S M T I: Trategic Anagement of Echnology and Nnovation

UPES
CENTRE FOR CONTINUING EDUCATION
MB403D
STRATEGIC MANAGEMENT OF
TECHNOLOGY AND INNOVATION
www.cce.upes.ac.in
Course Design
SLM Development Team

Dr. Raju Ganesh Sunder Dr. Rajesh Gupta
Professor & Head-Academic Unit Sr. Associate Professor
Mr. Tarun Batra Mr. Rahul Sharma Mr. Shantanu Trivedi
Author
Dr. Tarun Dhingra, Mr. Akhil Damodaran, Dr. Rajesh Tripathi, Mr. Vikas Kumar
Course Code: MB403D

Course Name: Strategic Management of Technology and Innovation
Version: July 2018

Contents
Unit 1 Dynamics of Technology—Evolution, Stages and Categories .......................... 1
Unit 2 Strategic Management of Technology and Innovation ..................................... 7
Unit 3 Dynamics of Technology—Theories and Models ............................................. 39
Unit 4 Strategic Agility: Dynamics of Information Technology and Structure ....... 47
Unit 5 Dynamics of Production Technologies and its Impact on Business .............. 55
Unit 6 Case Study I ....................................................................................................... 59
Unit 7 Case Study II ...................................................................................................... 65
Unit 8 Dynamics of Technology: Evolution, Stages and Categories ......................... 67
Unit 9 Technology and Business Environment ........................................................... 75
Unit 10 Implementing Strategic Technology Management ........................................ 103
Unit 11 Product Design.................................................................................................. 113
Unit 12 Managing Innovative Systems ........................................................................ 121

1
Unit 1 Notes
Dynamics of TTechnology—Evolution,
echnology—Evolution, ___________________
___________________
Stages and Categories ___________________
___________________
Learning Objectives: ___________________
After completion of this unit, the students will be able to explain: ___________________
\ Technology Dynamics
___________________
\ Relation Between Technology Dynamics, Cost and Quality
\ Importance of Scale and Value Addition on Dynamics of Technology ___________________
___________________
Introduction ___________________
Innovation is going up against an inexorably focal and deciding

part in society and can give opposing outcomes: riches from one
viewpoint, yet additionally joblessness, ecological irregular
characteristics and other social issues on the other. Manufacturing
methods and production organization are picked in each nation on
the basis of particular needs of the organizations, while the genuine
needs of every populace are regularly very unique. As of now, with
a specific end goal to keep all types of innovation from getting to
be increasingly “intrusive”, towards both the regular supply of assets
and the particular - however exceptionally separated - requirements
of mankind, innovative always must be distinguished and taken
after which are equipped for making the various needs good, from
the angle of economic improvement, the preservation and increment
in estimation of characteristic assets, and the nature of advancement.
This will turn out to be progressively critical later. This objective
is without a doubt and hard to accomplish; be that as it may,
evidence of the issues caused by summed up, uncontrolled utilization
of technology, everywhere throughout the world, persuades that
extreme endeavors must be made to accomplish this point. If not,
mankind risks an irreversible degradation of the most vital parts of
financial improvement and its quality. Inside this structure, those
organizations that create products and enterprises clearly involve
a focal, dynamic part, which they should play with a view both to
intensity and by and large capability and to adding to the
destinations of practical advancement.
Along these lines, from this viewpoint, the decision of production
ways, technologies and administration criteria is turning into an
inexorably perplexing and difficult one for both open and privately
owned businesses. Then again, the advances in logical and
Strategic Management of Technology and Innovation
2
mechanical know edge have turned out to be progressively quick
Notes
and exceptional, to the point that everybody has an expanded
number of conceivable choices.
___________________
Extension of the scope of accessible innovations is the principle
___________________
objective that innovation strategy must set, for clear reasons: the
___________________ more advancements that are accessible in each homogeneous creation
circumstance, the more noteworthy the odds are of choosing the
___________________
most proper one to give focused ness and in general capability to
___________________ the organizations that receive it.
___________________ It ought to be underscored that embracing advances that give

advantageous stance for the organization and the network - both in
___________________ the medium, long run - requires a significant change in the “financial
___________________ culture and affectability” of those in the field and open experts on
the one hand, and similarly as impressive an adjustment sought
___________________ after on the other. The change in monetary and mechanical culture
___________________
may thus be made possible by the extended information in each
field which, naturally and systematically associated, gives initial a
total reference diagram in which to embed decisions, at that point
worldwide information on the impacts that such decisions may make
at each level; lastly, agent data on the most proficient method to
apply them monetarily.
IT has traditionally functioned as the foundation to keep a company
running. One of its core functions has been to protect company
operations with firewalls and encryption to keep external
technologies out.
Dynamics of Technological Cycles: Evolution

• The Industrial Revolution – 1771
• The Age of Steam and Railways – 1829
• The Age of Steel and Heavy Engineering – 1875
• The Age of Oil, Electricity, Automobile and Mass Production
– 1908
• The Age of Information and Telecommunications – 1971 till
date
Innovation from 1900 to 1945

In the ongoing history of innovation, in any case, one truth emerges
unmistakably: notwithstanding the gigantic accomplishments of
innovation by 1900, the next decades saw more progress over an
extensive variety of exercises than the entire of already written
history. The plane, the rocket and interplanetary tests, gadgets,
nuclear power, anti-microbials, bug sprays, and a large group of
Unit 1: Dynamics of Technology—Evolution, Stages and Categories
3
new materials have all been imagined and created to make an
Notes
unparalleled social circumstance, loaded with potential outcomes
and risks, which would have been for all intents and purposes ___________________
impossible before the present century.
___________________
In a bid to decipher the occasions of the twentieth century, it will
be helpful to isolate the years prior to 1945 from those that took ___________________
after. The years 1900 to 1945 were commanded by the two World ___________________
Wars, while those since 1945 were engrossed by the need to stay
away from another significant war. There were significant political ___________________
changes in the twentieth century identified with innovative limit ___________________
and administration. It might be a misrepresentation to see the
twentieth century as “the American century,” yet the ascent of the ___________________
United States as a super state was adequately fast and emotional ___________________
to pardon the exaggeration. It was an ascent in light of enormous
characteristic assets misused to anchor expanded profitability ___________________
through boundless industrialization, and the achievement of the
___________________
United States in accomplishing this goal was tried and exhibited in
the two World Wars. Innovative authority goes from Britain and
the European countries to the United States over the span of these
wars. It is not necessarily the case that the springs of development
went dry in Europe. Numerous vital creations of the twentieth
century started there. In any case, it was the United States that
had the ability to acclimatize advancements and take full preferred
standpoint from them now and again when different nations were
insufficient in one or other of the indispensable social assets without
which a splendid creation can’t be changed over into a business
achievement. Similarly, as with Britain in the Industrial Revolution,
the mechanical essentialness of the United States in the twentieth
century was shown less by a specific advancements than by its
capacity to receive new thoughts from whatever source they
come.
The two World Wars were themselves the most essential instruments
of mechanical and additionally political change in the twentieth
century. It has been said that World War I was a scientific experts’
war, based on the gigantic significance of high explosives and toxic
substance gas. In different regards, the two wars hurried the
improvement of innovation by expanding the institutional
contraption for the consolation of advancement by both the state
and private industry. The wars were subsequently in charge of
speeding the change from “little science,” with look into still to a
great extent limited to little scale endeavors by a couple of separated
researchers, to “huge science,” with the accentuation on huge
research groups supported by governments and companies, working
on the whole on the advancement and utilization of new systems.
4
Notes
Technology and Education
Review of the historical backdrop of technology, gives us an insight
___________________
to the developing significance of education. In the early centuries of
___________________ human presence, an art was procured in an extensive and arduous
way by presenting with an ace who step by step prepared the start
___________________ in the shrouded puzzles of the expertise. Such guideline, set in a
___________________ lattice of oral custom and commonsense experience, was every now
and again more firmly identified with religious custom than to the
___________________ utilization of objective logical standards. Therefore, the craftsman
___________________
in earthenware production or sword making secured the ability
while guaranteeing that it would be propagated. Specialty
___________________ manufacturing was standardized in Western human advancement
as apprenticeship, which has made a structure for guideline in
___________________
specialized abilities. Progressively, nonetheless, guideline in new
___________________ methods requires get to both to general hypothetical learning and
to domains of handy experience that, by virtue of their curiosity,
___________________
were not accessible through conventional apprenticeship. Along these
lines, the necessity for a noteworthy extent of scholarly guideline
has turned into an essential component of most parts of present-
day technology. This quickened the union amongst science and
technology in the nineteenth and twentieth hundreds of years Be
that as it may, by the twentieth century all the progressed
mechanical nations, including newcomers like Japan, had perceived
the urgent part of a hypothetical innovative education in
accomplishing business and modern skill.
Types and Forms of Technology

The technologies used in manufacturing firms may be classified as
follows, while following their features into account:
• Generic technologies: Highly consolidated production
systems, characterized by relatively simple operations and slow
renovation.
• Advanced technologies: Production systems developed
mainly after the Second World War, characterized by complex,
refined operations and a high speed of renovation.
• Hybrid technologies: Production systems in which the
characteristics typical of advanced technologies are prevalent,
but not total, and which also include some characteristics of
traditional technologies.
• Intermediate technologies: Production systems in which the
characteristics of traditional technologies are prevalent, but
which also include some characteristics of advanced
technologies.
Unit 1: Dynamics of Technology—Evolution, Stages and Categories
5
Technology Value Addition: Radical Versus Continuous
Notes
Innovation
The technological level in production sectors may be distinguished ___________________
on the basis of various elements—type, speed of renovation, diffusion,
___________________
influence on the added value of the product, and research,
development and license expenditure. Of these, the added value is ___________________
certainly very significant. The advanced and mixed technologies
nearly always produce a high-added value, traditional technologies ___________________
tend to give a low added value, and intermediate technologies an ___________________
average added value.
___________________
There is nearly always a heavy increase in the value of raw materials
in manufacturing, electronic and aeronautical industries, in ___________________
secondary chemical and specialized industries (plant protection
products, surfactants, dies, pharmaceuticals and others); by contrast, ___________________
there is generally an average value in inorganic and intermediate ___________________
chemical industries; while there is a low added value in the food
industry, natural textile fibre processing, footwear, and building ___________________
materials.
The speed of technological renovation is also an element used to
distinguish among the various technologies; activities based on
traditional and intermediate technologies adjust their production
systems in no less than 10 years; mixed technologies in 5 to 10
years; advanced technologies every 1 to 5 years.
Another element characterizing technological levels are the research,
development and licensing expenditures; the more advanced the
technology in an activity, the higher these costs are, especially,
relative to the sales of the company.
Technology and Cost and Quality

Dynamics of technology is highly impacted by the considerations
like cost and quality. Firms in modern era as part of cost-cutting
exercise while starving for maintaining the highest level of quality.
Companies incur huge research and development cost in order to
bring down overall expenditure on technology procurement. Firms
also bid for achieving a benchmarked quality, which ultimately
influences dynamics of the technology
Technology and Scale Effects

The reception of a technology may rely upon a specific least effective
size underneath, which (or a greatest size above which) its utilization
may not be ideal; this implies the presentation of exceptional reason
gear ends up attainable just past a specific scale. There are numerous
cases, everywhere throughout the world, of creations executed in
industry just quite a long while after their finding simply because
the span of the organizations was too little to allow a quick return
of the comparing speculations.
6
As such, the highlights of a technology and of the inferred hardware
Notes influence the scale, and the scale thusly influences the innovative
change. To a specific degree, at that point, the connection between
___________________
a technology and the scale of its activities may well be of a commonly
___________________ causal nature (Rosegger, 1980 and 1986). We can sensibly accept
that technology is more vulnerable to the impact of scale than scale
___________________ is to the impact of technology. Indeed, there are two critical
___________________
explanations behind this. To begin with, technology is just a single
among a large group of variables.
___________________
The impacts of scale may occur at different levels, including:
___________________
• The global production of every item after some time.
___________________ • The items life-length.
___________________ • The efficiency level of every item per unit of time.
___________________ • The institutionalization level of the items.
___________________ • The production limits per unit of plant, gear and production
lines.
• The general size of a complex of plants in a particular zone.
• The level of vertical integration of a plant.
• The measure of an item sold to every client.
• The topographical centralization of clients.
• The extent of conveyances to every client.
Summary
With the advance of technologies, however, a vast array of
capabilities and sources of competitive advantage are emerging
beyond a business’ traditional walls. Those capabilities are coalescing
in a wealth of new ecosystems. To the extent the connections between
mechanical dynamics and production structures are concerned, these
have turned out to be progressively close but then dynamic, to the
point that they condition decisions and results in each field.
Essentially, the definitive significance of “non-focused relations”
between organizations, both on the organizations themselves and
on the general economy, is featured; this involves a dream of
technology as a “system”, and not only as a “production function”.
Questions for Discussion

1. What do you understand by technology dynamics?
2. Explain the relation between technology dynamics, cost and
quality.
3. Identify the importance of scale and value addition on dynamics
of technology.
7
Unit 2 Notes
Strategic Management of TTechnology

echnology
___________________
___________________
and Innovation ___________________
___________________
\ How technology influences competition and the industry structure
___________________
\ How innovation is used as an instrument to achieve competitive
advantage and firms captures profit coming out of innovation ___________________
\ Strategy formulation for innovation exploitation and management of
___________________
technology
\ How to make organizations ready for managing innovation and technology ___________________
Introduction
One common factor that has emerged in last 3–4 decades is the rate
of change witnessed in most of the industries. The rate of change
in the competitive landscape is fueled by innovation, which comes
in the form of technology and has the ability to drastically influence
and disrupt industry structure and competition. New technologies
that have come in the open marketplace have given birth to many
industries and have been instrumental for the death of some.
For example, some of these technologies and associated industries

were completely unheard of around some decades ago like wireless
technology, biotechnology, photovoltaic power, RFID, artificial
intelligence, robotics, 3D printing, etc., although these powerful
technologies have certainly influence many industries like the
telecom, organized retails, pharmaceuticals, manufacturing, power
system, etc. Innovation and technology certainly have all the might
to create disruption in the market and change the equilibrium of
value appropriation.
Since innovation and technology are directly linked with the basic
tenets of Strategic Management as discipline, like value creation
and value capture or appropriation, it becomes important to
understand how technology works as key driver of change in a
given business environment and contributes to the achievement of
competitive advantage.
Technology is found to be equally important in both emerging and

mature industries, although the phase where it affects the most
8
varies in both types of industries. In the case of emerging industries,
Notes
it influences more on the introduction and growth phases and in
the case of mature industries, it works as a major instrument of
___________________
competition. Technology is one of the dominant forces of bringing
___________________ change into the competitive landscape and requires careful study of
innovation and technology from an environment-determinism
___________________
perspective. It also needs to explore how these two are used as an
___________________ instrument to achieve competitive advantage.
___________________
Linkage Between Technology and Competitive
___________________ Advantage
___________________
The link that connects competitive advantage with technology is
___________________ innovation. Firms, in order to pursue competitive advantage, put
their resources into innovation. Innovation is one of the most
___________________ important causes of birth and death for many industries. It is also
___________________ responsible for putting the incumbent growth story in danger and
allows the incumbent to continue dominating the existing industry.
However, innovation requires some conditions to take place before
you can capture some value out of it.
The process of innovation

Two terms related and strongly linked to each other are invention
and innovation. Invention is creation of any new product, process
knowledge or any combination of these. In most of the cases,
invention happens by applying the existing knowledge in a new
arena that leads to the creation of something new. Innovation is
strongly linked with commercialization. It means, taking an
invention in the form of new product or service to market. It could
also be a new method of production. In order to make it successful,
both demand and supply have to contribute to its mite. For demand,
it requires adoption of the product or services by customers or
consumers and for supply, it needs imitation by its competitors.
An innovation could be the output of a single or many inventions

combined in one. For example, the wheel as a concept was invented
around 500 years ago but Karl Benz made first automobile in 1885,
so obviously automobile was a combination of many inventions
structured into one to make an attractive value proposition. The
basic definition of innovation is “applied creativity with successful
commercialization”. Thus, all innovations are inventions, but all
inventions may or may not be the innovation. If we carry out the
patent profile analysis of some of the most R&D-intensive
organizations to understand conversion of patents into commercial
success, then the result is a disappointing one. Many patents have
never been converted into innovation. Another important realization
Unit 2: Strategic Management of Technology and Innovation
9
in the case of innovation is that not all innovations require extensive
Notes
support of technology. Technology may have little or no use at all
in many innovations. The recent increase in packaging is largely
___________________
due to innovative design, although there are some new materials
developed for usage but still a large part of packaging growth has ___________________
happened due to design innovation.
___________________
All technologies that were part of personal computing on its launch
___________________
were already available on the market; PC was only a new innovative
assembly of it. The basic structure of relationship between innovation ___________________
and knowledge is given in the figure below, which also articulates
___________________
that there has been a lag effect between these two. In general,
there has been a long-time gap between knowledge, innovation and ___________________
its ultimate diffusion to masses.
___________________
Imitation ___________________
Supply side
___________________
Basic
knowledge Invention Innovation Diffusion
Demand side
Adoption
Figure 2.1. The Development of Technology: From Knowledge Creation to Diffusion

Source: Contemporary Strategy Analysis: Text and Cases Edition, Grant R M.
8th Edition
One of the critical challenges in any innovation is its ultimate

diffusion, which is dependent upon adoption by target group or
masses. The supply is generally taken care of or strengthened by
the imitators in the market.
The first patent related to printing was awarded in 1940 to Chester

Carlson and later on, it was purchased by Xerox, which launched
the first photocopy machine way back in 1958.
The famous jet engine, which applies the principles given by Newton,
was given patent in 1930 to Frank Whittle, but the first commercial
jet was launched in 1957, and after two years of that the Boeing
707 was launched in the market.
MP3, which was meant to compress audio files in software, was

developed first in 1987; the first MP3 player came to market in
1998, and later on, Apple created history by launching the iPod in
2001. This invention, along with internet, helped solidify the business
model of many music companies – there was no dearth of music
lovers back then. But the number of consumers who “purchased”
music has now dipped in the last few years.
10
These examples clearly show that historically there has been a
Notes
significant time lag between knowledge creation and innovations in
the market, although it is shrinking these days.
___________________
___________________ Innovation and its profitability

___________________ Do innovations guarantee fame and money? Did all inventors make
a smiling journey to the bank? Although many inventions have
___________________
taken place in last century, there is no empirical evidence to prove
___________________ that companies that put a high amount of R&D expenditure or line
up many new product launches are positively correlated to
___________________ profitability. Although it may look a bit ironical, it is true. One
___________________ thing is sure that every innovation creates value, but that value is
subject to many powerful forces working in the market along with
___________________ maneuvering of the market players.
___________________
___________________
Customers
Suppliers
Innovator
limitators and
other
“followers”
Figure 2.2. Appropriation of value: How are the benefits from innovation
distributed?
Source: Contemporary Strategy Analysis: Text and Cases Edition,
Grant R M. 8th Edition
The value created by the innovators is shared between different

parties operating in the market. The above figure shows that
customers, suppliers, imitators, or followers are the other parties in
the fray and innovators do not necessarily capture the largest pie.
It varies from market to market along with product to product but
generally, customers are the largest pie holders in any innovation
and value appropriation in the market.
This has been witnessed in many product categories, for example,

in PC the largest value is held by customers followed by suppliers
(Microsoft and Intel); in smartphones, largest values are captured
by the imitators or followers. Since the key objective behind any
research effort in any commercial organization is profit, this
empirical evidence does not necessarily conclude in the same
direction and are in some cases on the contrary.
11
ASPARTAME PCs SMARTPHONES
Notes
Customers
Customers Customers ___________________
Followers
rs Innovators Suppliers
Supplie Innovators ___________________
Followers
Innovators Suppliers ___________________

Followers
___________________
___________________
Figure 2.3. Appropriation of value: Who gets the benefits from innovation?
Source: Contemporary Strategy Analysis: Text and Cases Edition, Grant R M. ___________________
8th Edition.
___________________
The term used in SM literature related to this is the regime of
appropriability, which describes the context and state that have the ___________________
power of influencing value (read profit) distribution in any market.
___________________
This could be categorized into the strong and weak regimes. In the
strong regime, innovators are able to capture a significant or the ___________________
largest part of value in the market. Some examples are
pharmaceutical R&D-based brands that have exclusive marketing
rights (EMR), for example, Viagra of Pfizer.
NutraSweet made by Searle is also a huge profit-making brand of

the company and has contributed significantly to its bottom-line. In
a weak regime, innovators do not capture much value, rather it is
generally distributed among all parties, and innovators are just one
part of it. For example, in the case of e-book reader, it is fairly the
competition from existing product along with the power of substitutes
that has made the profit appropriation a huge task to the strategists.
How an innovator can appropriate maximum from the innovation

depends on four key factors: Intellectual property right, lead-time,
technology complexity and resources complementariness.
Intellectual Property Right (IPR)

Worldwide, there is a tremendous fight over IPR as it has the
power of deciding profit capturing in the market. Industries with
strong IPR laws protecting the novelty of the innovators generally
have higher value capturing as compared to where the IPR regime
is weak. This is the reason most of the developed countries have
vigorous fights over these and have argued strongly in favor of
robust IPR regimes in world trade and other international bodies
governing international business or trade.
The basic concept behind any IPR regime is that it wants to protect
the return to inventors. IPR includes many forms like patents,
copyright, trademarks and trade secrets.
12
Table 2.1: Intellectual Property Types and Rights
Notes
Type of Intellectual Rights Covered
___________________ Property
Copyright Use or performance of original works of literature,
___________________ art, music, drama or any other form of expression,
___________________ Patent The use, manufacture or the sale of inventions.

