• However, tight appropriability is the exception rather

than the rule.

HCMUT 20
Implications for Profitability
• In the pre-paradigmatic phase, the innovator must be

careful to let the basic design float until the design seems
likely to become the industry standard.
• Innovators in weak appropriability regimes need to be
intimately connected with the market so that designs are
based on user needs.
• Hence, the probability that the first firm to commercialize a
new product design will enter the paradigmatic phase with
the dominant design is problematic.
• In industries with large developmental and prototyping
costs, the innovator would be unlikely to emerge as a
winner at the end of the pre-paradigmatic stage if the
appropriability regime is weak.
3. Implications for Profitability
• In the pre-paradigmatic phase, complementary assets do not

loom large.
• As the terms of competition begin to change and prices become

increasingly unimportant, complementary assets become critical.
At this point, specialized and co-specialized assets become
critically important.
• Generalized assets are always available in an industry and do

not involve significant irreversibility.
• Specialized assets involve significant irreversibility and cannot

be easily accessed by contract.

HCMUT 21
Channel Selection Issues
Contractual Mixed Integration

Modes modes Modes
various hazards unnecessary

dependencies expensive
Channel Selection Issues
• Access to complementary assets is critical.

• What controls should the imitator establish over these
critical assets?
① innovator could integrate into all of the necessary
complementary assets.
② innovator could attempt to access these assets

through contractual relationships
In between these two extremes are a myriad of

intermediate forms and channels.

HCMUT 22
Contractual Modes
• The innovator will not have to make the capital expenditures
needed to build or buy the assets.
• Contractual relationships can bring added credibility to the
innovator, especially if the innovator is unknown and the
contractual partner is established and viable.
• Strategic partnering exposes the innovator to certain hazards,
particularly when the innovator is trying to use contracts to
access special capabilities.
• There is the added danger that the partner may imitate the
innovator’s technology and attempt to compete with the
innovator.
• Contractual or partnering strategies are unambiguously
preferred where the complementary assets are generic and in
competitive supply.
Integration Modes
• It is costly in terms of managerial and financial resources.

• To avoid a speculative price run-up, the assets in question
must be acquired by the innovator before their connection
with the innovation is public knowledge.
• Innovator may not have the time or the money to acquire
or build the complementary assets it would like to control.
• When imitation is easy, building or buying specialized
complementary assets must be considered in light of the
moves of competitors.
• In industries experiencing rapid technological change, no
single company is likely to have the full range of expertise
needed to bring advanced products to market in a timely
and cost-effective fashion。

HCMUT 23
Integration Modes
The figure
summarizes
the factors to
be
considered in
deciding
between
contracting
and building
or buying
(p.58)
Mixed Modes
• The reality of business is that mixed modes-

involving the blending of elements of integration and
contract- are rather common.
• Sometimes mixed modes represent transitional
phases.
the leading fighter manufacturers have developed

in- house avionics capabilities..

HCMUT 24
Conclusion
① Boundaries of an innovating firm are an important
strategic variable, particularly when intellectual property
protection is weak.
② The control of complementary assets, particularly when
they are specialized or co-specialized, helps establish
who wins and who loses from innovation.
③ Imitators can do better than innovators if they are better
positioned on cost and quality with respect to critical
complementary assets, such as manufacturing.
Conclusion
④ Being first to market is no longer a guarantee of

commercial success
⑤ National prowess in research and development is neither
necessary nor sufficient to ensure that the innovator (rather
than followers) captures the greater share of the profits
available from innovation.
⑥ Public policy towards science and technology must
recognize how important the technological infrastructure is
to the ability of domestically-based firms to build the
requisite competitive capacities needed to capture value
from innovation.

HCMUT 25
Capturing learning
from innovation
© 2009 John Wiley & Sons Ltd.

52
www.wileyeurope.com/college/tidd

HCMUT 26
Kolb’s cycle of experiential learning

www.wileyeurope.com/college/tidd
Instructor: Dr. Nguyen Thi Duc Nguyen, SIM-HCMUT 53
Group of firms according to innovation capability

Instructor: Dr. Nguyen Thi Duc Nguyen, SIM-HCMUT www.wileyeurope.com/college/tidd
54

HCMUT 27
CBGD: TS. Nguyễn Thị Đức Nguyên, Khoa Quản lý công Nghiệp, Trường Đại Học Bách Khoa-TpHCM
55

HCMUT 28

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TECHNOLOGY AND INNOVATION MANAGEMENT

- Understand the managing technological transitions

- Understand the organizing for innovation: Organization structure and Culture

Dr. Nguyen Thi Duc Nguyen, SIM-

Modern sociotechnical configuration

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

Dr. Nguyen Thi Duc Nguyen, SIM-

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

Integrative evolutionary multi-level

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

Dr. Nguyen Thi Duc Nguyen, SIM-

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

Integrative evolutionary multi-level

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

Dr. Nguyen Thi Duc Nguyen, SIM-

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

Integrative evolutionary multi-level

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

Dr. Nguyen Thi Duc Nguyen, SIM-

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

Empirical case-study: from sailing ships to

The Savannah (320 tones)

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

Dr. Nguyen Thi Duc Nguyen, SIM-

Mechanism in technological transitions

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

Dr. Nguyen Thi Duc Nguyen, SIM-

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

Dr. Nguyen Thi Duc Nguyen, SIM-

Emergent Stage of S-curve

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

Dr. Nguyen Thi Duc Nguyen, SIM-

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

Maturity Stage of S-curve

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

Dr. Nguyen Thi Duc Nguyen, SIM-

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

Technology S-curve as an forecasting tool

• The wide variety of empirical studies discovers that

the technology S-curve combines descriptive,

explanatory and predictive potential. It thus represent

a potential forecasting tool.

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

Dr. Nguyen Thi Duc Nguyen, SIM-

• It helps to monitor and map formulation.

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

Critique of the technology S-curve model

determine • its stylized or generalized

• Nobody knows the technical • scores in technology

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

Dr. Nguyen Thi Duc Nguyen, SIM-

Benefits from innovation, referred to as economic rents.

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

Dr. Nguyen Thi Duc Nguyen, SIM-

• The EMI Scanner is a classic case of a losing

• By the mid-’70s imitators had emerged, most notably

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

Some winning and losing innovators

Wining innovators: Losing innovators:

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

Dr. Nguyen Thi Duc Nguyen, SIM-

• There is lore, but little analytics, to explain when

• Xerox has been first to commercialize key computer

• The Comet I jet was introduced into the commercial