Trademark The use of symbols, words, names, pictures, designs
___________________ or combination thereof used by firms to identify
particular products, brands or services.
___________________
Trade Secrets The privacy of data, documents, formulas or
anything that is to be maintained as confidential
___________________
information.
___________________ Source: IPTV dictionary obtained from google.com 25 May 2018
___________________ Table 2.2: Types of IP
___________________ Type of IP What can be Duration and Maintenance When to
protected region of of the right apply
___________________ protection
Patents A technical 20 years Annual free for Before

enhancement, protection in the duration of launching
which is novel, the country of 20 years. product into
unique and filing. the market.
useful.
Trademarks Any name, 10 years Free required Can be done
symbol, phrase, protection in every 10 years before or after
mark, words, the country of for renewal of launching the
etc. to describe filing. Can be additional 10 mark into the
any goods or renewed every years, for market
services. 10 years. perpetuity
Copyrights Any literary Worldwide No fee Can apply at
object namely protection for required any time
artwork, the lifetime of
poetry, films, the creator
books, music, plus 50 years.
photography,
etc.
Design Novel orna 10 years Fee required Before
mental or outer protection in after 10 years launching
appearance of the country of for renewal. product into
any article of filling, can be market
manufacture. renewed once
for 5 years.
Trade Any secret tech- Worldwide N.A. N.A.
Secrets nique, knowhow, protection
process etc. which until it a
is an advantage protected as a
to the business secret
or profession,
and generally
secured through
agreements and
in-house trade
secret policy
implementation.
Source: Obtained from google.com on 4 June 2018

13
The type of innovation also determines the efficacy of IPR in many
Notes
situations, like for new drugs patens can be very effective but for
a configuration or business process, which could be an amalgamation
___________________
of exiting process, they will have weak protection. The fight for
value appropriation has brought considerable changes in the existing ___________________
patent regime in many countries and the scope of patents have also
___________________
included now the life form due to rising business and potential
conflict between biotechnology firms, computer firms and business ___________________
methods.
___________________
Companies have devoted significant time and energy on creating
___________________
and protecting their IPR and are now sufficiently organized to take
care of their intellectual knowledge capital. The ever-increasing ___________________
royalty earned through IPR by some companies (Microsoft, Texas
___________________
instrument, Dow chemicals, etc.) has also generated a huge interest
in other companies to put in considerable interest in creating, ___________________
protecting and harnessing the economic value of intellectual
___________________
knowledge capital.
Although patent is a significant step in protecting novelty, its main

disadvantage from the inventor’s point of view is that it makes the
information public and creates interest in followers; therefore, firms
often choose secrecy to protect its core economic interests while
patenting.
Lead-time
Whenever the market gets overwhelmed by a novel product, it always
creates huge interest in the rivals to follow and subsequently come
with a ‘me-too’ kind of product. But innovating companies generally
(if the innovation is complex) create a window where innovators
have some sort of temporary advantage as they are ahead of rivals
in lead time. How much time the nearest rivals will take to come
with same kind of product is a moot question that requires the
framing up of a competitive plan to remain ahead of competitors.
Some of the companies have set forward remarkable examples in

exploiting lead-time advantage over their rivals and appropriated
significant profit in this process. Microsoft, Cisco and Intel were
simply exceptional in harnessing lead-time advantage. The learning
curve as a strategy concept also becomes handy to understand the
lead-time advantage the innovators have over their rivals in moving
down on the same curve and eventually ahead of their rivals.
Competitive firms often use this lead time to maintain an edge in
their resources and capabilities and attempt to create and sustain
industry leadership.
When Toyota implemented the total quality principles created a

14
lead-time advantage over their rivals in spite of most of the rivals
Notes
attempting to copy it. The firm sustained that advantage once
established by firms for a significant period.
___________________
___________________ Technology Complexity

___________________ The ability to understand and comprehend the knowledge of
___________________ technology is one of the most important factors in determining the
extent of innovation being imitated by rivals. This becomes easier
___________________ if the legal protection available to the innovator is not effective. If
___________________
the technical knowledge pertaining to a technology is codifiable and
can be written down and passed on to others, then it has a higher
___________________ probability of making its way to rival R&D centers. This process
makes the diffusion rapid and creates large adoption of that
___________________
technology by masses, while leaving a small pie of value
___________________ appropriation for the innovators.
___________________ This makes some types of innovation, like financial innovation, recipe
of product and other trade secrets vulnerable. Intel has the trade
secret of industrial design of its micro-processor, which is codified
and can be easily transferred to others but the manufacturing and
operation process of making the chip is somewhat tacit and are
difficult to replicate.
Resources Complementariness
The definition of innovation contains successful commercialization.
Making an invention is one thing but taking it to market and making
the customer aware and adopt it is another set of challenges, which
all companies, who are in the business of innovative products, have
to face.
Manufacturing Distribution
capability
Financial Customer service

resources capability
Innovation
and core
technological
know-how
Marketing Complementary
capability technologies
Brand Supplier
relationships
Figure 2.4. Complementary resources

15
As the figure suggests, innovation needs to be coupled with a large
Notes
number of other factors responsible for taking it to the market and
making it successful. We have plenty of examples where the
___________________
inventing company has not necessarily made fortune in the market,
because it requires a host of complementary resources like ___________________
marketing, operation, distribution, finance, etc. In order to make a
___________________
successful entry in the market, there is a hot fight between
companies to gain these complementary resources and when they ___________________
are unable to do so, they try to form alliances with different
organizations that have the necessary resources. ___________________
The moment a company wants to form an alliance with another ___________________

organization, the moot question arises that who would have an ___________________
edge or power over other in this relationship, because it will
determine the division of value appropriability between them. It ___________________
depends upon the level of expertise or specialization of
___________________
complementary resources. The company that has the specialization
will be able to get the highest value in the pie of that product in the ___________________
market.
For example, in the rapidly changing automobile market, one of the
biggest challenges arising is innovation in engine design coming
from the electric vehicle and it has the power to change the
automobile market completely. In this change from internal
combustion engine to a new platform, although there is tough fight
being witnessed, the winners will be companies who have access to
complementary resources, because it is quite tough to create a set
of specialized resources of automobile market that these companies
have been pursuing since 100 years.
These are the most important factors responsible for having an
advantage over others to make this transition happen in the
multibillion-dollar automobile market. The possession of
complimentary resources may bring fortune to automobile
companies, although they will have to change from internal
combustion engine as compared to inventing companies, responsible
for bringing innovation related to chassis, batteries, etc. Electric
vehicles have the potential to disrupt oil and gas companies because
automobile sales is one of the important determinants of demand
of oil worldwide.
Protecting Innovation – The Conundrum?

Although there are many mechanisms, as discussed above, to protect
innovation, when all of these are gauged on the effectiveness scale,
they vary greatly as a tool used by the company to protect its turf
on the market. Patents, although celebrated a lot, have limited
effectiveness as compared to lead time, resource complementariness
and technological complexity.
16
Table 2.3: The effectiveness of different mechanisms for
Notes
protecting innovation
___________________ Secrecy Patents Lead- Sales/ Manufac-
(%) (%) time service turing
___________________
(%) (%) (%)
___________________
Product Innovations
___________________
Food 59 18 53 40 51
___________________ Drugs 54 50 50 33 49
___________________ Electronic 34 21 46 50 51
components
___________________
Telecom equipment 47 26 66 42 41
___________________ Medical equipment 51 55 58 52 43
___________________ All industries 51 35 53 43 46
___________________ Process Innovations
Food 56 16 42 30 47
Drugs 69 36 36 25 44
Electronic 47 15 43 42 56
components
Telecom equipment 35 15 43 34 41
Medical equipment 49 34 45 32 50
All industries 51 23 38 31 43
Notes: These data show the percentage of companies reporting that

particular mechanism, their sales and service, and their manufacturing
capabilities were effective in protecting Their inventions.
Source: W.M. Cohen, R.R. Nelson, and J P. Walsh, “Protecting Their

Intellectual Assess. Appropriability Conditions and Why US Manufacturing
Firms Patent (Or Not).” NBER Working Paper No W7552 (February 2000)
Reprinted by permission of the authors.
©2013 Robert M. Grant
www.contemporarystrategyanalysis.com
Source: Contemporary Strategy Analysis: Text and Cases Edition, Grant
R M. 8th Edition
17
Protection mechanism
Notes
Patents Industrial Cast and Continuos
Secret time innovation
___________________
Tacitness + –
Determining
Complexity + ___________________
factors
Specificity
Size + ___________________
Human +
___________________
Resources
___________________
Figure 2.5. Contemporary Strategy Analysis
Source: Contemporary Strategy Analysis: Text and Cases Edition, ___________________
___________________
Note: Here size and human resources are taken as part of resource
complementariness. ___________________
Patents product and process, both have a history to be imitated in ___________________

a short period of time. Then why does the company put enormous
___________________
resources for patenting? The dominant role that patents play is to
block the R&D of other companies in the ecosystem related to the
specific innovation and technology and to establish right to property
in that innovation, which can be used as a negotiating tool with
other companies whenever they want to use the technology to design
and create new products.
Table 2.4: Why do companies patent?

(Responses by 674 US manufacturers)
Product Process
Innovations (%) Innovations (%)
Prevent copying 95 77
For licensing revenue 28 23
To prevent law suits 59 47
To block others 82 64
For use in negotiations 47 43
To enhance reputation 46 34
To measure performance 6 5
Source: W. M. Cohen, R. R. Nelson, and J. P. Walsh, “protecting Their

Intellectual Assets Appropriability Conditions and Why US Manufacturing
Firms Parent (Or Not).” NBER Working Paper No.W2552 (February 2000)
@ 2000 Reprinted by permission of the authors.
©2013 Robert M. Grant
www.contemporarystrategyanalysis.com
R M. 8th Edition
18
There are instances when companies have entered into cross-
Notes
licensing arrangements with each other in order to design a new
innovation which is based on two companies’ patents profile, for
___________________
example, semi-conductor and electronics.
___________________
___________________
Strategies to Create and Capture Value from
Innovation
___________________
Value appropriation requires the ability to take risk along with the
___________________
requirement of resources with a firm. Based on this, the firm takes
___________________ a call to select a particular strategy. These strategies vary in the
above-written variables like risk and requirement of resources. The
___________________
different alternatives available to a firm are licensing, outsourcing,
___________________ co-operative arrangement like strategic alliances and joint ventures
and fully owned commercialization. In case of risk and return, it is
___________________ the least in licensing but highest in fully owned commercialization.
___________________ Risk and resources requirement increases from licensing to fully
owned commercialization where there are co-operative arrangements
like strategic alliances and joint ventures.
Licensing Outsourcing Strategic Joint Internal

certain fuctions allance venture commercialisation
Little investment Limits capital Benefits of Shares invest- Biggest

risk but returns investment, but may flexibility, Risks ment and risk, investment
Risk and also limited, Risk create dependence of informal Risks of partner requirement and
return that the licensee on suppliers/partners structure disagreement corresponding
either lacks and culture risks
motivation or clash Benefits of control
steals
the innovation
Few Permits external Permits pooling of the resources

Resource resources and and capabilities of more than
require- capabilities to be one firm
ments accessed
Microsoft’s XBox Ballard’s Psion created Larry page and

was largely designed strategic Symbian as a Sergey Brin
by other companies alliance with joint venture with established Google
and Flextronics does Daimler Ericsson, Nokia Inc. to develop and
Examples the manufacturing Chrysler and Motorola to market their internet
to develop develop the search technology
fuel cells symbian mobile
phone operating
system
Figure 2.6 Alternative strategies for exploiting innovation

How a firm chooses its strategy for creating and capturing value
through innovation is further dependent on two crucial factors, that
is, innovation characteristic and firm possession of resources and
capabilities.
Innovation characteristics. The firm’s ability to establish property

right for a given innovation is a crucial factor. For example, the
19
firm will go for licensing only when it has clear protection for its
Notes
innovation by intellectual property rights, for example, copyright
and patents. If we observe the value chain of the pharmaceutical
___________________
drug business, especially the business model of R&D-based drug
companies, some facts clearly describe the state of affair in them. ___________________
Any new drug will take a minimum of around 12 years to come to ___________________
market and it has multiple stages which require enormous resources
___________________
and risks to bear, which are surely possessed by a few. Over a
period of time of consolidation witnessed in this, the industry makes ___________________
the case of some giants dominating the drug business. Any firm
___________________
like Biocon (a known biotech firm) in India, which is carrying out
research for creating a potential blockbuster, has to take care of ___________________
risk and enormous resources requirement to begin with but the
___________________
ratio of a successful blockbuster drug coming out of its R&D, is one
out of 10000, which makes the business significantly complex and ___________________
risky.
___________________
Thus, firms like these either license out their research output to big
firms who possess necessary resources to carry them further and
operate on a major part of value chain of the industry. The royalty
portion of forms in drugs due to licensing is significant. Many firms
have their strategy in place to operate in a defined (read narrow)
part of value chain as they are not in a position to take risks with
limited resources at their command.
Dolby laboratories has its dominant earning coming through royalty,

which it has generated by licensing its patented sound system. We
shall understand that absence of proprietary option leads to ruing
out licensing as an alternative itself. All these alternative strategies
have its own advantage and disadvantages, which has to be
evaluated properly to take a decision of selection of best method for
creating and capturing value in the business of exploiting innovation.
The advantage of licensing is not to put enormous resources to

develop the innovation fully in house and to reduce the time to take
the market. In some cases, licensing is a preferred option because
it allows reducing lead time.
Firm resources and capabilities

Since resources requirement for alternative strategies are different,
the firm has to make a choice depending upon its ability to bear the
risk and commit resources related to any strategy. There is a stark
difference between a startup company and a big established company
to explain innovation in the market. Any small company like a
startup has a paucity of resources and is not able to take on the
route of fully owned commercialization.
20
They generally go for licensing, outsourcing and for co-operative
Notes
arrangements like strategic alliances and joint ventures. However,
big firms, that have a significant possession of resources and
___________________
capabilities, pursue fully owned commercialization. Even firms that
___________________ are big in size are tackling the problem of uncertainties like emerging
technology and dominant design go for cooperative arrangement by
___________________
entering into agreement with other big firms with the hope that
___________________ their collaboration will bear fruit in establishing a standard in the
market.
___________________
Leader’s followers and success in emerging industry
___________________
Since we know that objective of business strategy is to achieve
___________________
competitive advantage. One question arises, which is linked whether
___________________ to become a leader or follower. An answer to this question is
invariably ambiguous and the results are mixed. There are plenty
___________________
of examples where firms have made profit by becoming a leader
___________________ and many for being a follower.
It is always better to be a little more patient if you believe there is
significant risk in becoming a leader and would like to wait for
others either to develop the infrastructure and take the risk and
then to enter and establish itself in the market. It depends on some
issues, like up to what extent innovation can be protected by some
form of property right like IPR, availability of complementary
resources and potential to establish a standard.
One important point to keep in mind in becoming a technical
standard is “winner takes all”. It simply means that firm is able to
establish its product as a standard in the market, which allows it
to capture highest market share along with big profit. By becoming
an innovation, standard firm is able to make much more value and
to capture more. In PC industry Microsoft Window has the highest
market share of operating system of computers, which is around
80%. Intel in the microprocessor industry has the same market
share because it is of a technical standard.
Therefore, there is a tremendous fight between technology companies
to establish their technology as a standard.
Time also matters in the market as a window of opportunity must
meet with firm’s ability to put its resources and capabilities.
If firm is small and wishes to pursue innovation to its logical end
then it will have to garner resources, while a big firm which has a
long history of doing things on its own will have to take more risk
of establishing an innovation in the market as its brand and
reputation is linked to it.
In the computer industry, Apple was a leader and IBM was a
follower. Here, IBM used its complementary resources to it its full
21
advantage to get to the market. In the case of the browser war, as
Notes
it happened between Netscape and Microsoft, Microsoft in spite of
being a late entrant overtook Netscape and was successfully able to
___________________
dislodge the competitor in market, because it had huge
complementary resource bases like marketing, operation, finance, ___________________
etc.
___________________
General Electric entered the CT scanner field quite late but was
___________________
able to topple leadership of EMI. It is difficult to tell in which case
the company will be able to exploit profit by becoming a leader or ___________________
by being a follower. It also varies from industry to industry and
___________________
product to product. There are plenty of examples of success as a
leaders as well as for followers. ___________________
Table 2.5: Leaders, followers, and success in emerging ___________________

industries
___________________
Product Innovator Follower The winner
___________________
Jet airliner De Havilland Boeing (707) Follower
(Comet)
Float g ass Pilkington Corning Leader
X-ray scanner EMI General Electric Follower
Office PC Xerox IBM Follower
VCRs Ampex/Sony Matsushita Follower
Instant camera Polaroid Kodak Leader
Microwave oven Raytheon Samsung Follower
Video games player Atari Nintendo/Sony Followers
Disposable diaper Procter & Kimberley-Clark Leader
Gamble
Compact disk Sony/Philips Matsushita, Leader
Pioneer
Web browser Netscape Microsoft Follower
Web search engine Lycos Google Follower
MP3 music players Diamond Apple (iPod) Follower
Multimedia
Operating systems Symbian Microsoft Leader
for mobile phones (until 2010)
Laser printer Xerox, IBM Canon Follower
Flash memory Toshiba Samsung, Intel Followers
E-book reader Sony (Digital Amazon (Kindle) Follower
Reader)
Social networking SixDegrees.com Facebook Follower
Source: Based in part on D. Teece, The Competitive Challenge: Strategies for
Industrial Innovation and Renewal (Cambridge: Ballinger, 1987): 185-8.
R M. 8th Edition.
22
Judgement is still out on empirical grounds or whether we should
Notes
try to become a leader or follower and this moot question is decided
on the ability to protect your innovation through IPR, resources
___________________
and capability of the firm and potential to establish itself as a
___________________ technical standard. The table above talks about various products,
their innovator, follower, and the winner.
___________________
___________________ Risk Management

___________________ Every emerging industry, by definition, is at risk and these risks
___________________
primarily emanate from two prominent sources of uncertainties.
First, technological uncertainty that primarily arises because of the
___________________ absence of technical standards available in the market. The market
is quite complex as well as a dynamic entity until the time the
___________________
market is settled by establishing a technical standard; it has to be
___________________ borne by all competitors. It is always easy to tell how it happens in
any market, but it is extremely difficult to predict technological
___________________
development.
The second prominent source of uncertainty is when the market

grows, what size it will take, what will be response of customers
and how it will evolve over a period. It is very difficult to ascertain
any particular market trend. It can be easily summed up with the
help of this statement that it is difficult to predict the rising or
declining gradient of a market adoption or stopping of usage.
Whenever an innovative product or service enters the market and
people start adopting it, it is actually difficult to do the forecasting,
but without this basic information a firm cannot align its other
important activities like production, marketing and finance as these
all are dependent upon this crucial information.
Market forecasting is difficult and sometimes could get very

hazardous. One of the common techniques used for this purpose is
the Delphi technique. When companies are not able to forecast
technology in the market but still need to manage its operation,
then there is a need to limit risk, as uncertainty looms large on
head.
There are some useful strategies available to limit the risk.
Co-operative arrangement with the lead user

A firm can create a co-operative arrangement with the lead user,
which has most of the information of the trend of the market, if not
all, related to customer requirement, technology adoption, adoption
rate and other leading indicators which the firm makes to track the
latest trend in this innovation-based market. Some common
examples are the beta version of an upcoming software, government
23
defense contractor like Lockheed Martin play a useful and pioneering
Notes
role in shaping new technologies.
___________________
Taking limited risk
___________________
Another method is to limit your exposure to risk by not investing
in fixed cost since it is irreversible. The firm also uses innovative ___________________
financial structure to limit its exposure. Entering in the co-operative
___________________
arrangement with the help of strategic alliance and joint ventures
also requires less amount of risk taking and investment. ___________________
Flexibility through innovative means ___________________
Third technique of limiting risk is to have flexibility for a rapid ___________________

response to unpredictable events in the market. One significant
___________________
problem which India faced while entering the electricity market
(after the landmark electricity act, 2003) for generation, especially ___________________
since 2005, is the rapid change of policy by GOI witnessed in that
___________________
arena, which makes the life of companies extremely tough as most
of the decisions are irreversible in nature and firms cannot make
investments without incurring heavy fixed cost. GOI gave two
assurances related to important sources like coal and open access.
These were coal linkage with CIL (Coal Indian Limited) to be
provided to all generators and open access would happen as
envisaged by GOI.
Based on this, many companies put enormous amount of money in

establishing thermal power plants. As a massive amount of money
was invested for this and at the time of completion of project, when
the production plant was ready, the government did not fulfill its
own promises. How to manage this uncertainty while taking an
investment-related decision is also linked to project appraisal
techniques, as most of it is static in nature and by design cannot
take care of policy-related uncertainties. One answer that has
recently emerged and used by some companies is real options.
Competition for establishing standards

Have you ever noticed that while selling computers (desktop and
laptop), companies that manufacture them do not earn that much
money as compared to two critical components in that system like
wintel. Wintel is the standard used in the selling system all over
the world and that is Windows owned by Microsoft and Intel
processors owned by Intel. These two companies have minted money
by establishing their technology as industry standards. In a digital
network economy establishing technology as standard are not only
important parameters of success but also a crucial toll to establish
and sustain competitive advantage. The return generated by
companies like Microsoft, Intel and computers, cisco in internet
24
protocol standard, Dolby in sound system is huge and creates
Notes
widespread interest in establishing standards.
___________________ The table below highlights many firms that have spelt success by
___________________
establishing their technology as standards in the given industry.
___________________
Table 2.6: Examples of companies that own de facto
industry standards
___________________
Company Product category Standard
___________________
Microsoft PC operating systems Windows
___________________
Intel PC microprocessors x86 series
___________________
Sony/Philips Compact disks CD-ROM format
___________________
ARM (Holdings) Microprocessors for ARM architecture
___________________
mobile devices
___________________
Oracle Corporation Programming language Java
for web apps
Rockwell and 3Com 56K modems V90
Qualcomm Digital cellular wireless CDMA

communication
Adobe Systems Common file format for Acrobat Portable

creating and viewing Document Format
documents
Adobe Systems Web page animation Adobe Hash
Adobe Systems Page description language Post Script

for document printing
Bosch Antilock braking systems ABS and TCS

(Traction Control
System)
IMAX Corporation Motion picture filming IMAX

and projection system
Apple Music downloading system iTunes/iPod
Sony High definition DVD Blu-ray
NTT DOCOMO Mobile phone payment Osaifu-Keitai

system in Japan

R M. 8th Edition.
25
Standard and its Types Notes
Any electronic item or system in order to operate effectively must
___________________
have same format, interface or system. Without standards, electronic
devices will not be able to operate and perform the task and can ___________________
create a workable system even in a competitive scenario; thus
___________________
companies must adhere to some standards to operate and a standard
needs to emerge in any innovation. This means that all bulbs must ___________________
be able to fit into the electric socket and hard disks or memory
devices shall be able to work irrespective of the brand of the ___________________
computer. The above-given table clearly shows that companies ___________________

owning or having the de facto industry standards will have a
significant edge over all of its competitors. Standards can be public ___________________
or private. ___________________
Public standards ___________________
Respective governments or international bodies own some standards ___________________

and do not charge for their usage. These standards are also called
‘open’, do not have any intellectual property right or in some case,
it is free (like Linux). GSM mobiles and internet protocol are some
of the examples. Public or open standards has many benefits to
share also.
Open Standards, Global Benefits

• Address broad market needs
• Embody diverse perspectives
• Leverage proprietary knowledge
• Serve as building blocks for innovation
• Drive interoperatbility and scalability
• Streamline development and implementation
• Reduce costs
• Open new markets and applications
• Encourage market competition
• Drive global innovation and advancement
Source: Obtained from google.com on 29 May 2018
Private standards
These are proprietary and owned by private companies or bodies. If
I own the standard, all others have to make their products by
incorporating it, or it can be given as license to a third party. For
example, Qualcomm’s CDMA.
26
There are some mandatory standards, generally defined and set by
Notes respective governments like Indian government from time to time
have made and set the BS norms related to emission of automobiles.
___________________
One of the common problems witnessed in seeing the industry
___________________ standard emerging in any competitive scenario is the time taken to
see it applied. It requires massive investment and fights with many
___________________ rivals in any given market. The slow adoption of a standard can be
very costly in some cases like different gauges used by governments
___________________
in different countries and even many gauges in same country.
___________________
Reason for emergence of standards
___________________
The concept of network externality plays an important role in setting
___________________ standards in any market. The concept says that any product, whose
utility depends upon a number of users apart from it, is a network
___________________
externalities product. For example, the reason of having a phone is
___________________ the widespread adoption of phone by billions of users that makes
the proposition attractive. This is an example of the positive network
___________________ externality, but there are examples of negative network externalities
like high-end Armani suits and Rolls-Royce Motor Cars owners do
not want it to be possessed by many others because then the snobbery
and class appeal of the product goes away. The concept of network
externality only sets a standard so that different products are put
forth by competitors but do not force firms to make the same
products, it only wants that products must be compatible with others
through some common interface, form or system. Any phone (Nokia,
Vivo, MI, Samsung or Lenovo) bought by customers, irrespective of
different brand or network (Airtel, Vodafone, Jio or BSNL) shall be
able to perform.
It is hilarious to know that every railroad company until 1870 was
using its own gauge standard and had a robust obstruction toward
standardization. Network externality influences the adoption rate
of users, thus it plays an important role (that is given below as a
figure).
90
80
70
Adoption percentage
60
50
40
30
20
10
0
1
11
21
13
23
5
15
25
7
17
19
27
29
Without externalities with externalities
Figure 2.7. Adoption curves with and without network externalities

Source: Obtained from google.com on 28 May 2018.
27
There are many reasons why network externality arises.
Notes
Users Linked with Network
___________________
In many businesses like railroad, telephone, e-mail and electric-
base voltage, the user is not only linked but also dependent upon ___________________
network. Many electronic files are shared instantly owing to adhering ___________________
to the same standards. In recent days, there is a tremendous fight
for attracting users due to huge size and network being offered as ___________________
an attractive value proposition. For example, LinkedIn and
___________________
Facebook’s basic USP is their network, which has been even adopted
by many governments. Massive adoption by users that make the ___________________
network huge is the competitive advantage of many companies and
___________________
it is a serious challenge to any new company that wants to dislodge
the leader. ___________________
Complementary Products and Services Availability ___________________
Now the fight in market is for establishing a competitive eco-system. ___________________

One of the reasons of success of Nintendo and Sony in the game
business is creating an eco-system where other players or developers
make their products compatible to its base technology. Microsoft
(Symbian) lost the war over operating system of mobile phone and
was defeated by Android (Google) due to rapid adoption of the entire
App and other developers of android as their base system. Thus,
complementary products and services play a crucial part in winning
standard wars. In India, Maruti Suzuki’s success is also linked to
the availability of its spare parts and services in every 20 kilometers
in different towns and cities. People selected Suzuki because they
knew about the availability of complementary products and services
associated with the company.
Switching Costs Economization

If a product is used by masses, then the cost pertaining to switching
from one to other is minimum or none as compared to a product
where adoption is very low. In spite of Linux being free and Windows
coming at a given cost, the adoption rate of Linux is still far from
the critical scale as compared to Microsoft Windows due to the high
switching cost. Companies also leverage their network to bundle
their product along with their existing product to kill the
competition, which is quite common and has received the attention
of competitive bodies of different countries (like Competition
commission of India). It is a common practice in the technology
industry.
Competition for standard has a threshold point, beyond that, the
growth of the adoption goes ballistic, and then it becomes extremely
difficult to dislodge the leader once it attains the number one position
by establishing its technology as standard.
28
Winning Standard Wars
Notes
As we have learned, establishing technology standards is the key to
___________________ achieving competitive advantage in the market subject to network
___________________ externalities. Since gaining control over standard is crucial,
companies put out their best foot forward to claim a fight in the
___________________ market. Some of the noted winners are Microsoft in computer
___________________
operating system, Android in mobile phone operating system, etc.,
but there are noted losers also like Lotus in spreadsheet software,
___________________ Netscape in browsers, WordPerfect in word processing software,
etc. The difference between winners and losers is that the ‘winner
___________________
takes all’ and losers become ‘standard case study in B-School for
___________________ strategy classes’ for demonstrating how not to fight a war and become
past or sometimes history. So, the important point to learn is to
___________________
design a winning strategy by taking the concept of network
___________________ externalities.
___________________ Two important lessons that have come by studying various cases of
winning standard wars can be learned by asking two questions.
1. Will the market converge towards a single technical standard?
Does it have those characteristics?
The only way to answer this question is to carry out intricate
analysis of presence and source of network externalities.
2. What is the role of positive feedback?
The fight among forms is to establish early leadership and gain

momentum and size. It creates a positive spiral and drafts users’
adoption towards the early leader, which is crucial. Normal practices
of many successful companies are witnessed as follows:
1. Build alliances as quickly as possible – the rise of co-
operative relationship among companies in technology business
has expanded exponentially and winning the standard war is
one of the important reasons for this.
2. Anticipate the market – time to market is the determining
force and firms must enter quickly, penetrate quickly, and
must possess a fast cycle of product development to win.
3. Expectation management – in any emerging technology one
of the key success factors of winning the standard war is
managing the expectation of customers, competitors, suppliers,
and complementary goods producers.
Finally, a company must create an environment of trust by sharing

the value created by its innovative technology with other parties
notably (customers, competitors, complementors, and suppliers).
29
Notable steps provided by Shapiro and Varian for ‘What are the
Notes
key resources needed to win a standards war’ are as follows:
• Control over an installed base of customers. ___________________
• Owning intellectual property rights in the new technology. ___________________
• The ability to innovate in order to extend and adapt the initial ___________________
technological advance.
___________________
• First-mover advantage.
___________________
• Strength in complements.
___________________
• Reputation and brand name.
___________________
Source: C. Shapiro and H. R. Varian, “The Art of Standards Wars,”
California Management Review, 1999. ___________________
Making the Organization Ready for Managing ___________________
Innovation and Technology ___________________
Since strategy formulation and strategy execution are two sides of

the same coin and we have learned a great deal of designing
innovative technology-based strategies for winning in the market,
it requires creating those thriving conditions of creativity where
employees can think and execute innovation in an organization.
The potential of making a business strategy based on innovation
and technology is immense and can lead to superior profitability as
witnessed in success story of many companies.
The organization must appreciate that fostering innovation requires

different characteristics and resources like people, processes,
cultures, time and infrastructure. Although there is no clear-cut
relationship between amount of R&D and innovative output, the
trend shows that the amount of money being invested in research
for developing any innovation is huge. The success of innovation
largely depends upon creating those thriving conditions that leads
to innovation, thus it is the central challenge in doing business
based on innovation. There is a need to create conditions where
creativity, collaboration and cross-functional integration happens
in the organization and it requires a completely different mindset
as compared to present mechanical-based organizations and
bureaucratic structure. The real fight is in creating conditions for
creativity and organizing it for creating and capturing value.
Traditionally, organizations are designed for creating efficiency by

practicing division of labor and organizing co-operation to maintain
the link between specialization and co-ordination. Thus, present
the mechanical structure fosters silos and requires people to
specialize in their expertise area but creating an organization for
30
creativity needs an organization culture where creativity,
Notes
collaboration and cross-functional integration are required. The
organization has to create conditions for diversity of thoughts,
___________________
freedom to question and disagree as part of the process for designing
___________________ open culture, nurturing freedom to take part of any project and the
right to fail while pursuing any innovation. Google, Microsoft, 3M
___________________
are some of the examples where the organization has been able to
___________________ direct the energies of its talent base towards creating a future on
innovation.
___________________
Table 2.7 below attempts to compare characteristics of innovative
___________________
and mechanistic organizations.
___________________
Table 2.7: The characteristics of “operating” and
___________________ “innovating” organizations
___________________ Operating Innovating
organization organization
___________________
Structure Bureaucratic Flat organization without
Specialization and division hierarchical control
of labor Task-oriented project teams
Hierarchical control Fuzzy organizational
Defined organizational boundaries
boundaries
Processes Emphasis on eliminating Emphasis on enhancing

variation (e.g., six-sigma) variation
Top-down control Loose controls to foster idea
Tight financial controls generation
Flexible strategic planning
and financial control
Reward Financial compensation Autonomy

systems Promotion up the hierarchy Recognition
Power and status symbols Equity participation in new
ventures
People Recruitment and selection Key need is for idea genera-

based on the needs of the tors who combine required
organization structure technical knowledge with
for specific skills: functio- creative personality traits
nal and staff specialists, Managers must act as spon-
general managers, and sors and orchestrators.
operatives
Source: Adapted from J. K Galbraith and R. K. Kazanjian, Strategy

Implementation: Structure, Systems and Processes, 2nd edn (St. Paul, MN:
West, 1986).
R M. 8th Edition
31
While designing the organization for pursuing innovation for
Notes
commercial success, the firm must have clarity in mind that the
critical linkage between these two variables is market needs. The
___________________
firm has to have its eyes and ears glued to market to understand
and appreciate problems of customers and use these open or latent ___________________
needs for designing a winning product or services, which will
___________________
instantly capture the market’s attention and money.
___________________
Approaches for Management of Innovation ___________________
The central challenge as highlighted above is to balance the tradeoff ___________________
between differentiation and integration. The requirement of a
creative organization in terms of organization structure and ___________________
management system is drastically different as capturing the
___________________
efficiency part of organizing operational activities that works on
the principle of division of labor. The challenge of organizing ___________________
integration in an organization, where all traditional but important
___________________
functions like production, marketing, finance, operations and supply
chain are not only required but have to work as part of a cohesive
whole. No doubt, it is a challenging task and requires utmost
attention from the top management. This inherent trade-off creates
a tussle between the constituents, sometimes even threatens the
established routines, process and mechanism of doing things in an
organization. All firms (especially successful) who try to establish
their eminence in the field of innovation and technology have
understood this central dilemma and have devised their own
methods of attaining results. The recent organizational change done
by Google while creating Alphabet as a parent organization has
captured the attention of organization theorists, as the speed of
restructuring in a big technology firm surprised many. The dynamic
ability to pursue change with this size is remarkable.
In order to stimulate innovation, flexibility, creativity, and

entrepreneurial spirit in an innovation-based organization, below
given initiatives have been employed by firms.
Cross-Functional Teams
With an eye for fostering integration, firms have now adopted the
route of making cross-functional teams for various tasks, notably
product development. It is now a proven and the most effective
mechanism of product development strategy and clearly solves the
time-taking, silo-minded and sequential set of activities, which
traditionally dominates the product-development space since long.
The ability to use the specialization and experience of a diverse set
of experts ranging from production, marketing, finance, operations
and supply chain is the value creator in this method of product
development.
32
Notes
Product Champions
It is the method for stimulating creativity in an individual to work
___________________
on the full value chain of innovation cycle, from idea generation to
___________________ commercial success. One of the most important needs of creative
people is to give them freedom to ideate, experiment, develop and
___________________
test the market; product champions are made to do that. It satisfies
___________________ the creative and entrepreneurial urge of the person. Firms who are
successful in creating and capturing value through innovating are
___________________ those that create organization processes where this drive of the
___________________ individual, as observed through research also, that it is not money
that matters but creative satisfaction of leading a team from idea
___________________ generation to commercialization, is met.
___________________
Acquiring Innovation in Various Stages of Product
___________________
Development Value Chain
___________________
As we know that value chain of a new product is quite complex and
needs massive resources and time to invest, big firms have adopted
the strategy of buying innovation from small firms and using its
complementary resource base to complete the chain. Small firms
while struggling with resources inadequacy have to surrender their
innovation to a large firm. It is quite common in pharmaceutical
firms as resources to create a new blockbuster drug need at least
12–15 years and massive investment and risk.
Open Innovation
Over a period of time, firms have learned this in the hard way that
not all ideas of innovation can come from internal sources and
firms have to collaborate and create a network for tracking ideas;
innovations are made in various pockets of the market. It requires
formation of network through either an established platform or
creating a new platform itself, for fostering collaborative
relationships between various demand-and-supply side players
including licensed deals, outsourcing of components, joint research
avenue and collaborative product development with customers also.
Case Study
Five technology trends that will drive innovation in future
Let’s look at how the top technology trends are expected to drive
innovation in future8. Each of these technologies impacts multiple
functions within a company and influence different industries
differently.
33
Innovation is never easy, and in today’s world where everything is
Notes
becoming digital, innovation is technology first and quite complex.
Over the years, the linear model of innovation has been tweaked to
___________________
include these variations – the phase-gate model (e.g., NASA 1960),
market pull (e.g. photo editing software), and technology push (e.g., ___________________
Samsung Galaxy with touchscreen technology in 2012), whatever
your business model, emerging technologies will be a key driver. ___________________
Let’s look at how top technology trends are expected to drive ___________________
innovation in 2018. Each of these technologies impacts multiple ___________________
functions within a company and influence different industries
differently. ___________________
___________________
Artificial Intelligence
___________________
AI will likely continue to rule in the near future.
___________________
Thanks to interesting advances in AI, healthcare can look forward
to lower costs for medical treatments and process optimization, ___________________
more accurate and easier ways to predict health outcomes, and
improvement in patient experience and healthcare delivery. Tons of
patient data, such as medical and imaging records, and predictive
analytics will help prevent and cure diseases on time. Nudge-based
systems could soon reduce hospital visits.
AI chatbots, by blending principles of sentiment analysis, knowledge
management, and NLP, will serve as health assistants and virtual
helpers to improve caregiver-patient interactions. In the next year,
bots could help interpret medical records, AI platforms could act as
indicators of emotional intelligence, and major developments in
robotic surgery will help doctors.
AI for automakers will be about driverless systems that could even
predict your destination and for banks, it will be a superior end-
user experience. AI for retailers could be about automated inventory
management while for enforcers of the law, it could be predictive
policing.
For B2B companies, AI will help in lead generation and predictive
account management and sales. Firms are expected to save nearly
$80 million in salary expenditure by employing bots. AI will also
reshape payments by helping sniff out fraud and managing risk
while streamlining the payment chain. Meanwhile, the debate on
social, ethical, and political concerns of AI will continue.
Robotics
Not all robots require AI. Aside from chatbots, surveillance or
delivery drones, and surgical robots, robotics is revolutionizing many
sectors in various other ways.
34
More companies, such as Zipline, will use drones pick up critical
Notes
medical supplies – blood, medicines, anti-venom, vaccines – and
carry them off safely to remote corners, saving lives quickly. Drones
___________________
are being used for search and rescue and for construction and
___________________ inspection. In agriculture, drones will find increasing use to detect
crop health and manage livestock. Some companies are working
___________________
with public safety workers to identify innovative uses of commercial
___________________ drones.
___________________ Manufacturing concerns will continue to use robotic systems for
warehousing, delivery, and for other processes. The workers on the
___________________
factory floor, commodity salespeople, much of middle management,
___________________ etc., are going to be replaced by robots sooner than we think. With
an increased demand for robots, we will need “smart” employees
___________________
who are adaptable, curious, and persevering, and thereby drive
___________________ innovation. But the industry is still in its infancy. Trends indicate
growth in RaaS (robot-as-a-service) and collaborative robots in the
___________________ coming year.
Going off on a tangent perhaps, but some interesting research
highlights “the power of early exposure to robotics and coding in
defying gender stereotypes toward technology and engineering
fields.” This is yet another reason to get excited about the field of
robotics and its innovation potential.
Machine Learning
In the coming few years, more of the big companies will be moving
away from traditional ways of chatting with consumers via emails,
texts, or chat boxes. Disruptive technologies will usher in “machine-
mediated conversational marketing” to transform content marketing
by delivering the most relevant and personalized content to the
audience, while enhancing customer experience and improving
engagement.
Banks, such as Danske, are analyzing customer data to identify the
customer’s favorite means of communication and predict other
customer needs. With ML making it difficult to tell apart machines
from human, security measures will need to get more creative than
CAPTCHAs. ML will become commonplace in the finance industry
by helping companies predict whether a particular customer would
default or likely to be in debt in the future.
In the healthcare space, new ML algorithms are already being used
to find more effective ways to deal with mental illnesses, identify
suicidal behavior, and predict cirrhosis mortality rates and advanced
coronary calcium. Machine learning techniques will successfully
predict earthquakes, avalanches, and landslides soon. Manufacturers
will embrace new algorithms for preventive maintenance.
35
Machine learning–enabled facial analysis, predictive and preemptive
Notes
analytics, pattern recognition, biometrics, deep learning platforms,
and more will result in a transformative impact on everyday living.
___________________
However exciting the applications tremendous insights from ML
may power, there will be some blowback to deal with in the future, ___________________
such as the invasion of privacy.
___________________
IoT ___________________
According to Goldman Sachs, there are five main Internet of Things ___________________
(IoT) verticals of adoption: wearables, connected cars, connected ___________________
homes, connected cities, and industrial internet. Every year, the
idea of connectivity becomes more fantastic and inclusive than before. ___________________
The number of digitally connected devices are set to increase
___________________
phenomenally in the next five years. In the next few years, human-
to-human, machine-to-machine, and human-to-device interactions ___________________
will improve further. IoT-driven trends – 5G, edge computing, and
___________________
analytics – thanks to the massive amount of information, are
spurring novel business insights across industries.
Perhaps, the retail sector will benefit more than most because of
sensors-based analytics. Smart tech will help retailers is numerous
ways – from determining which store is most popular with buyers
and boosting sales to reducing wait time and dispatching store
representatives to enhance customer experience almost at once. IoT
innovation will help companies manage loss due to theft, track
inventory, and personalize customer interactions. The industrial
IoT market is gathering power, and IoT devices will help in
monitoring equipment or processes and streamline management
strategies.
IoT will enhance fleet management, and smart supply chains will
boost productivity in lesser time. What smart technology will
continue to do in the next year is help improve insurance, scheduling,
and records in hospitals. Everyday tasks like turning on the
thermostat or the lights will be voice-led. Smart homes will give
companies invaluable behavioral data which improve consumer
targeting and reduce the cost per customer, especially for SMBs. In
healthcare, wearable devices, implants, contact lenses, and connected
ink tattoos are expected to grow exponentially.
Digital twins, the next step in the IoT-driven world, will help
companies detect or predict problems through data analysis and
plan through simulations – you can optimize assets and minimize
defects with the help of the digital proxies. The concept will drive
innovation in automotive, healthcare, and financial sectors to achieve
competitive differentiation. This bridging technology between the
digital and physical world can better stakeholder decision making
36
via deep insights gained on modeling customer behavior or enhancing
Notes
situational awareness for preventive maintenance and asset
optimization.
___________________
___________________
But patching vulnerabilities in the security of global infrastructure
systems will remain a key challenge in the IoT sphere.
___________________
___________________
Blockchain
___________________ Blockchain, a distributed ledger with a built-in consensus mechanism
to carry out secure transactions, is going full force, eager to disrupt
___________________ all areas of finance, tech, and society. In 2018, capital markets will
___________________
be switching more confidently to blockchain platforms; biggies such
as Accenture will be seen moving on to real-world applications and
___________________ use cases from proof-of-concepts.
___________________ The launch of a market-ready cryptocurrency and a cost-effective
___________________
international fund-transfer system based on blockchain are on the
cards for some banking groups.
In its happy journey of disrupting various sectors, blockchain

technology is expected to bring much relief to freight and logistics.
In the coming years, interesting cybersecurity applications of IoT
and blockchain will emerge suggest reports. The decentralized,
immutable blockchain technology can prevent data theft from
connected devices. We are likely to see more of blockchain-powered
crowdfunding. Crypto crowdfunding is something to look forward to
in real estate investing.
Blockchain technology is expected to bring transparency,

accountability, ease, and trust to these areas in future: business
credit reports, business accounting, global workforce management,
recruitment and background checks, evidence handling, charitable
financial transactions, retail, wills and inheritances, wills and
inheritances, gun ownership and usage, public records, loyalty
programs, sports management, energy generation schemes,
entertainment rights, voting, education, and so much more.
Many consider it overhyped and believe it will have a slow

development cycle.
Summary
The outcome of new technological advances will depend on how
they are perceived – as threats or as opportunities. 2018 promises
to be exciting with innovative technology trends, such as edge
computing, conversational platforms, immersive experiences,
intelligent analytics, and self-driving cars, making life infinitely
more satisfying and exciting.
37
These emerging technologies pack so much disruptive potential that
Notes
we will have to see to believe the amazing transformation they
could bring to our everyday lives.
___________________
Source: Economic Times, Sachin Gupta, CEO, HackerEarth, Jan 19, 2018,
___________________
02.05
https://tech.economictimes.indiatimes.com/catalysts/5-technology-trends- ___________________
that-will-drive-innovation-in-2018/2835
___________________
Questions for Discussion ___________________
Take an industry of your choice and answer the following questions: ___________________
1. How technology (take one or more than one) will influence ___________________
competition and industry structure?
___________________
2. How innovation can be used as an instrument to achieve
___________________
competitive advantage in a given technology of choice?
3. How can we make the organization ready for managing ___________________
innovation and technology?
39
Unit 3 Notes
Dynamics of TTechnology—Theories
echnology—Theories
___________________
___________________
and Models ___________________
___________________
\
___________________
\
___________________
\
___________________
___________________
Introduction
Diffusion of Innovation
Diffusion of Innovation (DOI) Theory was propounded by E.M. Rogers
in 1962, is one of the most established theory being acknowledged
in the field of technology and social science. Its beginning lies in
correspondence to clarify how, after some time, a thought or item
picks up force and diffuses (or spreads) through a particular populace
or social framework. The final product of this dispersion is that
individuals, as a feature of a social framework, embrace another
thought, conduct, or item.
There are five categories of adopter classes and keeping in mind

that most of the overall public tends to fall in the center
classifications, it is as yet important to comprehend the qualities of
the objective populace. While advancing a development, there are
diverse procedures used to speak to the distinctive adopter classes.
2.5%
Innovators Early
Early
adopters majority
Late majority Laggards
34%
13.5% 34% 16%
Figure 3.1. Diffusion of innovation theory

Source: http://blog.leanmonitor.com/early-adopters-allies-launching-product/
40
Notes
Innovators
At the point when an item is put available the main people to
___________________
purchase the item are the ‘innovators’. This little gathering of
___________________ individuals needs to be the first to attempt the item and they will
go for icebreaking. These elite clients in this gathering are in this
___________________ way innovators. In this manner, the item will turn out to be
___________________ progressively well known and deals will increment.
___________________ Early adaptors

___________________ Much the same as the innovators, the early adaptors get a kick out
of the chance to experiment with new things and they are not
___________________
reluctant to put resources into new items. This gathering is
___________________ fundamentally bigger than the ‘innovators’ gathering and regularly
they definitely know much about the new item. In light of this
___________________ information they assume a vital part in verbal promoting concerning
___________________ the new item because of which deals will increment emphatically.
Early majority
The early majority aggregate adores patterns, however wants to
keep a watch out before making a buy. The item will be purchased
in large numbers by this gathering of individuals. The item will
turn out to be to a great degree prevalent and this will cause an
avalanche sought after.
Late majority
The late majority amass really lingers behind and will just purchase
the item after numerous other individuals have gotten it and its
prevalence is as of now diminishing. The motivation behind why
this gathering does not purchase the item from the begin needs to
do with trust in the item. This gathering must be sure beyond a
shadow of a doubt that they are not making a terrible purchase.
The item is likewise sold much of the time in this ‘late majority’
organize.
Laggards
The laggards bunch lingers behind (intentionally or unknowingly)
in the pattern and dislikes development or change. It isn’t until the
point when the item isn’t much popular any more and is going to
leave the market that this gathering chooses to purchase the item
all things considered. The most evident reason is that this gathering
holds up until the point that the business cost is brought down.
There are five principle factors that impact adoption of an innovation
and every one of these factors is influencing everything to an
alternate degree in the five adopter categories.
Unit 3: Dynamics of Technology—Theories and Models
41
Relative Advantage: How much an advancement is seen as
Notes
superior to anything the thought, program, or item it replaces.
Compatibility: How consistent the development is with the values, ___________________

experiences, and needs of the potential adopters. ___________________
Complexity: How troublesome the development is to understand ___________________
and additionally use.
___________________
Trainability: The degree to which the development can be tested
or explored different avenues regarding before a pledge to embrace ___________________
is made. ___________________
Observability: The degree to which the development provides ___________________
substantial results.
___________________
Source: http://sphweb.bumc.bu.edu/otlt/MPH-modules/SB/Behavioral
Change Theories/BehavioralChangeTheories4.html ___________________
___________________
Technology Life Cycle and Innovation S-Curve
A standout amongst the most famous concepts in Innovation is the
Innovation S-Curve, the technology life cycle. This system, which
operates alongside the Bass Model, is used to decide execution in
regards to time and exertion. It assists in deciding the level of
development of the industry/item.
As a result, while assessing an item or an industry, it is significant

to understand where it is on the S-curve because of the numerous
implications that result out of that such as the possible risks and
pitfalls that are associated for specific phases on it.
Product performance
Time or engineering effort

Figure 3.2
Source: www.galsinsights.com/the-innovation-s-curve/
Major Phases of Technology Life Cycle

Taking a glance of technology life cycle, we can decipher 4 different
stages: Ferment, Takeoff, Maturity, Discontinuity. Positioning a new
42
industry/ product assists professionals to determine what is the
Notes
potential of it and also decide on a certain innovation strategy that
will fit best for it.
___________________
Performance
___________________
___________________
___________________
Maturity
___________________
Discontinuity
___________________
Take-off
___________________
___________________
Ferment
___________________
Time
___________________ Figure 3.3
Source: www.galsinsights.com/the-innovation-s-curve/
Era of Ferment: This phase is in the start of the S-Curve example

of innovation. It is the point at which the item/industry is totally
new. As a result, a predominant design in the market hasn’t been
established yet. In this manner, the opposition between the various
players in the industry is wild. As a result, usually at this stage
most of the resources are spent on research and development.
Takeoff: In this phase, because of the capacity to conquer a

noteworthy specialized obstacle or the capacity to satisfy a request
of the market, the item/industry have been embraced by the early
greater part and figured out how to cross the chasm and a
predominant design has been established as of now. Subsequently,
the market will be portrayed with a fast development underway,
and the item will move rapidly towards a full market
acknowledgment.
Maturity: Here, the item is received almost totally by society and

is usually moving toward a physical point of confinement. Because
of the strong rivalry among the real players in the market which is
plainly characterized at this stage, most of the resources now are
spent on enhancing the generation processes and making them less
expensive. Thusly, oftentimes the products at this stage turn out to
be totally standardized and the innovations at this stage are
considered incremental.
Discontinuity: At this phase the advancement occurs, as another

S-Curve example can rise. Since the previous item/industry reaches
an era of maturity, there is an open door for another item to speak
43
to the innovators segment in the populace and they will start another
Notes
item life cycle which is usually considered as the Disruption.
___________________
Phases of Technical Advance
___________________
William Hamilton proposed phases of dynamics of advancement of
technology. He opined that Technical advancement takes place with ___________________
plethora of scientific queries which aims at demystifying many ___________________
unexplored phenomena and concepts. Once these queries satiated,
the comprehended phenomenon are thus concretized by development ___________________
of technical products and services which are published by its ___________________
introduction to the world commercialization.
___________________
Commercial ___________________
Technical
development application
___________________
Relative importance
Scientific
research ___________________
Science Technology Commercialisation
Figure 3.4. Phases of technical advance

Source: William F. HAMILTON, 1990
Nolan Model
Richard Nolan (1974) has examined a system for IS arranging,
prominently known as Nolan stage model. The essential exhibit of
the model is that any association will travel through stages of
development as for the utilization and administration of IS. While
advancing, an organsation must experience each stage of
development before it can move to the following stage.
It may be noted that Nolan stage model is a possibility framework

which enables supervisors to analyze the stage(s) of IS in the
association and consequently give an arrangement of breaking points
to arranging.
The Nolan stages model demonstrate distinguished four stages of

data framework development. A short portrayal of these stages is
given underneath:
44
Stage 1
Notes
The First development stage is known as inception/initiation stage.
___________________ In this stage, the innovation is set in the organization. A couple of
___________________ uses in the association are automated. There are just few clients.
This stage is described by least arranging.
___________________
Stage 2
___________________
This development stage is called extension. Amid this stage quick
___________________
and uncontrolled development in the number and assortment of IT
___________________ applications happens. Numerous clients embrace PCs in taking care
of their IT related issues.
___________________
___________________
Stage 3
___________________ This stage is known as formalization or control stage on the grounds

that in this stage, associations pick up control over the innovation’s
___________________ assets by actualizing formal control procedures and models.
Therefore, organizations can apply financially savvy criteria. In any
case, controls now and again move toward becoming boundaries in
accomplishing potential advantages.
Stage 4
Nolan has portrayed this development stage as development or
incorporation stage as by this stage association increase adequate
experience and development in IS/IT applications. In this stage,
applications are incorporated, controls are balanced. Arranging is
settled. That is the reason this development stage in some cases is
additionally called the stage of perfection.
However Nolan in 1979 appended the model by introducing two

more stages . Basically two additional stages were dissected from
existing fourth stage of integration . The new added fifth and sixth
stages were rechristened as administration and maturity stage
respectively.
Source: http://ecomputernotes.com/mis/information-system-planning/
explain-the-nolan-stage-model-for-is-planning.
Technology Acceptance Model

Davis (1986 ) introduced the Technology Acceptance Model which
bargains all the more particularly with the forecast of the worthiness
of a data framework. The reason for this model is to foresee the
adequacy of a device and to recognize the alterations which must be
conveyed to the framework keeping in mind the end goal to make
it worthy to clients. This model proposes that the agreeableness of
45
a data framework is controlled by two principle factors: perceived
Notes
usefulness and perceived utility.
Perceived usefulness is characterized just like how much a man ___________________

trusts that the utilization of a framework will enhance his execution. ___________________
Perceived Ease alludes to how much a man trusts that the utilization
of a framework will be easy. ___________________
The Technology Acceptance Model speculates an immediate ___________________

connection between perceived usefulness and perceived utility. With
___________________
two frameworks offering similar highlights, a client will discover
more valuable the one that he discovers less demanding to utilize ___________________
(Dillon and Morris, on 1996).
___________________
Perceived ___________________
usefulness
___________________
External Attitude toward Behavioral Actual system
variables using intention to use use
___________________
Perceived
ease of use
Figure 3.5. Technology Acceptance Model from Davis,

Bagozzi et Warshaw (1989)
Other’s use
Computer efficacy
System quality
Perceived ease
Organisational of use
support
Prior
experience Perceived
usefulness
Anxiety
System usage
Task structure
Figure 3.6
Source: McFarland & Hamilton (2006)
The results comforted the research model, showing that “system

usage was directly and significantly affected by task structure, prior
experience, other’s use, organizational support, anxiety, and system
quality.” Mediation effect were also shown as predicted. Thus
However, for some relations, the effect went in the opposite direction
from expected, like other’s use lowering computer efficacy or high
quality systems linked to low frequency of use.
46
In a nutshell, the initial model or its extension does not completely
Notes
accounts for the observed variance in system usage. However, the
models all agree that computer efficacy affects perceived ease of
___________________
use, which in turns is strongly related to perceived usefulness.
___________________
___________________
___________________ 1. Explain diffusion of innovation model and its importance in
understanding the dynamics of technology.
___________________
2. What are the pillars of TAM model? Explain in detail.
___________________
3. Identify the major phases in technology life cycle and enunciate
___________________
its influence on DOT.
___________________
___________________
___________________
47
Unit 4 Notes
Strategic Agility: Dynamics of

___________________
___________________
Information TTechnology
echnology and ___________________
Structure ___________________
___________________
\ Four Building Squares of Strategic Nimbleness
___________________
\ Strategic Agility
___________________
___________________
Introduction
Organizations need to assemble IT infrastructure for strategic
readiness. Strategic deftness is characterized by the arrangement
of business activities an undertaking can promptly actualize.
Numerous components add to nimbleness, including client base,
mark, center skill, infrastructure, and workers’ capacity to change.
Sorting out and organizing these components into a coordinated
gathering of assets results in a venture ability, which, if better
than that of contenders, turns into an unmistakable capability.
The Four Building Squares of Strategic Nimbleness

Strategic deftness is the capacity of a firm to ceaselessly detect and
investigate client and commercial center improvement openings and
react with the fitting setups of abilities and abilities to abuse these
Leveraging
capabbilities enriching
and capacities customers
nurturing
mastering
inter-
change and
organisational
uncertainty
cooperation
Figure 4.1. The four building squares of strategic nimbleness

48
open doors with speed, amaze, and aggressive achievement. More
Notes
or less, enhancing clients, utilizing abilities and limits, supporting
between authoritative participation, and acing change and
___________________
vulnerability are the four building squares of strategic nimbleness.
___________________
___________________
Enriching Customers
___________________ Enhancing clients can incorporate the accompanying exercises:
• Solution-centricity: Deliver add up to answers for present
___________________
and foreseen client needs. Arrangements are adjustable packs
___________________ of items and administrations.
___________________ • Customer-centricity: Heighten client comfort, including
space, time, speed, and customized accommodation.
___________________
• Accelerate arrangement and item advancement to
___________________ persistently invigorate client contributions: Portfolio of
___________________ incremental, building, and radical development ventures.
• Co-select clients in the development procedure:
Customers are wellsprings of thoughts for item and
arrangement contributions. Clients are co-makers of creative
thoughts.
Leveraging Capabilities and Capacities

Utilizing abilities and limits is the following building square. Initial,
a biological community of abilities must be constructed. The
biological system may comprise of client relationship administration,
offering chain administration, supply-request synchronization,
producing administration, money related designing, mark
administration, human capital administration, and data innovation
administration. Next, world-class greatness must be supported. This
infers center around an adjusted arrangement of measurements,
for example, adaptiveness, responsiveness, speed, cost, adequacy,
and quality. This likewise suggests applying ceaseless change
strategies for ability improvement and putting resources into and
creating empowering data infrastructures and administrations
stages.
Nurturing Inter-organizational Cooperation

Supporting between hierarchical collaboration is worried about
esteem net idea, esteem net stance, and esteem net joining. With
regards to strategic deftness, esteem nets are arrangements of
sourcing and organization structures for building the expanded
venture. This definition is not quite the same as our fundamental
meaning of significant worth system as an esteem arrangement in
Unit 4: Strategic Agility: Dynamics of Information Technology and Structure
49
this book. With regards to strategic deftness, esteem nets are
Notes
architected to use other firms’ capacities and resources that
supplement center abilities and resources inside a firm. Esteem net
___________________
stance is worried about the administration of the esteem net, which
can be either prescriptive or cooperative. Esteem net coordination ___________________
requires center around the esteem net and aptitude replication or
___________________
ability combination.
___________________
What’s more, the accompanying activities are critical in supporting
between authoritative collaboration: ___________________
• Identify and guarantee potential accomplices as to wanted ___________________

abilities (resources, capacities) and their monetary
___________________
dissolvability.
• Develop and persistently survey working associations with ___________________
accomplices. ___________________
• Develop capacities to work with accomplices through an ___________________
assortment of legally binding components.
• Develop abilities to rapidly build up (and expel) the innovation,
process, and administrative interfaces required while starting
business game plans with new accomplices.
Mastering Change and Uncertainty

Acing change and vulnerability is the fourth and last building square
of strategic dexterity. It requires strategic prescience, strategic
knowledge, and authoritative learning.
The accompanying activities are critical in acing change and

vulnerability:
• Sense, foresee and misuse patterns, openings, and dangers.
• Quickly and flawlessly marshal the blends of capacities
important in forming creative moves.
• Quickly reconfigure abilities vital in forming imaginative
moves.
• Execute and gain from strategic trials and from strategic
activities.
The proof from driving ventures shows that executing diverse sorts
of electronic business activities in light of nuclear e-plans of action
requires distinctive high-capacity IT infrastructures. Strategic
dexterity requires time, cash, administration, and center—a
comprehension of which unmistakable examples of high-capacity
infrastructures are required where. Putting resources into IT
infrastructure resembles purchasing a choice. In the event that
50
utilized effectively, infrastructure empowers speedier time to
Notes
showcase; if not, it will demonstrate a pointless cost.
___________________
Strategic Agility
___________________
One way to deal with enhancing strategic nimbleness is utility
___________________ registering. Utility figuring proposes to enable customers to purchase
___________________ processing limit as they do power—just by connecting to. For
customers, the cost is variable and in view of the genuine limit they
___________________ request, as opposed to a settled cost for a limit they just use amid
___________________
crest periods. They can get the limit they require at whatever point
they require it, without using assets and push to frequently screen
___________________ and redesign limit.
___________________ The vision of utility figuring goes past customary outsourcing of IT
administrations. It incorporates every single potential mix of
___________________
sourcing choices as we will find to a limited extent two of this book.
___________________ Merchants are promising to offer applications and business forms,
including figuring, applications, and master staff, in an on-request
design, similarly the same number of firms currently purchase call
focus and finance forms.
Utility processing depends on a few vital specialized capacities to

convey these guaranteed administrations:
• Grid figuring empowers a system of processors to give shared
preparing limit via flawlessly getting to unused limit
somewhere else.
• Autonomic figuring technology empowers a system to act
naturally mending, and hence gives higher unwavering quality
over a framework than is as of now accessible.
• Web administrations give specialized principles that encourage
coordination crosswise over frameworks.
In joining these three abilities in a one-to-numerous plans of action,

merchants hope to offer on-request registering limit and an extensive
variety of fitting and-play technology and process segments.
Another way to deal with enhancing strategic dexterity is

authoritative engineering work. Associations regularly consign the
activity of adjusting business needs and technology support to IT or
tasks, yet with the strategic vulnerabilities of e-business, a different
planning part of hierarchical engineer might be the main
arrangement.
The moving focused scene is making a bigger hole amongst

strategists and technologists. Administrators are caught up with
making and refining dreams and have brief period to center around
51
technology. Technologists are caught up with keeping the stage
Notes
current and have brief period to comprehend the business top to
bottom. Without an instrument to drive correspondence, each
___________________
gathering withdraws into its claim to fame.
___________________
Among organizations that were effectively adjusting business and
technology in e-business, it has been recognized a progression of ___________________
crossing over exercises that added up to the formation of what they
___________________
call an authoritative engineer. A hierarchical designer is somebody
who is neither all strategist nor all technologist, who manages the ___________________
interpretation of a strategic vision to an adaptable, incorporated
___________________
stage. Hierarchical engineers maintain a discourse amongst
visionaries and technologists as they characterize and plan the ___________________
correct blend of structures, procedures, capacities, and
___________________
advancements. This mix has a more prominent possibility of
enhancing strategic dexterity by being receptive to moving ___________________
hierarchical objectives.
___________________
Without some system to connect the interests of strategists and
technologists, information technology can’t get ready for change,
and senior business administrators wind up managing and
subsidizing here and now technology activities. Hierarchical planners
work with the two strategists and technologists to recognize and
become the authoritative and specialized capacities expected to see
a dream through to its supporting stage.
The modeler sees the vision through three primary interpretation

stages:
From
technology
From necessities to
association to real stage
From vision to technology
association prerequisites
Figure 4.2. Interpretation stages/phases
• Phase 1 - From vision to association: The authoritative modeler

sets plan parameters for the hierarchical structures,
procedures, and abilities that make the vision conceivable.
• Phase 2 - From association to technology prerequisites: The
draftsman currently attempts to delineate authoritative needs
to stage qualities.
• Phase 3 - From technology necessities to real stage: The
modeler is presently prepared to get a fix on reality by chatting
with technology specialists about what they can really do.
52
An authoritative draftsman is a noteworthy speculation for a
Notes
business, so it will be critical to endorse the position despite the
fact that it is basically a staff work with no instantly unmistakable
___________________
business benefits.
___________________
___________________ STAGE 1 STAGE 2
Total quality Lean management &

___________________ management mass customisation
___________________
GENERATION
___________________
STAGE 3 STAGE 4
___________________ Organisational Strategic agility

adaptiveness
___________________
___________________ Figure 4.3. The advancement toward strategic deftness
___________________ Every age of corporate change has underlined particular kinds of

capacities and execution improvement. Way reliant movement
through every one of these waves is fundamental as the discovering
that happens inside each wave produces vital changes in introduction
and limit.
Add up to quality administration has productivity as its aggressive

base, while lean administration and mass customization have client
centricity and item assortment as its base. Hierarchical adaptiveness
is described by adaptability and organizations, while strategic
deftness has entrepreneurial sense making and impromptu creation
as its focused base. Moreover, strategic deftness has the outline
target of advancement and disturbance and the choice design of
outside inward joint effort.
The advancement toward readiness regarding information design

began with information and measurements defense (add up to quality
administration), proceeded onward to process justification and
information joining (lean administration and mass customization),
at that point to meta process legitimization and metadata
combination (authoritative adaptiveness), lastly to information
perceivability and information testing (strategic nimbleness).
It has been watched that information advances can empower

nimbleness in a few different ways:
• The strategic part of IT can move to liquid choice, specialist,
and coordinated effort structures.
• The IT design can move to measured frame.
• The key advances will be Web administrations, objects, shrewd
specialists, and disseminated coordinated effort advances.
53
• The key IT associations will incorporate accomplices’ market
Notes
specialists.
• Finally, IT speculation center will never again be fetched ___________________
decrease, profitability change, time-to-market, or item life cycle
___________________
refreshment. Or maybe, IT speculation will center around
genuine. ___________________
Alternatives, showcase prototyping, time-to-arrangement, and ___________________

relationship capital. Of basic significance is IT interest in IT
___________________
infrastructure. Strategic readiness requires a particular example of
high-capacity infrastructures. Getting the correct adjust is ___________________
troublesome. Under-contributing decreases strategic dexterity and
___________________
eases back time to advertise. Additionally, infrastructure
speculations must be made before interests in business applications ___________________
in light of the fact that doing both in the meantime results in
___________________
infrastructure fracture. In any case, if the infrastructure isn’t utilized
or is the wrong kind, an organization is over-contributing and ___________________
squandering assets.
Following are the administrative rules for strategic readiness:

• Adaptiveness empowers focused accomplishment in the
computerized economy.
• Strategic readiness empowers focused initiative.
• Adaptiveness requires the co-combination of client and
arrangement centricity, capacities worked around information,
process, and information technology infrastructures, and
esteem net designs.
• Additionally, strategic spryness requires the authority of
progress and vulnerability through entrepreneurial
introduction and detecting abilities.
• Strategic deftness is supported at different levels - aggressive
readiness, advancement nimbleness, and utilitarian spryness.
• The advancement toward strategic dexterity happens through
the learning picked up by earlier interests in all out-quality
administration, lean administration, and esteem net
combination.
• Information technology administration encourages strategic
deftness as a computerized choices generator by speaking to a
stage for process development, for esteem net joining, and for
advancement and strategic experimentation.
• Attention must be centered around critical changes of the IT
work, for example, IT engineering, IT speculation, IT
associations, and arranging rationale strategic deftness is a
54
rising idea that requirements look into concerning both
Notes
hierarchical and technology issues. Hierarchical issues
incorporate competency advancement and authoritative design
___________________
as shown by the requirement for authoritative engineers.
___________________
Technology issues incorporate dispersed insight, interfacing astute
___________________ operators and people, learning revelation advancements and
procedures, quick start-up and mix activities, metadata and process
___________________
designs, and end-to-end esteem chain information perceivability. In
___________________ the event thatdirectors can depict their coveted strategic deftness,
they at that point can recognize the IT infrastructure benefits that
___________________
should be over the business normal, and along these lines can make
___________________ an unmistakable ability.
___________________ Imperative drivers of strategic spryness are technique, sourcing,
and administration. System portrays ways to the coveted future,
___________________
sourcing depicts access to assets for the coveted future, while
___________________ administration portrays administration instruments to lead into
the coveted future.
Summary
Research exhibits a critical relationship between strategic spryness
and IT infrastructure ability. In this manner, if directors can depict
their coveted strategic readiness, they at that point can recognize
the IT infrastructure benefit groups that should be over the business
normal, and in this manner can make a particular capability.

1. Explain the translation phases of vision.
2. Critically analyze the building blocks of strategic agility.
3. How IT infrastructure can enable strategic agility in an
organization?
55
Unit 5 Notes
Dynamics of PProduction
roduction TTechnologies
echnologies ___________________
___________________
and its Impact on Business ___________________
___________________
\ Sustainable Production Technologies
___________________
___________________
Introduction
___________________
With recent thrust on the term “sustainable development”, the need
___________________
of identifying compatible and feasible technologies have gained
momentum. The dynamic of technologies urges to conform to new
needs of society including eco-friendly production technologies, which
could address social issues like self-reliance in meeting poverty and
safety need.
These requirements have begun another urgency in conceiving and
building up the mechanical exercises also, in utilization designs.
Companies associated with mass institutionalized production are
changing their production structure as indicated by the new
parameters of versatility and adaptability. New innovative strategies
and developments make it conceivable to fulfill consumer demands.
At the point when the consumer started to demand a specific
assortment of products, production structures turned out to be
innovatively unequipped for producing a genuine assortment of
demand vis-à-vis product.
Sustainable Production Technologies

Emerging challenges posed by urgent need of settling ecological
issues demand new production designs are and efficient industrial
implementation. As it is said that charity begins at home, the same
applies for the need of developing green production technologies
which could pave way for sustainable development for not only for
business but also for the concerned stakeholders
The cleaner production technology might be characterized as “the
ceaseless application of a coordinated preventive ecological system
and products which diminish dangers to people and nature”.
Cleaner or greener generation incorporates rationing crude materials
and vitality by minimizing lethal crude materials and lessening the
56
amount of toxicity. Products procedure centers on planning for
Notes
recyclability, utilizing renewable materials and expanding life cycle.
The fundamental standards which the cleaner generation approaches
___________________
are analyzed from now onwards.
___________________
The preparatory guideline drives a decreased discharge into the
___________________ earth of harmful or dangerous substances, particularly when there
is motivation to accept that harm or unsafe impacts are probably
___________________
going to be caused. Counteractive action, in fact, might be
___________________ acknowledged through lower or no emissions into the earth with a
specific end goal to dodge negative impacts.
___________________
Another essential rule of cleaner production is the combination of
___________________
environmental protection activities crosswise over different
___________________ frameworks. It ought to be figured it out, to be sure, that specific
activities don’t generally initiate a summed up environmental
___________________ change, and relocations of negative impacts may even emerge.
___________________ Cleaner creation is chiefly acknowledged through, from one
perspective, the accomplishment of higher material proficiency levels,
and, then again, the minimization of lethal and unsafe substances
discharged into the environment.
Modular Production Technology

Modular production technologies are basically an assembly of
technologies segregated on the basis of modules. It aims to simply
the production system with more resilience and autonomy. It further
facilitates the containment of cost and also paves way for enhanced
flexibility and elasticity, which become prerequisites while dealing
with demand dynamics.
This is made possible owing to the speed and convenience of
production changes orchestrated through interchangeable and
permutation and combination of modules. Firms engaged in modular
production would enjoy greater flexibility as the “modular” traits of
the production system ease out the process of catering to those
products which are most in demand in the market at a given time.
As discussed above, it checks production costs because of features
of modular technology, which reduces a high number of finished
products to a bunch of essential accessories and a family of
components which further positively impacts movement of inventory,
production scheduling and overall operations. In a bid to fashion a
systematic structure of modular products, firms need to have
exhaustive technical–functional analysis and to identify the rationale
of the process. The technical–functional analysis facilitates the
identification of traits and characteristics of products required by
the market. It also enumerates and figures out technicalities involved
in shaping the accessories, vital parts and structure of the product.
Unit 5: Dynamics of Production Technologies and its Impact on Business
57
Group Technology and Cell Production Notes
Changing dynamics of technology, which has sought freedom from
___________________
lacunas like less efficient solution emanating from department
production and rigid productivity of line production, sees its future ___________________
in a new genre of production technologies like group technology or
cellular production technology which facilitates intermediate levels ___________________
of productivity and flexibility. Said technologies are basically an ___________________

arrangement of a unique type of layout based on “manufacturing
cells”, which is characterized by an assembly of similar components ___________________
grouped together in a coterie based on commonality of functionality. ___________________
A configuration and contours of machinery is designed in small ___________________
cells which is basically a family of similar components and complies
the theory of group work. It is pertinent to mention that cellular ___________________
production technologies comprise various component parts which
___________________
are dedicated to a particular stage of the production cycle. Efficient
productivity is accomplished by organizing the plant into groups of ___________________
machines (cells). The segregation of components and parts of
technologies faces a challenging job of rational decision making
which may require the three following methods:
1. Visual inspection: The method consists of simple
observational phenomena which includes clear identifications
of physical parts, followed by its proper arrangement on the
basis of similarity. The method is simple and cost-effective;
however, its accuracy remains questionable.
2. Coding: Codification of the design and production
characteristics is the basic premise of classification. In this
process a unique code number is assigned to unique traits and
virtues of the part. Though the method is profusely used, it
has demerits of intricacies and expensiveness embedded in it.
3. Production flow analysis: The analysis studies and focusses
on structure and sequence of operations. It further simplifies
the process by clubbing the parts of similar nature in
designated coterie of operations and tools.
Just-in-time (JIT) Manufacturing Technology

JIT system is most widely and accomplished system which was
propounded by Japanese. It is one of the most celebrated buzzwords
in operation/production management. Firms with its galloping
inventory cost including administrative and holding cost are
frequently encountered with the challenge of bridling the
unwarranted cost overrun primarily attributed to fixed component.
Not only cost, but also the consideration of meeting the variability
factor of the market demand germinates the need of JIT production
58
technologies and schedules. There are two basic production-
Notes
scheduling methods which are as follows:
___________________ 1. Push systems: The system stems from efficient prophecies of
sales and demand for stipulated time framework, which further
___________________
paves way for developing the production schedule which would
___________________ be actually structuring of sequence of products produced in
the assembly line and required to be lined up for warehouse
___________________
destined for the transportation of actual orders. Prior to that,
___________________ activities involving development of a component or semi-
finished part and its arrival on the final assembly lines are
___________________ also designed.
___________________ 2.
___________________
___________________
___________________ 3. Pull systems: The pull system belongs to a domain of

management and organizational procedures aptly called as
“just-in-time” production, which eyes at streamlining of the
manufacturing system. Mechanism of JIT refers to a set of
events and practices aimed at refining the entire production
line which ultimately impacts the coordinates of process
including a technical parts ranging from layout of plant and
degrees of technological advancement of machinery and
organizational issues consisting operational schedule and
structure of labor force. The entire mechanism envisages most
convenient flow of process
Summary
Since just the production work has the (innovative) capacity to
make a genuine assortment of yield, its part is bound to wind up
a need as per the requirement. Production is therefore desired to be
capable of identifying and applying the methods embellished with
a succession of products, which is extraordinarily unique from its
predecessors. This is made conceivable by the use of new design
and distinctive production.

1. Explain the dimension of sustainable development in the
production technology design.
2. What do you understand by modular/cellular production
technology? Explain its importance in ensuring efficient
production system.
3. What is JIT technology. Discuss its growing role in curtailment
of unwarranted cost overrun.
59
Unit 6 Notes
Case Study I ___________________
___________________
___________________
Can M-PesaService Succeed in India? ___________________
Geeta Devi, Choti Devi and Lilima Kachaap, three poor women in the ___________________
nondescript area of Namkum near Ranchi, Jharkhand’s capital, had
recently given birth to healthy offspring. But their joy was tempered ___________________
by exasperation. Their wait for due money from Janani Suraksha ___________________
Yojana (JSY), a financial assistance plan under the National Rural
Health Mission (NRHM), was getting never-ending. The scheme, which ___________________
promotes institutional delivery among poor women, gives ` 1,400 on
the birth of every child to the mother. ___________________
Thankfully, the trio would get their due unlike thousands of others ___________________
who do not, and from quite an unexpected source. It all started when
Vodafone, India’s second-largest mobile operator by subscriber base,
tied up with NRHM to do a pilot project in Namkum. The objective:
disburse money directly to the beneficiaries through M-Pesa - its
financial mobile service better known as a mobile wallet. M-Pesa is
a USSD-based (an SMS-based service that does not need Internet)
technology that helps people send and receive money over the mobile,
apart from making utility bill payments and recharging mobile and
DTH accounts.
The Jharkhand government shared the list of beneficiaries with

Vodafone. In turn, Vodafone identified its customers on the list, and
activated the M-Pesa service for them. For people who were not on
Vodafone, the company put up camps in Namkum so that they could
get Vodafone SIMs and the M-Pesa service.
Once that was done, the government sent information on the

beneficiaries - and the money - to the banking system that was linked
with the M-Pesa accounts. Vodafone’s agents - some of whom are also
business correspondents - then hand over the money to the recipients.
So, Geeta, Choti and Lilima - and several others - finally got their
money through M-Pesa.
Why mobile money might work in India

Mobile money has worked elsewhere in the world. M-Pesa was started
in Kenya in 2007 by Safaricom, a 90- per cent Vodafone subsidiary,
as a corporate social responsibility (CSR) activity. Due to Kenya’s
high crime rate, it was near impossible to carry money physically. So,
M-Pesa started as a money transfer project and was hugely successful.
Today, M-Pesa has 70 per cent penetration in Kenya and is no more
a CSR activity.
Contd..
60
Notes India might not have the same problem as Kenya, but mobile money
still holds up an interesting solution for money transfer to rural areas.
___________________
Consider the facts. India has 100,000 bank branches, five per cent of
___________________ which are in rural areas. Sending money through banks becomes
impossible for the millions of villagers who migrate to big cities for
___________________ work. The post office system is also used a lot to transfer money but
is not considered entirely reliable. As a result, most migrant workers
___________________ send money home in cash through travelling relatives or acquaintances
___________________
— a method fraught with chance and risk.
At the same time, government assistance schemes like JSY and

___________________
employment plans like Mahatma Gandhi National Rural Employment
___________________ Guarantee Act (MNREGA) have given rise to a new breed of
middlemen. This unscrupulous lot takes commissions to disburse the
___________________ money to the beneficiaries, but don’t always deliver. And the cheated
beneficiary is none the wiser, largely due to ignorance and illiteracy.
___________________
Plus, there are the inevitable delays due to red tape.
___________________
In Odisha, for instance, a large chunk of rural employment comes
from MNREGA, which ensures 100 working days to every enrolled
individual in rural India each financial year. In the current financial
year, according to estimates by experts, 6.48 crore payments are
delayed by more than 15 days, worth ` 4,629 crore, much behind the
government’s desire to clear all payments within 15 days.
In Odisha, Vodafone did another pilot and tied up with the state
government to disburse wages of MNREGA workers through M-Pesa
in the Hinjilicut and Chikiti blocks in Ganjam district. It solved two
problems. For those with accounts in local cooperative banks and post
offices, it reduced delay in payment. And it helped deliver the money
to the people who didn’t have bank accounts.
What works in mobile’s favour is that India has 900 million mobile
subscribers, 40 per cent of which are rural consumers. “Time will tell
if it is the best possible way, but it definitely seems that m-banking
is the best available medium, because of mobile telephony’s penetration
in rural India,” says telecom regulatory expert Mahesh Uppal.
How Vodafone did it

After travelling through Tanzania, Fiji, South Africa and Congo,
M-Pesa finally made its launch in India in April 2013, after a pilot in
2010. That was when Vodafone had tied up with HDFC Bank to
become a banking correspondent in a small village called Sikar, in
Rajasthan’s Jaipur district. The pilot was small and wasn’t scalable
then due to regulatory problems - the government had yet not given
mobile wallet licences to operators. Vodafone was dependent on HDFC
Bank to get the wallet activated, which took anything between eight
and 10 days. As a result, people would often lose interest and never
come back. “We wanted to understand distribution and customer need,”
Contd..
Unit 6: Case Study I
61
says Suresh Sethi, head of M-Pesa in India. “It was a good learning Notes
process for us.”
___________________
Things changed in June 2012, when the Reserve Bank of India (RBI)
started giving out licences to start mobile wallet, and Vodafone applied. ___________________
In November, the operators, including Airtel, were given licences to
operate a semi-open mobile wallet—which allowed consumers to send ___________________
and transfer money, pay bills and do recharges, but did not allow the
___________________
user to take out cash. But the RBI did allow interoperability with a
bank, which enabled Vodafone to tie up with ICICI Bank to allow ___________________
cash out options.
___________________
Finally, Vodafone’s M-Pesa service was rolled out in April 2013, in
the circles of West Bengal, Kolkata, Bihar and Jharkhand. A lot of ___________________
people from these states migrate to bigger cities for jobs. M-Pesa
___________________
users, who could enrol in M-Pesa by a one-time payment of `100, also
needed to open an account with ICICI Bank. ___________________
So, Vodafone started collecting Know Your Customer (KYC) forms, a ___________________
mandatory requirement to open a bank account, and started instant
activation. “We are doing a quasi-banking service. We collect KYC
forms like any bank does,” says Sethi. Thousands of Vodafone dealers
became M-Pesa agents or business correspondents and started banking
the unbanked.
The only problem at the time was that all M-Pesa agents had to be
within 30 km of their parent bank, especially since ICICI Bank does
not have deep penetration in rural India. (The RBI subsequently
removed the 30-km restriction this June.)
Within a year of M-Pesa’s launch, Vodafone completed its pan-India

rollout. Today, it has 80,000 outlets or banking correspondents, 60
per cent of which are in rural India, and all of them have the ability
to cash out. Even though M-Pesa has other services like utility bill
payments and recharge options, money transfer accounts for 60 per
cent of the business.
To Vodafone’s advantage, therefore, is the limited banking

infrastructure in the country and the migrant workers’ need to send
money home in a secure manner. What helps is that Vodafone has a
distribution network that spans 1.7 million touch points, and deep
penetration in rural India - of its 170 million users, 53 per cent are
in rural areas.
Of course, Vodafone isn’t the only company offering money transfer

on mobile. India’s biggest mobile operator Bharti Airtel launched Airtel
Money in January 2011. But its inherent disadvantage is that it doesn’t
allow cash out, as it does not have a pan-India tie-up with any bank,
except a very small footprint with Axis Bank. Airtel’s older tie-up
with State Bank of India (SBI) has also long come to an end. SBI
itself runs a banking correspondent service called Eko India Financial
Contd..
62
Notes Services. Eko works as a mobile wallet but is not dependent on any
mobile operator. But the network is much smaller than Vodafone’s.
___________________
Idea Cellular, India’s third-largest mobile operator, also has an
___________________ M-Wallet. “In its current form, the segment that it appeals to is the
urban and semi-urban user,” says Ambrish Jain, Deputy Managing
___________________ Director of Idea Cellular. “But m-banking is needed for the unbanked
population who don’t have debit and credit cards. And they require
___________________ cash out, which is not available today.”
___________________ Telecom companies are expecting that once the RBI comes out with
the final guidelines, it will allow them to provide cash out services
___________________
without any intervention needed from banks.
___________________
LONG WAY TO GO
___________________
However, the success of M-Pesa in India on a scale comparable to
___________________ Kenya looks like a long haul. Of Vodafone’s user base of 170 million,
only 1.5 million are enrolled in M-Pesa. And less than one-third of
___________________ these are active users. A lot of this is because people still rely on the
bank to deposit money and are not comfortable transferring money
over mobile.
The problems with microfinance in India had raised a question: is it

too early for financial inclusion in India? And now, there is a new
question: is it too early for inclusion through mobile? Marten Pieters,
CEO of Vodafone India, doesn’t think so. “No, we feel that we are well
positioned and aligned to enable financial inclusion,” he says
confidently.
Vodafone is also upgrading the M-Pesa platform. The old platform

was an import from Kenya and is not scalable. The new platform
being built will also work on the Internet. “We have built capability
to provide Internet-based services also, given that reduction in price
points of smartphones and increased availability has led to (their)
greater adoption,” says Pieters. “M-Pesa will also be available on a
mobile app shortly.”
In 2011, industry estimates and experts had said that by 2015 there
will be anywhere between 200 and 300 million people using financial
inclusion, but numbers haven’t yet reached a sixth of that. Even
though Vodafone has got initial success with M-Pesa, the bigger
challenge is to get the numbers like its mobile service has garnered.
Sanchit Vir Gogia Chief Analyst & CEO, Greyhound Research, feels
that “M-Pesa’s adoption has been low owing to factors such as
awareness and lack of information and communication technology
Financial inclusion is the need of the hour in a country like India and
it has been emphasised enough by government, companies and
individuals. The RBI’s pilot project on M-Wallet has been an important
factor within the e-commerce industry and I believe it is heading in
the right direction.
Contd..
Unit 6: Case Study I
63
Talking about M-Pesa, which is Vodafone’s M-Wallet offering, the Notes
adoption has been low owing to factors such as awareness and lack
of ICT (information and communication technology) networks. For ___________________
this platform to thrive it is imperative that India also reaches a
healthy stage of digital inclusion, that is, connectivity for all. Adoption ___________________
is a key factor for such a service. It is important to understand that
for any new service, a mind-shift to use that particular service takes ___________________
time. This will happen when the government brings vendors, suppliers ___________________
and the customer on a single platform to promote M-Wallet or, in this
case, M-Pesa. ___________________
Word of mouth is the greatest tool for influencing people. If the service ___________________
picks up in tier-1 and metropolitan cities, it is bound to have a ripple
effect in tier-2 and tier-3 cities. However, the success and the growth ___________________
of M-Pesa will depend on the merchants who will promote and
___________________
integrate M-Pesa with their business needs. We still need to
understand the fact that there are many uneducated people in the ___________________
tier-2 and tier-3 markets who do not understand the concept of M-
Wallet in its complete functionality. Educating them is a primary ___________________
concern for vendors. If this problem is approached strategically, it is
only then that M-Pesa can achieve its optimum growth.
Therefore, Vodafone needs to approach the Indian market very

strategically by ensuring that people are digitally educated on the
advantages and convenience of a platform like M-Pesa. In order to
achieve optimum adoption of M-Pesa platform, Vodafone needs to
give at least two years.
Rajesh Chakrabarti, Executive Director, Bharti Institute of Public

Policy, Indian School of Business, Mohali Campus thinks that Mobile
money, or M-Pesa as Vodafone introduced it, has been a much awaited
product in India. Given India’s enviable mobile penetration and
massive financial exclusion and significant cash management problems
in certain areas, mobile money appears like the most sensible solution.
However, one has to understand that a product like M-Pesa becomes
useful only when a significant number of people begin using it,
particularly the people you are usually transacting with or sending
remittances to.
So, the enrolments and benefits of M-Pesa are not likely to grow
smoothly over time but are likely to exhibit significant “breaks” as
the service crosses certain critical thresholds. Hence the thrust on
hooking up large-scale vendors like railway ticket service, a node that
touches hundreds of thousands of people and helps M-Pesa jump over
to a new threshold in its network effect.
Given this nature of the product, it remains too early to evaluate the
success and impact of M-Pesa. Customer acquisition will be the name
of the game and Vodafone has chosen to replicate its successful African
model in India by spreading a large number of agents, over 75,000,
across the country and has already crossed the million-customer mark.
Contd..
64
Notes A strategy for customer acquisition, particularly focused at the bottom
of the pyramid, is likely to be the key driver. However, here too, a
___________________ conscious, focused approach of taking M-Pesa to the financially
excluded may actually be less productive than seeking to create M-
___________________ Pesa as the “in” thing and find initial acceptance in an affluent urban
demography and then have it “trickle” or “gush down” to the financially
___________________
excluded.
___________________ Service providers are likely to see more benefits of signing up if their
___________________ customers are into mobile money. As a result, convenience rather
than ending exclusion may end up being the USP. There, of course,
___________________ M-Pesa will have to battle it out with other bank account or credit
card-based forms of mobile payments, but that should be a familiar
___________________ battleground for Vodafone
___________________ Source: https://www.businesstoday.in/magazine/case-study/case-study-
vodafone-mpesa-mobile-cash-transfer-service-future/story/211926.html
___________________
___________________ Questions for Discussion

1. Is it premature for Vodafone to aim for financial inclusion through
M-Pesa as dynamics of IT in India is still to be redefined? Write
your views.
2. Identify the role of technology dynamics and TAM model in
adoption and success of M-Pesa.
3. Old business model of digital payment was introduced in India by
Vodafone. Do you see its technological viability? Support your
answer while critically examining the technology life cycle in India.
65
Unit 7 Notes
Case Study II ___________________
___________________
___________________
Siewert & Kau: Integrate for Success
___________________
German IT service provider Siewert & Kau has been a top-10 German ___________________
distributor since 2010. To ensure its partners and companies can
always benefit from the latest technology, the company aims to offer ___________________
cloud automation solutions that can be easily integrated with existing
___________________
ERP systems and processes already in place as part of existing service
life cycles. ___________________
After taking a decision to further automate and expand its Microsoft ___________________
cloud services delivery channel for its reseller network, Siewert &
Kau chose to fully integrate the Cloud Distributor Solution from ___________________
Microsoft partner interworks.cloud. As a result, the company can
handle high transaction volumes from its established partner network
and is better prepared for future expansion.
The project was implemented using a phased approach, ensuring a

seamless transition to the new model, and helping manage and reduce
the risks that often arise in complex projects. The project started by
deploying the solution on Siewert & Kau’s site, with training sessions
taking place soon after.
In parallel, the project teams redefined the integration layer between

the cloud platform and Siewert & Kau’s core systems. The first phase
was completed shortly after this, in November 2017, with the roll out
of the platform to a production environment, and the support of
customers’ orders through the interworks.cloud platform. The second
phase saw a specific segment of Siewert & Kau’s partners brought
onto the platform, the activation of Siewert & Kau’s online portal,
and the deployment of the first integration deliverables. Phase three
was delivered in February 2018, with the system becoming fully
operational for all Siewert & Kau partners, and the integration
elements fully deployed.
By leveraging an own-branded marketplace for cloud services –

powered by the interworks.cloud platform – Siewert & Kau enhanced
its resellers’ user experience and achieved a significant increase in
revenue and productivity. Additionally, the interworks.cloud platform
helped the company provide partners with more advanced and powerful
tools to improve the processes for subscriptions, automated
provisioning, billing, and invoicing of cloud services. Making use of
the interworks.cloud platform’s open APIs, Siewert & Kau was also
able to integrate its existing ERP system into the platform, enabling
processes to be standardized while maintaining business continuity.
Contd..
66
Notes During all phases of the implementation, Value Added Services (VAS),
interworks.cloud’s German country partner, offered valuable support.
___________________ As a trusted business partner, it ensured that the needs of Siewert
& Kau were fully met – and in the timescales required
___________________
Source: http://www.technologyrecord.com/Article/how-siewert-kau-is-
___________________ adopting-a-modern-cloud-technology-approach-71966
___________________
___________________
1. Do you think dynamics of technology is impacted by Brand value?
___________________ If yes, explain with reasons and logics derived from the case.
___________________ 2. Is dynamics of technology impacted when you perceived ease and

utility? Explain while using TAM framework.
___________________
3. Analyze the role integration strategies in the expansion of value
___________________ chain activities, if any, played in the case.
___________________
67
Unit 8 Notes
Dynamics of TTechnology:
echnology: Evolution,
___________________
___________________
Stages and Categories ___________________
___________________
\ Dynamics of Technological Cycles
___________________
\ Types and Forms of Technology
___________________
\ Radical Versus Continuous Innovation
\ Relationship Between Technology and Cost & Quality ___________________
\ The Impacts of Scale
___________________
Introduction
Innovation is going up against an inexorably focal and deciding
part in society and can give opposing outcomes such as riches from
one viewpoint, yet additionally joblessness, ecological irregular
characteristics and other social issues on the other. Manufacturing
methods and production organizations are picked in each nation on
the basis of particular needs of the organizations, while the genuine
needs of every populace are regularly very unique. As of now, with
a specific end goal to keep all types of innovation from getting to
be increasingly “intrusive”, towards both the regular supply of assets
and the exceptionally separated requirements of mankind,
innovation always must be distinguished and taken after, which
are equipped for making the various needs good, from the angle of
economic improvement, the preservation and increment in
estimation of characteristic assets, and the nature of advancement.
This will turn out to be progressively critical later on. This objective
is without a doubt and hard to accomplish; be that as it may,
evidence of the issues caused by summed up, uncontrolled utilization
of technology, everywhere throughout the world, persuades that
extreme endeavors must be made to accomplish this point. If not,
mankind risks an irreversible degradation of the most vital parts of
financial improvement and its quality. Inside this structure, those
organizations that create products and enterprises clearly involve
a focal, dynamic part, which they should play with a view both to
intensity and by and large capability and to adding to the
destinations of practical advancement.
68
Along these lines, from this viewpoint, the decision of production
Notes
ways, technologies and administration criteria is turning into an
inexorably perplexing and difficult one for both open and privately-
___________________
owned businesses. Then again, the advances in logical and
___________________ mechanical know edge have turned out to be progressively quick
and exceptional, to the point that everybody has an expanded
___________________
number of conceivable choices.
___________________
Extension of the scope of accessible innovations is the principle
___________________ objective that innovation strategy must set, for clear reasons such
as:
___________________
• The more advancements that are accessible in each
___________________
homogeneous creation circumstance.
___________________ • The more noteworthy the odds are of choosing the most proper
___________________ one to give focusedness and in general, capability to the
organizations that receive it.
___________________
It ought to be underscored that embracing advances that give
advantageous stance for the organization and the network - both in
the medium and long run, requires a significant change in the
“financial culture and affectability” of those in the field and open
experts on the one hand, and similarly as impressive an adjustment
sought after on the other. The change in monetary and mechanical
culture may thus be made possible by the extended information in
each field which, naturally and systematically associated, gives
initial a total reference diagram in which to embed decisions, at
that point worldwide information on the impacts that such decisions
may make at each level; lastly, agent data on the most proficient
method to apply them monetarily.
It has traditionally functioned as the foundation to keep a company

running. One of its core functions has been to protect company
operations with firewalls and encryption to keep external
technologies out.
Dynamics of Technological Cycles: Evolution

• The Industrial Revolution - 1771
• The Age of Steam and Railways - 1829
• The Age of Steel and Heavy Engineering - 1875
• The Age of Oil, Electricity, the Automobile and Mass Production
- 1908
• The Age of Information and Telecommunications - 1971 till
date
Unit 8: Dynamics of Technology: Evolution, Stages and Categories
69
Innovation from 1900 to 1945 Notes
In the ongoing history of innovation, in any case, one truth emerges
___________________
unmistakably: notwithstanding the gigantic accomplishments of
innovation by 1900, the next decades saw more progress over an ___________________
extensive variety of exercises than the entire of already written
___________________
history. The plane, the rocket and interplanetary tests, gadgets,
nuclear power, anti-microbials, bug sprays, and a large group of ___________________
new materials have all been imagined and created to make an
unparalleled social circumstance, loaded with potential outcomes ___________________
and risks, which would have been for all intents and purposes ___________________
impossible before the present century.
___________________
In a bid to decipher the occasions of the twentieth century, it will
be helpful to isolate the years prior to 1945 from those that took ___________________
after. The years 1900 to 1945 were commanded by the two World ___________________
Wars, while those since 1945 were engrossed by the need to stay
away from another significant war. There were significant political ___________________
changes in the twentieth century identified with innovative limit
and administration. It might be a misrepresentation to see the
twentieth century as “the American century,” yet the ascent of the
United States as a super state was adequately fast and emotional
to pardon the exaggeration. It was an ascent in light of enormous
characteristic assets misused to anchor expanded profitability
through boundless industrialization, and the achievement of the
United States in accomplishing this goal was tried and exhibited in
the two World Wars. Innovative authority goes from Britain and
the European countries to the United States over the span of these
wars. It is not necessarily the case that the springs of development
went dry in Europe. Numerous vital creations of the twentieth
century started there. In any case, it was the United States that
had the ability to acclimatize advancements and take full preferred
standpoint from them now and again when different nations were
insufficient in one or other of the indispensable social assets without
which a splendid creation can’t be changed over into a business
achievement. Similarly, as with Britain in the Industrial Revolution,
the mechanical essentialness of the United States in the twentieth
century was shown less by a specific advancement than by its
capacity to receive new thoughts from whatever source they come.
The two World Wars were themselves the most essential instruments
of mechanical and additionally political change in the twentieth
century. It has been said that World War I was a scientific experts’
war, based on the gigantic significance of high explosives and toxic
substance gas. In different regards, the two wars hurried the
improvement of innovation by expanding the institutional
contraption for the consolation of advancement by both the state
70
and private industry. The wars were subsequently in charge of
Notes
speeding the change from “little science,” with look into still to a
great extent limited to little scale endeavors by a couple of separated
___________________
researchers, to “huge science,” with the accentuation on huge
___________________ research groups supported by governments and companies, working
on the whole on the advancement and utilization of new systems.
___________________
___________________ Technology and Education

___________________ Review of the historical backdrop of technology, gives us an insight
___________________
to the developing significance of education. In the early centuries of
human presence, an art was procured in an extensive and arduous
___________________ way by presenting with an ace who step by step prepared the start
in the shrouded puzzles of the expertise. Such guideline, set in a
___________________
lattice of oral custom and commonsense experience, was every now
___________________ and again more firmly identified with religious custom than to the
utilization of objective logical standards. Therefore, the craftsman
___________________
in earthenware production or sword making secured the ability
while guaranteeing that it would be propagated. Specialty
manufacturing was standardized in Western human advancement
as apprenticeship, which has made due as a structure for guideline
in specialized abilities. Progressively, nonetheless, guideline in new
methods requires get to both to general hypothetical learning and
to domains of handy experience that, by virtue of their curiosity,
were not accessible through conventional apprenticeship. Along these
lines, the necessity for a noteworthy extent of scholarly guideline
has turned into an essential component of most parts of present-
day technology. This quickened the union amongst science and
technology in the nineteenth and twentieth hundreds of years Be
that as it may, by the twentieth century all the progressed
mechanical nations, including newcomers like Japan, had perceived
the urgent part of a hypothetical innovative education in
accomplishing business and modern skill.
Types and Forms of Technology

The technologies used in manufacturing firms may be classified as
follows, while following their features into account:
(a) Generic technologies: Highly-consolidated production
systems, characterized by relatively simple operations and slow
renovation
(b) Advanced technologies: Production systems developed
mainly after the Second World War, characterized by complex,
refined operations and a high speed of renovation
(c) Hybrid technologies: Production systems in which the
characteristics typical of advanced technologies are prevalent,
71
but not total, and which also include some characteristics of
Notes
traditional technologies
(d) Intermediate technologies: Production systems in which the ___________________
characteristics of traditional technologies are prevalent, but
___________________
which also include some characteristics of advanced
technologies. ___________________
Technology Value Addition: Radical Versus ___________________
Continuous Innovation ___________________
The technological level in production sectors may be distinguished ___________________

on the basis of various elements such as type, speed of renovation,
___________________
diffusion, influence on the added value of the product, and research,
development and license expenditure. ___________________
Of these, the added value is certainly significant. The advanced ___________________

and mixed technologies nearly always produce a high added value,
traditional technologies tend to give a low added value, and ___________________
intermediate technologies an average added value.
There is nearly always a heavy increase in the value of raw materials
in manufacturing, electronic and aeronautical industries, in
secondary chemical and specialized industries (plant protection
products, surfactants, dies, pharmaceuticals and others); by contrast,
there is generally an average value in inorganic and intermediate
chemical industries; while there is a low added value in the food
industry, natural textile fibre processing, footwear, and building
materials.
The speed of technological renovation is also an element used to
distinguish among the various technologies; activities based on
traditional and intermediate technologies adjust their production
systems in no less than 10 years; mixed technologies in 5 to 10
years; advanced technologies every 1 to 5 years.
Another element characterizing technological levels are the research,
development and licensing expenditures. The more advanced the
technology in an activity, the higher these costs are, especially,
relative to the sales of the company.
Technology and Cost and Quality

Dynamics of technology is highly impacted by the considerations
like cost and quality. Firms in modern era as part of cost-cutting
exercise while striving for maintaining the highest level of quality.
Companies incur huge research and development cost in order to
bring down overall expenditure on technology procurement. Firms
also bid for achieving a benchmarked quality, which ultimately
influences dynamics of the technology.
72
Notes
Technology and Scale Effects
The reception of a technology may rely upon a specific least effective
___________________
size underneath which (or a greatest size above which) its utilization
___________________ may not be ideal. This implies the presentation of exceptional reason
gear ends up attainable just past a specific scale. There are numerous
___________________
cases, everywhere throughout the world, of creations executed in
___________________ industry just quite a long while after their finding simply because
the span of the organizations was too little to allow a quick return
___________________ of the comparing speculations.
___________________
As such, the highlights of a technology and of the inferred hardware
___________________ influence the scale, and the scale thusly influences the innovative
change. To a specific degree, at that point, the connection between
___________________ a technology and the scale of its activities may well be of a commonly
___________________ causal nature (Rosegger, 1980 and 1986). We can sensibly accept
that technology is more vulnerable to the impact of scale than scale
___________________ is to the impact of technology. Indeed, there are two critical
explanations behind this. To begin with, technology is just a single
among a large group of variables.
The impacts of scale may occur at different levels, including:

• The global production of every item after some time.
• The items life-length.
• The efficiency level of every item per unit of time.
• The institutionalization level of the items.
• The production limits per unit of plant, gear and production
lines.
• The general size of a complex of plants in a particular zone.
• The level of vertical integration of a plan.
• The measure of an item sold to every client.
• The topographical centralization of clients.
• The extent of conveyances to every client.
Summary
With the advance of technologies, however, a vast array of
capabilities and sources of competitive advantage are emerging
beyond a business’ traditional walls. Those capabilities are coalescing
in a wealth of new ecosystems.
To the extent the connections between mechanical dynamics and

production structures are concerned, these have turned out to be
73
progressively close but then dynamic, to the point that they condition
Notes
decisions and results in each field.
Essentially, the definitive significance of “non-focused relations” ___________________

between organizations, both on the organizations themselves and ___________________
on the general economy, is featured; this involves a dream of
technology as a “system”, and not only as a “production function”. ___________________
___________________
___________________
1. What do you understand by technology dynamics?
___________________
2. Explain the relation between technology dynamics, cost and
quality. ___________________
3. Identify the importance of scale and value addition on dynamics ___________________

of technology.
___________________
___________________
75
Unit 9 Notes
Technology and Business Environment

___________________
___________________
___________________

\ Technological Environment
___________________
\ Major Current Developments in the Technological Environment
\ Relationship Between Innovation, Diffusion and Networking ___________________
___________________
Introduction ___________________
If we see an organization from an open system perspective, it has ___________________

an operating environment, which includes almost everything outside
the boundaries of a firm; influences the performance of an
organization and the design of its internal operations.
Layers or Levels of Business Environment

1. Task environment (dealing with day-to-day operations) includes
customers, suppliers, competitors, trade agencies.
2. Competitive or industrial environment (affects all competitors
in the same industry) new entrants, substitutes, market
structure.
3. Macro environment (affects almost all industries).
Major Segments in the Macro-environment

1. Social environment (demographics, lifestyles, social values/
habits).
2. Economic environment (natural resources, income, saving,
investment).
3. Political / regulatory environment (legislature, administration,
judicial bodies).
4. Technological environment.
Technological Environment
Technological environment is a network of organizations consisting
of developers and facilitators. The important characteristic features
of technological environment are:
76
• Most visible and pervasive macro environment segment in a
Notes
society.
___________________ • Brings new products, processes and materials.
___________________ • Directly impacts every aspect of the society around us.
___________________ • Alters the rules of global trade and competition.
___________________ Actors in the technological environment

___________________ Developers Facilitators
___________________ Public Government Laboratories Department of Science and
and Research Institutes Technology
___________________
University laboratories State Agencies
___________________
Incubators
___________________
Private Firm R&D Labs Venture Capitalists
___________________ R&D Consortia Technology Evaluators
Technological Alliances or
Partnerships
Technology Development
Technology development process involves creation of knowledge and
application of knowledge.
• Development of new products/process/materials.
• Technology development occurs in stages.
(Each stage becomes the basis for the development in ensuing stage.)
• Determinant of technology development: Solely not the
developer, also the national and international political
considerations are also detrimental in technology development.
Technology development activities

• Creation of New knowledge
• Applied Research
• Development
• Engineering
• Commercialization
Innovation networks
The relationship among technology developers and facilitators often
culminate in the formation of innovation networks, or clusters of
organizations that share interpersonal and organizational ties with
Unit 9: Technology and Business Environment
77
one another. Innovation networks are a major feature of all developed
Notes
economies.
The Silicon Valley in California, Route 128 in Massachusetts and ___________________

North Carolina Research Triangle are the most famous innovation ___________________
networks in the US.
___________________
Traditional industries: Furniture (Grand Rapids, Michigan),
carpet (Dalton, Georgia) and weaving (Northern Italy) ___________________
Innovation networks accelerate technology development for many ___________________

reasons: ___________________
• Assist in diffusion of technology.
___________________
• Create a critical mass of skills that speed knowledge
___________________
development.
___________________
• Provide social safety net for individuals risks in technology
development. ___________________
• Takes care of innovation failure victims.
Changes in the technological environment

The changes in technological environment can be classified into
types, namely induced changes and autonomous changes.
Induced changes
Technological changes taking place due to forces in macro
environmental segments (social, political or economic forces).
• Linkage between technological and the political/regulatory
environments.
• Linkage between technological and the economic environments.
Autonomous changes
Technological changes taking place due to the independent actions
of technology developers in their quest for competitive advantage.
• Social change
– Agriculture, machine production, information revolution
• Long-wave theory of economic change
– I – scientific discoveries, innovation, new products
– II – new industries, markets, expansion
– III – technology matures, competitors, decreasing
profitability. Finally, business failures, unemployment,
economic turmoil in financial markets leading to depression.
78
Major Current Developments in the Technological
Notes
Environment
___________________ • Globalization
___________________ – Resources allocated to technology development.
___________________ – Changing location of manufacturing facilities.
___________________ – Rise of multinationals.
___________________ – Comparative advantage of nations.
___________________ • Time Compression

– Shortened product life cycles.
___________________
– Shortened development times.
___________________
– Decreasing payback periods.
___________________
• Technology Integration
___________________
– Combining technologies to develop new products.
– Combining technologies to commercialize products.
GLOBALISATION The scope of

environment is global
TIME Increased
COMPRESSION interdependence o
institutions
TECHNOLOGY Need for simultaneous

INTEGREATION imitation and
innovation
Figure 9.1. Major current developments in the technological environment
Integrating Innovation, Technology and Business

Strategy
Technological change can be described at two levels:
1. Individual firm level
• Problem recognition
• Technology selection
• Solution development
• Commercialization/implementation
2. Technology level: Innovation is the process by which firms
arrive at feasible solutions to technical opportunities or
customer wants. Two different groups of players respond to
the innovation:
79
• Adoption: customers make decision to adopt or not to adopt
Notes
the innovation.
• Imitation: Competitors may decide to copy the innovation ___________________
and make their own (new) products to compete with the
___________________
innovating firm.
___________________
Technology–Market (T–M) Matrix
___________________
T-M Matrix is a framework for making technology management
___________________
decisions. It has two dimensions - technology dimension and market
dimension. ___________________
Innovation ___________________
___________________
Innovation refers to both the output and the process of arriving at
a technologically feasible solution to a technologically feasible ___________________
solution to a problem triggered by a technological opportunity or
customer need. ___________________
The term innovation is used in two ways:

1. Process
2. Output
Components of innovation
As outputs, technological innovation has three components:
(a) A hardware component
(b) A software component
(c) An evaluation information component
Innovation dynamics at the firm level
Drivers Process Outputs
Figure 9.2. A framework describing firm-level innovation
Drivers of Innovation
Firms innovate to respond environmental demands or
opportunistically to shape the environment. Two environmental
factors, which stimulate innovation are:
1. Market factors
2. Input factors
Firms may also engage in autonomous innovation.

80
Process of innovation
Notes
• Market-pull is the advancement of technology oriented
___________________ primarily toward a specific market need and only secondarily
toward increased technical performance.
___________________
• Technology push is the advancement of technology oriented
___________________
primarily toward increased technical performance and only
___________________ secondarily toward specific market needs.
___________________ Types of innovation outputs

___________________ Table 9.1: Classification of Innovation for Products,
___________________
Processes and Services
___________________ Characteristics of Minor Incremental Architectural

Elements: Component Change
___________________ Knowledge
___________________ Novel Modular Radical

Change
Existing Novel
Characteristics of Linkage
Among Elements:
Component Configuration
Effect on Incremental Architectural

Unchanged
Component Product: 486 Product: Digital

Configuration Microprocessors Telephone
Process: Continuous Process: Quality
Improvement Circles
Modular Radical
Changed
Product: Plain Product: VCR

Paper Copiers Process: Robotics
Process: Just-in- in Manufacturing
Time Inventories
Reinforced Overturned
Effect on Component Knowledge
Technology Evolution
1. S-curve of technology evolution
2. Technology progression
3. Levels of technology development
81
4. Technology change agents
Notes
5. Evolutionary characteristics of technological change
___________________
6. Uncertainty and technological insularity
___________________
1. S-Curve of technology evolution
___________________
Although the initial development of a new technology often appears
to be a random process, once a new technology comes into existence, ___________________
its evolution over time displays reasonably stable pattern. ___________________
2. Technology progression ___________________
Technology evolution refers to the changes in the performance ___________________

characteristics of a specific technology over time.
___________________
Stage 1: Emergence
___________________
Stage 2: Rapid Improvement
___________________
Stage 3: Declining Improvement
Stage 4: Maturity
3. Levels of technology development

• Basic Research and Applied Research.
• Development, Engineering and Operations.
• Basic research is conducted without a practical application or
problem at hand.
• A lengthy period often occurs between an invention in basic
research and its application in the form of innovation.
• Major technological advances (i.e., radical innovations in such
fields as military weapons, medicines or agriculture) require
not just one innovation but a cluster of innovations, often as
many as a dozen.
4. Technology change agents

The agents or creators of technological change are innumerable and
vary significantly across the level of technological change.
• Government agencies
• Research institutions
• Universities and laboratories
• Large corporations
• Independent entrepreneurs or firms.
82
5. Evolutionary characteristics of technological change
Notes
• The coexistence of different types of innovations – incremental,
___________________ modular, architectural and radical – and the simultaneous
development of innovations at multiple levels by numerous
___________________
change agents bestow evolutionary characteristics on
___________________ technological development.
___________________ • Each of the incremental steps is a creative act and depends on
active experimentation, learning and availability of local
___________________
information of a specific nature. The accumulation or synthesis
___________________ of these facts is often not visible to outsiders.
___________________ 6. Uncertainty and technological insularity

___________________ • The evolutionary character of technological change suggests
that the individuals and firms that are engaged in solving
___________________
technical problems face a great degree of uncertainty.
___________________
• Technological insularity – this principle suggests that a
characteristic feature of technical know-how is that it is not
easily transmitted.
• Technological insularity leads to two characteristics of change:
(a) Spatial clustering
(b) Temporal clustering
Characteristics of Innovative Firms

As early as 1939, Joseph Schumpeter proposed that innovative
success might be related to the size of a firm. He outlined two types
of innovation from microeconomic perspective: Entrepreneurial
innovation, Managed innovation.
Entrepreneurial innovation
Entrepreneurial innovation occurs when new technologies and
scientific development yield economic opportunities for proactive
entrepreneurs. Small, fast-growing firms emerge and become the
primary engine of innovation and often generate modular and
architectural innovations.
Managed innovation
As the markets mature, the firms that survive tend to become larger
and competition shifts to price. This leads to an era of managed
innovation, when firms attune their research and development efforts
– innovation – to market forces, several incremental innovations
result from R&D activity, mainly of large firms. During this era,
83
innovation efforts also become directed away from products and
Notes
towards cost-reducing process technologies.
___________________
Organization Structure
___________________
Formalization: Relevant rules, written documentation and operating
procedures within an organization. ___________________
Centralization: Locus of decision making. The more centralized an ___________________

organization, the more likely it is that decisions are made at the ___________________
top levels of the organization.
___________________
Innovation, Diffusion and Networking ___________________
Diffusion ___________________
Diffusion is the process by which an innovation is propagated ___________________

through certain channels over time among the units of a system.
___________________
• A technical solution is considered to be an innovation when it
is new or perceived as new by the individual or the unit of
adoption.
• Propagation refers to the spread of an innovation beyond its
inventor.
• The time dimension is involved in diffusion, because it takes
time for individuals or firms to decide to adopt an innovation.
• A system is a set of interlinked units that participate in the
diffusion process.
Supply side
competitors
Imitation
Innovation
Diffusion
Demand side
consumers
Figure 9.3. Diffusion versus imitation

Source: Adapted from Robert Grantt, Contemporary Strategy Analysis,
Basil Blackwell, 1995
Dynamics of diffusion
Innovations propagate through a population of consumers in the
market over time. Not all individuals or firms comprising the market
adopt an adoption at the same time. Three major characteristics of
84
the dynamics of diffusion:
Notes
(1) The S-curve of diffusion
___________________
(2) Reinvention during diffusion
___________________
(3) Mechanism of diffusion
___________________
S-Curve of diffusion
___________________
S-shaped curve shows the number of individuals adopting an
___________________ innovation on a cumulative basis, the bell-shaped curve shows the
same data in terms of the number of individuals each year. An S-
___________________
shaped diffusion curve is characteristic of almost all innovations.
___________________
The S-curve also enables us to distinguish between innovations
___________________ along two factors:
___________________ (1) The rate of diffusion—speed with which an innovation
propagates through a population of individuals or firms.
___________________
(2) The potential set of adopters—total number or individuals or
firms who are likely to adopt an innovation.
Reinvention
These are the dynamics by which an innovation is changed or
modified by the users as they adopt or use it. Four ways in which
reinvention occurs during diffusion:
1. Changes in the design and performance characteristics as per
user’s requirements.
2. A standard model of innovation may emerge.
3. Development of complementary products.
4. New applications facilitating adoption beyond originally
conceived application.
Mechanisms of diffusion
• Technology Substitution: the actual substitution of a new
technology for the old based on adopter judgment – superiority
of an innovation
• Bandwagon Effect: the dynamic which later adopters in their
decision to adopt an innovation, imitate the behavior of earlier
adopters
The twin mechanism of technology substitution and bandwagon

effect, underscores the roles of:
• Uncertainty and information
• Knowledge and learning
85
A model of innovation adoption
Notes
Awareness: an individual or firm is exposed to an innovation’s
existence and understanding of its functions. ___________________
Attitude formation: an individual or firm forms a favorable or an ___________________
unfavorable attitude toward innovation. ___________________
Decision: making the choice of adapting or rejecting the innovation. ___________________
Implementation: an individual or firm puts an innovation into ___________________

use.
___________________
Confirmation: an individual or firm seeks the reinforcement of an
___________________
innovation decision that has already been made, but the unit may
reverse the decision if exposed to conflicting messages about the ___________________
innovation.
___________________
Shifting characteristics of adopters over time
___________________
• Innovators
• Early Adopter
• Early Majority
• Late Majority
• Laggards
Attributes of an Innovation
• Relative Advantage
• Compatibility
• Complexity
• Trialability
• Observability
Components Attributes
Relative Advantage
HARDWARE
Complexity
SOFTWARE
Compatibility
Trialability
EVALUATION
Observability
Figure 9.4. Components of an innovation mapped to attributes

86
Four major factors that drive community effects:
Notes
1. Prior technology drag
___________________
2. Irreversibility of investments
___________________
3. Sponsorship
___________________ 4. Expectations
___________________
Characteristics of the population
___________________
1. Communications
___________________ 2. Opinion Leaders
___________________ 3. Cultural Norms
___________________
Influence of environmental trends on diffusion
___________________ • As a result of globalization, the potential adopters during the
___________________ diffusion of any innovation are located all over the world.
• Time compression in diffusion requires rapid responses by firms
in three areas: (1) redesign of the evaluation information
component of the innovation, (2) adjustment of their marketing
strategies, and (3) adoption of relevant innovations faster than
their competitors.
• The potential for technology integration in both process and
product arenas is inducing firms to look outside their own
organization for appropriate innovation as compared to their
in-house development activity. The choice to either “make” or
“buy” is a part of the problem-solving process.
Managerial Implications
1. Significant attention should be devoted to obtaining market
feedback over the course of diffusion in the case of a new
product or process introduction.
2. In the case of firms adopting innovation, implementation is a
challenging task and should be managed carefully.
3. Product design and marketing strategy should reinforce each
other as a firm rolls out a new product or process.
4. When feasible, managers should line up sponsors and create
expectations of a technology success to take advantage of
community effects in diffusion.
87
Business Strategy Notes
Technology Technology Strategy
forecasts ___________________
___________________
R&D
___________________
Knowledge Technology development Product and
management and utilisation process
___________________
Information technologyj
Technology acquisition
Management
and transfer ___________________
Commercialisation ___________________
___________________
Value chain management
product lifecycle management ___________________
Figure 9.5. The managerial functions of technology management from the
___________________
viewpoint of the industrial company
___________________
Technology Strategy Formulation
The process of technology strategy formulation comprises of the
following three sequential stages:
1. Assessment of technology
The purpose of this stage is to assess the technology scenario with
respect to the enterprise. For this purpose, the information regarding
state of the technology is gathered, i.e., the present level or status
of technology and the likely technology development in the future
as well. Then, each technological alternative is analyzed and
evaluated vis-à-vis other alternatives in the backdrop of competition,
given the strength of the firm.
Thus, the activities identified in this stage are as follows:
Identification of the concerned technologies:

The question arises: what we mean by technologies over here. The
set of technological knowledge and skills, which have an impact on
the position of the firm among its competitors in the market in the
present and future conditions are collectively referred as concerned
technologies.
How to identify these technologies?

(i) Firm’s detailed technological structure analysis: The
technologies involved in the value chain of a firm can be broadly
categorized into three types, viz. product; production; and
support technologies. Product technologies are technologies
embodied in the product, i.e., products are often characterized
88
by these technologies. For example, the touch screen feature
Notes
of a mobile phone, the auto ignition gas stove, the power
steering system in a car, etc. These technologies often become
___________________
the basis for the designing of new products.
___________________
Then, there is a set of technologies, which helps in the
___________________ production process like electroplating, welding, milling,
grinding, distillation, polymerization, etc. For example,
___________________
distillation is a technological process used in the refinery to
___________________ produce products like gasoline, motor spirit, cooking gas, ATF,
etc. from crude oil. These are mainly various operations and
___________________
processes done at the shop floor level in order to synthesize
___________________ the designed product. It may also be in the form of some secret
formula, reaction catalyst, or process vital in the firm’s
___________________ production process.
___________________ Support technologies are not present in the core product and
___________________
production process of the firm. They only support the core
activity of the firm without being a part of the product or
services offered. The typical support technologies are IT tools,
software packages, networks, etc. The activities in the value
chain of the firm should be mapped for identifying them, i.e.,
inbound logistics, outbound logistics, distribution, sales, after-
sales service, customer relationship, supplier relationship, etc.
For example, technologies involved in e-procurement, online
booking and digital bill payments.
(ii) Future technologies: The emerging or pacing technologies,
which are not in use currently but can, affect the firm in the
future. These are potential technologies, which can replace
the existing technologies in coming times or become a cause of
generating new products. For example, digital technology
replaced photo-film; internet changed the music and motion
picture distribution business. Technology forecasting techniques
are useful in identifying future technologies for this purpose.
The information gathered may be summarized in the form of
a table, i.e., the concerned technologies of the firm classified
into three types of technologies (product; production; support)
and their possible sources of procurement (in-house and outside
the firm).The identification of these technologies constitutes
the initial part of analysis for technology strategy formulation
of the firm. The outcome of this activity is a comprehensive
list of the technologies relevant to the firm’s business.
89
Table 9.2: Concerned technologies list
Notes
Type of Technologies Technologies Sources
___________________
Product Technologies
___________________
•
– ___________________
• ___________________
•
___________________
–
___________________
Production/Process Technologies
___________________
•
– ___________________
• ___________________
• ___________________
–
Support Technologies
• Inbound logistics
• Outbound logistics
• Supplier relationship
• Distribution
• Customer relationship
• Sales
• Billing
• After sales
2. Analysis of the competitive impact of different

technologies
The two aspects, which are analyzed to assess the competitive impact
of a technology, are:
(i) Competitive importance of a technology; and
(ii) Its relevance in sustaining the competitive factors of market.
The different competitive factors of the technology are identified

and enumerated like competitive factor 1, competitive factor 2,
competitive factor 3 and so on. The personnel representing different
functional departments like procurement, production, stores, sales,
engineering, labor from different zones/sections are asked to rate
the various competitive factors of concerned technology on a value
scale, say 1 to 5. The rating value 1 indicates the technology has no
90
impact on that particular competitive factor whereas value 5 means
Notes
that it is a critical factor in achieving the given factor. If possible,
not only the internal members of the firm but also the opinion of
___________________
external stakeholders including suppliers, transporters, customers
___________________ and distribution channel partners should also be included in this
evaluation process.
___________________
After this process the overall evaluation, taking into consideration
___________________
the response of different stakeholders with regard to competitive
___________________ factors of the said technology are recorded systematically in a matrix.
The rating of different stakeholders (internal or external) are
___________________
combined together to arrive at an overall evaluation of the factor.
___________________ The rating of different stakeholders can be combined together by
giving equal weightage. Alternatively, the ratings of different
___________________
stakeholders can be given varied weightages depending on their
___________________ relative importance in the business value chain of the firm or
industry.
___________________
Afterwards, the collected information regarding competitiveness of
the technology is systematically arranged in a matrix. The rows
represent different competitive factors of a technology. The rating
(say, 1, 2… 5) of the technology on that particular competitive factor
is recorded against it in the appropriate cells. An indicative matrix
of this analysis is shown below:
Table 9.3: Competitive factors of a technology
Technology (..............) 1 2 3 4 5
Competitive Factor 1
………..........
………..........
This analysis will help in the identification of the critical

technologies, having the highest impact on the competitive factors.
This analysis thus helps in ranking, prioritizing and eventually
selection and adoption of the most competitive technology. The
typical output of this exercise is a list of critical technologies
arranged according to their competitive strength.
3. Assessment of technological capability

The objective of this assessment is to find the technological
capabilities of the firm pertaining to critical technologies. The context
91
of this assessment is the competitive environment in which the
Notes
firm operates. The strength or weakness of the firm vis-à-vis its
prominent competitors in the industry is evaluated in each critical
___________________
technology (CT). The key variables under consideration in this
assessment are: ___________________
• Human resources inventory (qualities, skills, experience, ___________________

knowledge, adaptability).
___________________
• Budget for research and development (amount and share of
___________________
sales).
• Avenues for grants, funding agencies and institutional support. ___________________
• Criteria and orientation for research activities fund allocation. ___________________
• Patents, copyrights and intellectual property of the firm. ___________________
• Equipment, tools, lab and allied facilities. ___________________
Again, the technological capability of the firm can be assessed with ___________________
the help of a matrix, wherein the strength and weakness of the firm
in terms of different capability variables is summarized. The
different dimensions of capability variables are enlisted and various
critical technologies for the firm are derived here from the previously
done competitive impact analysis of technologies. The technology
capability dimensions are arranged vertically whereas the various
CTs (CT 1, CT 2, CT 3 …… CT n) arranged horizontally in the
matrix. Hence, the columns represent various CTs and different
dimensions of technological capability represented by rows.
Table 9.4: Technological capability dimensions of critical

technologies
Technological Capability CT CT CT CT ... CT Comments

Dimensions 1 2 3 4 n
Human Resources Inventory

• Numbers
• Qualification
• Skills
• Experience
• Adaptability
• ……
Budget for Research and

Development
• Absolute Value
• As % of sales
• Vis-à-vis competitors
........................
92
The top management headed by managing director should lead the
Notes
team of the firm’s functional and technical managers in assigning
a score value to each cell indicative of the firm’s particular CT
___________________
capability in the given dimension. The score values can be worked
___________________ out by a qualitative approach like discussion, or quantitative
approach like analyzing rigorous data, preparing merit tables,
___________________
assigning weightages and calculating averages. The score values
___________________ can be any numerical value from 1 to 5; where 1 stands for very
weak, 2 stands for weak, 3 stands for average, 4 stands for mildly
___________________
strong and 5 stands for strong. The score values can also be
___________________ supplemented by descriptive comments. The strong but non-critical
for firm’s competitiveness technologies can be licensed out.
___________________
___________________ Selection of Technology

___________________ In this stage, the firm attempts to rate its strength in each CT
identified in the previous stage and thus, ascertain its current
___________________
attainment level in that particular CT. Henceforth, the firm sets its
desired attainment level with respect to that particular. For this
purpose, the technological capability assessment matrix (prepared
in last part of first stage) is referred to find out weak dimensions
of firm’s technological capability with regard to that particular CT.
This forms the basis for betterment of certain aspects of technology.
For example, if there is unavailability of equipment or trained or
qualified personnel or shortage of funds then appropriate resources
are provided to overcome the specific weakness and gain strength
in that CT. This exercise helps the firm in deciding its course of
action in selecting technology for putting in interest and making an
investment. A comprehensive and combined approach in this
direction will lead to importance based on ordering or sequencing
different technological tasks of the firm. The firm will come to know,
which task has to be done, then next and so on.
The process of technology selection can systematically be done with

the help of a matrix. The different CTs arranged vertically in a
matrix whereas the strength of the firm in CT arranged horizontally.
The top management of the firm should prepare this matrix with
inputs from the technical and functional department heads.
Table 9.5: Strength of critical technology matrix
CT Strength
Very Weak Average Strong Very
Weak Strong
93
This analysis also provides a basis for a technology strategy
Notes
formulation of the firm. If the firm is strong in a particular
technology, it may adopt leadership strategy, i.e., being the first in
___________________
the market for providing new technology-based product s or services.
However, if the firm is weak compared to its competitors then the ___________________
firm may adopt follower strategy, i.e., imitating the market leaders.
___________________
Later on, when the firm attains the desired level of strength in that
CT and at par with the competitors, it can think about a change of ___________________
strategy.
___________________
Management of Technology Projects ___________________
In order to manage the technological projects, it is imperative for ___________________

the firm to properly organize and categorize these projects. There
___________________
is a set of technology projects, which is limited to the procurement
of instruments for R&D laboratory or acquirement of some ___________________
specialized machinery set required for production improvement.
___________________
These type of projects are typical investment projects based on the
comparative financial cost–benefit analysis of the available
alternatives and hence, selecting or prioritizing them on the lines
of capital budgeting. While, another set of projects demands higher
involvement and understanding in all spheres of research and
development and engineering (R&D&E). The different aspects of
the product development project from supplier relationship
management (SRM) to customer relationship management (CRM)
requires attention, covering demand planning, source selection,
logistics, manufacturing process, inventory management supply
chain design and handling customer complaints.
The technology management process has four steps in the given

order. Firstly, the firm tabulates the particulars of all the identified
technology development projects. Secondly, the firm categorizes these
projects (R&D&E project/investment project) based on criterion
discussed above. Thirdly, the firm makes a selection of the technology
projects, which it will undertake. Finally, the method of sourcing
the said technology is decided, that is, the firm will develop
technology in-house or alternatively, procure from a supplier outside
the firm.
(a) Tabulation of technology development projects

The firm’s approach can be either proactive or reactive in seeking
and adopting latest technology. If the firm strategically analyzes
and emulates newer technologies before its competitors, it will
achieve technology strategy leadership. Otherwise, if the firm does
not go for innovative technologies and waits until and unless it is
forced to change, relegated to be technology strategy follower. The
94
firm is necessarily required to undertake certain new technology
Notes
projects to fulfil its strategic intent. Otherwise, regular business
projects need may also lead to technology development projects.
___________________
The particulars related to every technology development project
___________________ recorded in a structured table, as shown below:
___________________ Table 9.6: Description of technology development project
___________________ Project Description:
___________________ Project Objectives:
___________________ Likely Impacts (Quantitative /
___________________ Qualitative)
___________________ Costs Target Date

(All factors)
___________________
Related CT R&D Projects Total Costs Benefits
___________________ (including (incremental
material, sales in future
overheads, for defined
facilities, period of time)
personnel,
R&D)
The output of this exercise is precise and relevant information like

objective, timeline, impacts, cost and benefits regarding each
technology development project is available.
(b) Categorization of technology development projects

The output of the previous step is an input for this step. The projects
identified and elaborated in the first step are categorized into
R&D&E projects and investment projects. This will decide the level
of involvement in the project. The R&D&E projects require
engagement in the full production chain, not just manufacturing.
However, if it is an investment function, the role is limited to
financial cost-benefit analysis only.
(c) Selection of technology projects

The selection of technology is constrained by availability of budget.
There is a likelihood that the total cost of all the identified projects
95
may exceed the total money provided for R&D activities. When a
Notes
firm lands up in such a situation, it has to pick some projects and
leave the remaining ones. The key question in this stage is which
___________________
projects to choose and which not to choose. The selection and rejection
of projects is based on the overall attractiveness analysis of the ___________________
projects. The analysis should include not only quantitative monetary
___________________
cost-benefits but also include non-financial and qualitative features
like technical robustness, strategic fit, market success, financial ___________________
factors, time horizon, etc. The technological environment in which
___________________
the firm operates, SWOT of technology and patent issues, are taken
into consideration in determining the technical robustness. The ___________________
contribution of the project adds to achieving the firm’s overall
___________________
strategic objectives and strengthening its core competencies. The
likelihood of technology being accepted in the market and the ___________________
capability of generating sales determine market success. The return
___________________
on investment (ROI), breakeven point, payback period, and risk are
important financial factors for decision making. Each aspect of ___________________
analysis is assigned a weightage based on its importance in project
selection and a comparison matrix is created. The columns of the
matrix represent projects, whereas rows represent different aspects
of project analysis. All the projects are rated in every aspect on a
value scale of 1 to 5, where 5 represents the highest value and 1
corresponds to the lowest value on the continuum.
Table 9.7: Project selection matrix

Analysis Weightage Project
Aspect P 1 P 2 P 3 P ... P n
Technical
Robustness
Strategic Fit
Market Success
Financial Factors
Time Horizon
This matrix can help in making comparison of different projects

and henceforth their selection. The ratings of a project in different
aspects of analysis are multiplied with their corresponding
weightage. These are added to determine the overall attractiveness
of the project. Then, projects are ranked on the basis of their overall
attractiveness. The highest-ranking project is selected first, then
next one, and so on till the total budget is exhausted. The projects
left after this process are rejected. In case of investment projects,
the method adopted is same but with some changes in the weightages
96
of different aspects. The technical robustness and market success is
Notes
given lower weightage while financial factors like ROI, financial
cost and benefits are given higher importance.
___________________
___________________ (d) Sourcing of technology

___________________ After the selection of technology projects, the next step is to decide
the source of technology. The source may be in-house or outside the
___________________
firm. The various in-house and outside sources are identified, and
___________________ their merits and demerits are analyzed.
___________________ The available methods for sourcing technology are listed as follows:
___________________
• In-house R&D projects
• Contracts with technical research institutes
___________________
• Acquiring competent firms
___________________
• Strategic alliance or joint venture
___________________ • Creating special task force
• Employing experts
The factors guiding the selection of technology sourcing include:

• Availability of sources (in-house and outside the firm).
• Price of sourcing technology vis-à-vis expected benefits from
technology.
• Availability of know-how and resources.
• Regulations and restrictions.
• Safeguarding from imitation.
• Availability of time.
Table 9.8: Source for technology supply table
Projects In-house Contract Joint Task Employing

R&D R&D Venture Force Experts
P 1
P 2
P 3
….
P n
The alternatives for sourcing technology for R&D&E projects are

evaluated on the basis guiding factors. The evaluation may be a
quantitative rating along with qualitative comments. The suitable
option for sourcing technology is hence, identified and executed.
97
Notes
ASSESSMENT OF TECHNOLOGY
___________________
___________________
Identification of the concerned technologies
___________________
(i) Firm’s Detailed Technological Structure
Analysis ___________________
(ii) Future Technologies
___________________
___________________
Analysis of the competitive impact of different
technologies ___________________
___________________
Assessment of the technological capability ___________________
___________________
Selection of Technology
Management of Technology Projects
Tabulation of Technology Development Projects
Categorisation of Technology Development Projects
Selection of Technology Projects
Sourcing of Technology
Figure 9.6. Overview of technology strategy formulation process
Models for Technology Strategy Formulation

Technology strategy is a kind of strategy that aims to conduct an
organization to determine the technologies on which its sustainable
competitiveness depends. Technology strategy is a means of
achieving a superior competitive position and realizing long-term
organizational goals. Technology strategy is both an analytical and
a creative process but also dependent on other strategies of the
organization. On one hand, the management technology strategy
98
(MTS) is directly related to the master strategy of holding the
Notes
company and from the other side it is related to the IT and IS
strategy. Various attempts have been made in the context of strategy
___________________
and technologies, which are somehow related to management.
___________________ However, the effective management of technology is a tall order
problem before organizations. The corporations can solve this
___________________
problem by formulating strategy for technologies.
___________________
___________________
Master Strategy of
Holding Company
___________________
___________________
___________________
MTS (Management
___________________ Technologies Strategy)
___________________
IT and IS Strategy
(Information Technology / Information Systems
Figure 9.7. Position of MTS formulation
The scope of technology strategy also covers the acquisition methods

besides the feasibility and availability of technologies. Lots of
attempts have been done in the field of strategic management of
technology. Arasti et al. (2010) have comprehensively investigated
the concept of technology strategy at the corporate level of holding
companies. As management technologies are a special type of
technology, general technology strategy formulation models cannot
necessarily be applied for their strategy formulation. Some
technology strategy formulation models have the ‘positioning’
approach, like Porter’s, Little’s and Hax-Majluf’s model. Some other
models have the ‘resource-based’ approach, like Chiesa’s model. The
technology in the positioning approach, as opposed to the resource-
based approach, is considered as a supportive factor of the
competitive strategy. With regard to the fact that management
technologies are considered as supportive technologies, the
technology strategy formulation method is required to be based on
the positioning approach. Technology strategy is the translation
and interpretation of the overall strategy of organization in the
area of technology. The model for technology strategy formulation
should be in accordance with the features of the industry and capable
of responding to future challenges.
99
The different models for strategy formulation are classified into
Notes
two categories based on their approach:
___________________
1. Identification of the company or organization position
approach ___________________
The general features of this approach are relatively stable ___________________

technological environment, certainty, involvement of low technology,
___________________
known set of suppliers and consumers. The important approaches
classified under this approach are Porter’s model, Little’s model, ___________________
Hax-Majluf’s model.
___________________
(a) Porter’s model ___________________
The firm’s attitude in technology development and application is an ___________________
important determinant of strategy formulation in this model.
___________________
Identifying related technologies ___________________
Identifying technologies that create value
Identifying key technologies
Assessing attractiveness of key technologies
Evaluating firm capabilities
Formulating strategies
Integrity for implementation
Figure 9.8. Porter’s model for technology strategy formulation
Porter has suggested the following six steps for formulating

technology strategy formulation:
1. Listing all the technologies involved in the value chain.
2. Tracking important technology changes taking place in the
related area.
3. Evaluating technology strategy attractiveness and selecting
important technologies.
4. Assessing capability of firm and amount of investment for
developing technology.
100
5. Formulating technology strategy.
Notes
6. Implementing the strategy.
___________________
(b) Little’s model
___________________
The market forces, competitive environment and market success
___________________ guide the technology strategy formulation in this model. This model
___________________ proposes the following five steps for technology strategy formulation:
___________________
1. Knowing the product particulars and market understanding.
2. Knowing the principles of competition.
___________________
3. Identification of critical success factors.
___________________
4. Understanding of concerned technologies.
___________________
5. Choosing the important strategic technologies.
___________________
Knowledge of present status
___________________ market process
Knowledge of key processes
Assessment of internal Knowledge of related

success factors technologies
Selection o important or
strategic technology
Figure 9.9. Little’s model for technology strategy formulation
(c) Hax-Majluf’s model

The main inputs in this model for formulation of technology strategy
are macro strategies of the firm. The steps in strategy formulation
according to this model are as follows:
1. Finding out macro strategies of organization.
2. Identification of STUs (strategic technological units).
3. Assessment of transformation of technology with respect to
strategic technologies.
4. Estimation of technological requirements with respect to each
strategic technology.
5. Formulation of technology strategy covering three points:
selecting new technology(s), appropriate time of introduction
for new technology(s), and acquisition method(s) selection.
101
Organisation strategy Notes
Organisation mission
overall themes of technological needs
___________________
___________________
Business strategy
Business mission
Overall themes of technological needs
___________________
___________________
Identification of
Strategic Technological Units ___________________
___________________
Careful study of technological Environment scanning of Opportunities ___________________

internal status of the organisation and threats of technology
___________________
Determining technological Determining attractiveness ___________________
capabilities of the of
organisation technologies
___________________
Formulating technology
Determining technological
capabilities of the organisation
Determining technological
capabilities of the organisation
Figure 9.10. Hax-Majluf’s model for technology strategy formulation
2. Resource-oriented and key capabilities approach

Arasti and Packniat (2006) analyzed diverse technology strategy
formulation frameworks. Such frameworks may adopt a rational or
incremental process for formulating the technology strategy. In the
rational process, companies are concerned with describing,
understanding and analyzing the environment in order to determine
a course of action and execute a plan. In the incremental process,
the rapidly changing environment offers constraints to the rational
process, and often companies make decisions and take actions in
one direction, measure results and adjust goals, and finally define
the next steps.
Chiesa’s Model
According to Chiesa, existing models for formulating the technology
strategy, which he qualifies as traditional, are based on an analytical
structure derived from the SCP strategic approach. So a company
chooses its positioning strategy, and the technology strategy must
102
give support to the corporate strategy. Frequently, the analysis is
Notes
centered in the product–market relation or in the technologies
associated with the product. This approach assumes a relative
___________________
stability in technologies over time. In competitive and dynamic
___________________ markets, in which there is constant product renovation, the
technology strategy is not only a consequence of the corporate
___________________ strategy, but it also guides the development of competencies which
___________________ can be used in other products or markets.
___________________
CORPORATE STRATEGIC ARCHITECTURE
___________________
___________________ EXTERNAL ANALYSIS INTERNAL ANALYSIS

Identification Identification Mapping firm’s Identification
___________________ distinctive of future
of the value for of critical
the customer future skills technological skills
___________________ skills
___________________
Identification of potential applications of existing skills
Strategic Programming
Budgeting
Figure 9.11. Chiesa’s model for technology strategy formulation
Summary
Changes in technology affect how a company will do business. A
business may have to dramatically change their operating strategy
as a result of changes in the technological environment.
Technological change can bring about advantages and opportunities
for businesses.

1. List down technology development activities.
2. What are the major current developments in the technological
environment?
3. Write a note on Technology–Market (T–M) Matrix.
4. What is the influence of environmental trends on diffusion?
5. What are the stages in technology strategy formulation?
6. What is the significance of Porter’s model?
7. List down the steps in strategy formulation as per Hax-Majluf’s
model.
103
Unit 10 Notes
Implementing Strategic TTechnology

echnology
___________________
___________________
Management ___________________
___________________
\ Advantages and Disadvantages of a Strategic Alliance
___________________
\ Types of Strategic Alliances
___________________
\ Framework for Strategic Alliance
\ Joint Venture ___________________
___________________
Introduction
A strategic alliance is an arrangement between two companies to
undertake a mutually beneficial project while each retains its
independence. Companies decide to form strategic global business
alliances for many reasons. One of the most important reasons is to
gain access to another company’s knowledge or resources. Companies
can also decide to join forces to develop new products or to enter a
market that neither could enter alone.
Strategic Alliance for Technology Management

International strategic alliance is an important part of strategic
management in which two or more firms engage in partnership
with each other to complete each other’s firm or business objective.
The mutual agreement can be related to technology, finance,

manpower, etc. The mutual agreement is based on the objective of
the firm as a whole. Sometimes the alliance is because of an entry
into a new market. Alliances are generally flexible partnerships in
which two or more firms can collaborate. The alliance has both pros
and cons of equal share, which will be discussed in the subsequent
paragraphs.
Advantage of having a strategic alliance include:

1. Shared risk: Companies will have shared accountable risk as
per their agreements, which provide less market risk exposure
to individual companies.
104
2. Shared knowledge: Sharing the skills, manpower, technology,
Notes
and brand gives greater power to the new-formed alliance and
provides a competitive advantage to them in the business.
___________________
3. Opportunities for further rise: Using the infrastructure of
___________________
each other, good brand value can take each company into
___________________ greater heights; they can tap new markets and this provides
a new dimension to their existing portfolio.
___________________
4. Greater speed to reach the market: Alliance can help enter
___________________
each other’s market more quickly than going individually.
___________________ 5. Complexity: Alliance can minimize the risk of complexities
___________________ which can arise when companies expand and become larger
organizations by using each other’s resources and knowledge
___________________ and minimize the risks.
___________________ 6. Costs: This is one of the reasons why alliances are considered;
it greatly reduces the cost, as assets and infrastructure and
___________________
shared.
7. Economies of scale: This is one of the important targets in
the area of alliance; if two companies are having an alliance,
they will share their resources which will enable a better
economy of scale.
Risks of a strategic alliance include:

1. Risk of sharing: In alliance, generally skills, technology,
market are shared but there are chances that company secrets
can get leaked out.
2. Unequal alliance: Both parties are not equal, so one will
have the upper hand over the other, which gives rise to conflict
of interest.
Importance of a Strategic Alliance

There was an era when strategic alliance was just another option
for the corporates, but today it is not just an option but a competitive
strategy for a company. The main reason behind the move is the
emergence of globalization. We can have customers from every
country. This has given rise to a new strategy in the business domain
called strategic alliance, which can be in the form of joint ventures.
The main intention behind it is to develop each other’s strength
and minimize weakness.
Another important reason is the emergence of IPR (intellectual

property rights), which has restricted companies from developing
their own technology and, by alliance, they can get the technology
with mutual benefit to both.
Unit 10: Implementing Strategic Technology Management
105
Types of Strategic Alliances
Notes
1. Coalition: Where partners group together to get global access
or to gain market. This kind of alliance gives each partner the ___________________
access to each other’s market and also it reduces the intense
___________________
competition between them so that each can gain from the
market. ___________________
Example: Airlines – they partner with international airlines ___________________

to gain access to the market and also to connect each last mile
___________________
for better connectivity and customer satisfaction.
2. Co-specialization: The partners welcome each other’s ___________________
specialty which complement each other and derive a new ___________________

process improvement/new product/technology for better
competitive advantage in the market. Example: Renault-Nissan ___________________
– Renault is a French company and Nissan is a Japanese ___________________
company, but both have collaborated to form alliance and
together they are creating cars. ___________________
3. Learning: Partners collaborate to learn from each other to

form better knowledge about the business or market. Example:
NUMMI: New United Motor Manufacturing, Inc. jointly owned
by General Motors and Toyota.
Coalition Consortia
Co-specialisation
Learning
Globally based
E.g. Airlines
E.g. GSM
Renault-Nissan
Scope of the Joint venture Joint venture

alliance for market entry for resource
exploitation
Typical in emerging E.g. Mining,
Country based
countries agriculture based,
oil and gas
Market Resources
Figure 10.1: International Strategic Alliance Matrix

Source: (Phillippe Lasserre, Global Strategic Management, third edition)
Framework for Strategic Alliance

Strategic alliance needs to be designed by keeping in mind the
frame given below, which will build a better alliance.
1. Strategic value: To define the scope of the alliance, create
the strategic objective, to understand the value creation
potential of the alliance.
2. Partners fit: We need to see if the partners are strategically
fit, capability fit, culturally fit, organizationally fit.
106
3. Negotiation and design: It includes operational scope,
Notes
interference and governance.
___________________ Sometimes alliance may not be only with firms, it can be with
___________________
countries having an alliance with firms.
___________________
For example:
___________________ What IBM received: It received the control board for IBM 5216
Daisy Wheel printer. Others include peripherals for banking
___________________ computers and retail house computers.
___________________ What Taiwan received: $3 million contract to develop the ASIC
___________________ chips, knowledge of strict R&D procedures and techniques.
___________________ Case Study: Japanese Alliance Strategy

___________________ It was barely a week ago when Honda and Yamaha announced a
___________________ strategic alliance for small scooters in Japan.
On Wednesday, Toyota and Suzuki said they were coming together

in a technological partnership. Some months earlier in May, Nissan
bailed out a beleaguered Mitsubishi which had its back to the wall
following a scandal on fudged mileage data.
This chain of events is unusual in a country whose key automotive

participants have generally been the exceptions in a rapid global
wave of consolidation. Surely, Osamu Suzuki, Chairman of Suzuki
Motor, is no stranger to alliances given his company’s first high-
profile outing with General Motors (GM) many years ago, which
was followed more recently by a disastrous teaming up with
Volkswagen (VW).
Likewise, Nissan needed a lifeline from Renault in 1999 to stay

afloat and the equity crossholding has worked like a charm since
then. One could, in fact, argue that it is the Japanese ally which
has grown stronger over the years and is pivotal to the alliance
today.
But then, these are the rare exceptions where the Japanese have
pretty much kept to themselves barring the occasional technological
alliances with western counterparts. This is equally true for
neighboring Korea where Hyundai and Kia have operated in tandem
without a fuss while SsangYong is owned by the Mahindras.
The prominent exception in Japan was Suzuki, which perhaps

realized that a small player like itself needed a stronger ally on
board. At one point, it was actually exploring the idea of roping in
GM to steer its India innings jointly at Maruti once the government
relinquished its stake. This may have well happened had GM not
changed course and acquired Daewoo, which had gone bankrupt.
107
Yet, this did not deter Suzuki from its intent of scouring for a
Notes
larger partner and this is when VW entered the picture in 2009.
Here was this formidable German carmaker which had made no
___________________
bones about its ambition to be the world’s top player by 2018. Its
comparatively smaller Japanese partner was a force to reckon with ___________________
in markets like India, which continued to elude VW.
___________________
The sky was clearly the limit except that the partners just could
___________________
not see eye-to-eye and it was a visibly relieved Osamu Suzuki who
welcomed the divorce and compared it to clearing a tiny bone from ___________________
his throat!
___________________
These are early days for Suzuki and Toyota but there are no two
___________________
ways about the fact that it is a significant initiative. The world’s
most powerful carmaker has only just set in motion to make ___________________
Daihatsu its wholly owned arm, which could be a key growth engine
___________________
for markets like India. Now, with Suzuki in tow, it will be interesting
to see how the script pans out. ___________________
Perhaps, an equity alliance cannot be ruled out either, though this

will mark a huge step for Toyota. Suzuki has not managed to
optimally leverage its past associations with either GM or VW. At
one point, it seemed as if it would tilt toward Fiat, given the
convergence in expertise of small cars but clearly it made sense to
opt for a much stronger partner. The common Japanese DNA
between the two will also make it relatively simpler to discuss a
host of issues.
In the case of Honda and Yamaha in two-wheelers, it is ironical

that two fierce rivals have actually kissed and made up though, in
all fairness, this is way too minuscule an initiative. It pertains to
a segment that is less than one percent globally, though there is no
telling if the scope of the alliance will be extended in the coming
years.
While Renault emerged the knight in shining armor for Nissan 17

years ago, it was now the turn of the latter to do something similar
for Mitsubishi. There are some interesting synergies that the duo
can work on in the ASEAN region as well as in engine and product
development.
Interestingly, Mitsubishi had explored the idea of a global alliance

with PSA Peugeot Citroen some years ago, which seemed to suggest
an encore of the successful Renault–Nissan marriage. However, the
talks did not throw up anything substantial and, years later, it was
a weaker Peugeot that needed Dongfeng Motor of China to infuse
equity and get back on its feet.
108
Honda’s car business has been chugging along without any alliances
Notes
and it is a moot point if the management will contemplate something
in the future. There is really no compelling reason to do so, especially
___________________
when the boat is not rocking yet but these are especially challenging
___________________ times for automakers.
___________________ It was the mega merger of Daimler and Chrysler that spurred the
consolidation wave across the world even while the marriage
___________________
collapsed like a pack of cards. VW has a dozen brands in its portfolio
___________________ ranging from Audi, Lamborghini, Porsche and Bugatti to Skoda,
Scania, MAN and Ducati.
___________________
Apart from Nissan, Renault has teamed up with Daimler while
___________________
Fiat Chrysler Automobiles recently reached out to GM, which was
___________________ not interested. Chinese automakers also have lofty goals, with Geely
buying out Volvo Cars while others like SAIC and Dongfeng have
___________________
strong roles in their alliances with GM and PSA respectively. The
___________________ Japanese probably believe that they just cannot be silent spectators
any longer.
Reference: It is a season of alliances for Japanese automakers |

Business Line. (n.d.). Retrieved September 4, 2017, from http://
www.thehindubusinessline.com/specials/auto-focus/japanese-
automakers-suzuki-honda/article9215988.ece
Joint Venture
A joint venture is a business entity which is created by agreement
between two or more parties. It is characterized by shared risk,
ownership, governance, etc.
There are certain elements of joint venture design which defines

the way a joint venture will work for the firms and these elements
are crucial for differentiating joint ventures from other type of
ventures.
The key elements of joint venture design are as follows:

1. number of parties involved,
2. The geography, product and the value chain system on which
the JV will operate,
3. The contribution of the parties,
4. The structure of JV,
5. The valuation of agreement and the ownership share of each
party,
6. Economic implication for both parties,
109
7. Governance and regulation
Notes
8. Skill hiring and HR activities, and
___________________
9. Exit agreement.
___________________
Steps for Joint Venture Strategy
___________________
1. First, we need to define the strategy for the future business.
___________________
2. To decide with the management whether a JV will be a right
vehicle for the business or, if no, what should be the move ___________________
forward approach?
___________________
3. If the joint venture is the right vehicle then we need to screen
___________________
the partner. Partners need to fulfil the requirements of the
JV. ___________________
4. Development of the JV deal agreement, which will culminate ___________________
into a contract.
___________________
5. Negotiating detailed terms of the agreements.
6. Creating the JV and planning to operationalize it.
7. Growth of the JV and exit.
Partner Selection Criteria

Selecting a partner is not an easy task for a JV to be formed. First
of all, JV needs intention, not only from the part of the stakeholders
but also from the side of the consumer, as a lot of preference is
involved in terms of technology, brand name, capital, language
barrier, etc.
One of the best ways to screen the JV partner is as follows:

1. First, we need to screen the perspective partners.
2. Then, shortlisting the partner by establishing a specific
selection criterion needs to be done.
Duration of an Alliance
Another aspect of alliance is how long they are expected to last and
that depends on the severity of the project, the priority set in it and
the stakeholders involved in it. for example, in a sub-contracting
agreement, even if there is a written agreement between the parties,
there will be a less extensive long-lasting relationship involved in
it to complete the joint ventures where the parties have extensive
relationship, which may go on for years.
The negotiation between parties also differs in both the

circumstances, joint venture needs more effort to develop, the
negotiation will take efforts.
110
Notes
Location: Domestic and International Alliance
Domestic alliance is more local in nature so the cost of having these
___________________
alliances are generally less. Domestic alliance helps in the
___________________ development of the local market, where the company can push the
product to their local market. The domestic alliance needs much
___________________ more local network understanding. The objective behind the domestic
___________________ alliance is always development of local dominance or competitiveness
in the local market.
___________________
International alliance generally means alliance between two market
___________________ players of different markets of different countries. The objective
___________________
generally is technology transfer and international market
penetration; this provides necessary resources for the companies to
___________________ work together.
___________________
Building Successful Strategic Alliances
___________________
To build a strategic alliance you need a proper partner who can
understand what’s the common objective behind the alliance and
how the alliance works; this happens only by mutual admiration of
each other’s respective strengths and competitiveness.
There will be differences and conflict between partners but if they
have a long-term vision and common strong goal, it will be easier
to manage the alliance. Renault–Nissan is one of the prime examples
of alliance.
It is always advisable to share the right information with the partner
in the alliance, especially information pertaining to the alliance
and long-term goals and objectives; this provides the way forward
for the alliance and better manages the objectives. That doesn’t
mean you need to trust the partner, but mutual sharing of
information regarding common alliance objective is very crucial.
This means if one partner has a huge network which can help the
other partner to improve its base, then the first partner should help
for the same.
Have a realistic agreement: This means that when the alliance
is done it is important for the partners to do a realistic understanding
of each other’s expectation, to come to the common purpose as
realistically as possible.
Culture: alliance needs to focus more on the culture, as culture
changes the way alliances are made.
Reasons for International Alliances

An extensive variety of reasons for international alliances has been
proposed. Bruce Kogut is a leading expert of global business, and
111
he has sought to bring consistency to the reasons for alliances. He
Notes
argued that they will be summarized into three large groups.
___________________
Organizational Learning
___________________
• Cost savings
___________________
• Strategic behavior
___________________
Organizational gaining knowledge of worldwide alliances ideally
takes place as corporations are trying to find knowledge in the ___________________
areas of products, techniques, or markets from their alliance
___________________
partners. The quantity of gaining knowledge of an alliance depends
on three elements: (1) the motive to study, (2) the receptivity to ___________________
new data, and (3) the transparency of the partnering company.
___________________
There are issues surrounding information from alliances that
managers must keep in mind as they circulate ahead. The technology ___________________
(product or process) is described by using its competitive importance
___________________
to the company(s) as well as its complexity. The more complex the
era, the more difficult it is to learn in an international alliance. As
a result, it is more likely that a firm will use subcontracting or
acquisition if the technique is too complicated.
Gaining knowledge in global alliances is also impacted by way of

corporations in the alliance having unique sets of capabilities,
particular corporate cultures, and different control patterns.
Mastering takes place as the people and teams within every firm
integrate their knowledge. The goal is to hold on to the best practices
as opposed to having every aspect to compete to hold its status quo.
As a result, the alliance structure and expected outcomes ought to
range in line with the type of gaining knowledge as desired.
Summary
Strategic alliances occur when two or more organizations join
together to pursue mutual benefits. Partners may provide the
strategic alliance with resources such as products, distribution
channels, manufacturing capability, project funding, capital
equipment, knowledge, expertise, or intellectual property. Often,
strategic alliances are formed to create a competitive advantage for
the partners in their respective markets.

1. Write a short note on joint venture.
2. List down the advantages of a strategic alliance.
3. What are the risks involved in a strategic alliance?
113
Unit 11 Notes
Product Design
___________________
___________________
___________________

\ Product Design Process
___________________
\ Considerations in Product Design and Process Development
___________________
Introduction ___________________
___________________
Designing a new product goes through a furnace of analytical method
and is predicated on a problem-fixing approach to enhance improve ___________________
the quality of life of the end user and his or her interaction with the
environment it deals with approximately problem-solving, about
visualizing the needs of the user and bringing a solution. Product
designers also work with other professionals along with engineers
and marketers. Product design has many fields of software including
medical devices, tableware, rings, sports and enjoyment, meals
renovation appliances, fixtures, and many others. It also takes into
consideration the manufacturing cost, the producing procedures and
the rules.
Product Design Flowchart

The product design flowchart includes various phases/steps that
are considered at various parts of the design so that at the end of
the product design and process development, they can all be included
in the feasibility report for top management.
Design strategy Interaction Design Interface Design
Define Ideate Ideate Ideate Ideate
Design literation
Product Reset (Pivot)
Figure 11.1. Product design flowchart

Source: https://zurb.com/word/design-process
114
As per the flowchart of design, the first stage starts with clear-cut
Notes
definition of intended strategy followed by ideation process, which
in common parlance, could be dubbed as “imaginative flight”.
___________________
Ideation practically leads to a germination of prototype or roadmap
___________________ of intended product or service.
___________________ There are three important general activities in product design:
___________________ 1. Product formulation
___________________ 2. Packaging development
___________________ 3. Processing development
___________________ Product formulation

___________________ Many products are made by combining raw materials in specific
proportions in a formulation, and research on the effects of various
___________________
formulations on product qualities is common in product design.
___________________
In systematic formulation, there are steps that include:
1. Set the product qualities required.
2. Find data for the raw material compositions, qualities and
costs.
Packaging development
Good packaging is like style. It’s a way of saying who you are
without having to speak. This makes the packaging design and
development process extremely crucial. Some of the biggest brands
are known to have received severe criticism for poor and inadequate
packaging.
One must consider the following points before getting into product
packaging:
• Project brief
• Get to know the product
• Know your target group
• Channel chosen to sell the product
• What is the competition doing?
• Is sustainability a point of consideration?
Process development
Process development is interwoven with product design. This division
of the process into its individual parts is the method used in either
analysing a current process for a new product (process analysis) or
for building a new process for a new product (process synthesis).
Unit 11: Product Design
115
The individual parts and then the connections between them are
Notes
studied to give the optimal overall process.
There are three aspects of studying processing: ___________________
1. Unit operations ___________________
2. Unit processes ___________________
3. Processing limits ___________________
The use of computers has led to a great deal of change in product ___________________
design and process development from the recipe testing of the past
___________________
to systematic design based on process engineering principles and
knowledge of physics and chemistry. The development steps are ___________________
common in all projects, but the relative amounts of time and effort
___________________
required for different steps may change considerably. Many products
are processed in more or less generic equipment so the emphasis in ___________________
development lies on the product. If process development is more
___________________
extensive, the logical sequence remains but the description of the
steps may change
Perceptual Mapping and Design

Perceptual maps analyze client view of an organization’s products
with rival’s products. It is a visual strategy for looking at client
view of various product or administrations: The process may include:
1. Screening Ideas
The reason for screening thoughts is to kill those thoughts that
don’t seem to have high potential thus evade the expenses brought
about at consequent stages. Utilizing gathering of individuals,
recommendations would be bolstered by designs, models and a
blueprint determination and judged against an arrangement of
criteria, for example, need to the organizations survival, part in
rounding out a current product/benefit, level of cover with existing
products and administrations, using existing procedures and
abilities, effect on general deals and benefits of the organization.
To have a superior assessment of thoughts, every one of the

measurements of the thoughts is scored on a 0–10 scale and each
measurement is appended weights according to these measurements.
The subsequent total score helps in choosing which thought to
advance and which thought ought to be dropped.
2. Feasibility Study
Introductory screening of the thoughts is intended to stop the
thoughts, which are unsatisfactory for assist contemplations.
116
Practicality think about comprises of a market investigation, a
Notes
financial examination, and specialized and key investigation.
___________________ Advertising takes the thoughts that are created, and the client
___________________
needs that are recognized from the primary phase of the plan
procedure and creates elective product ideas. The market
___________________ investigation through client examination and market study surveys
whether there is an enough interest for the proposed product to put
___________________
resources into growing further.
___________________
On the off chance that the adequate request exists, at that point
___________________ there is a monetary investigation that goes for setting up the
generation and development expenses and contrasts them and
___________________
evaluated deals volume. The benefit capability of the product can
___________________ be considered utilizing quantitative strategies, for example, money
saving advantage investigation, choice hypothesis, net present
___________________
esteem (NPV) or interior rate of return (IRR).
___________________
3. Basic Design
Design engineers take general execution particulars and make an
interpretation of them in to specialized determinations. The
procedure of basic design configuration includes building a model,
testing the model, reexamining the outline and retesting until the
point that a suitable plan is resolved. It is further developed while
keeping into the account of physical appearance of a product, its
shape, measure, shading, styling and so on. Plan rearrangements
endeavor to decrease the quantity of parts, subassemblies, and
choices into a product.
4. Pilot Testing
In the initial phase of product and process development, models are
fabricated and tried after a few emphases, pilot keep running of the
assembling procedure is directed. Changes are made as required
before finishing the plan. Apart from consistently testing the product
for execution, testing is likewise completed to check the adequacy
of the product in the characterized market and consumer group.
This helps company understand that whether client will acknowledge
and purchase this product in the market. The last outline comprises
of point by point illustrations and details for the new product. The
going with process designs are functional guidelines for make
including essential hardware’s and tooling, segment sources sets of
expectations, work directions and Programs for PC helped machines.
5. New Product Launch

Propelling another product and service includes sagacious thought
process. The procedure has been refined and repaired; however, it
117
still can’t seem to work at a managed level of production. It begins
Notes
at a generally low level of volume and as the company creates trust
in its capacities to execute production reliably and marketing
___________________
capacities to offer the product, the volume witness incremental
changes. Propelling the new product or administration includes co- ___________________
planning the production network and taking off promoting plans.
___________________
Promoting and generation will work in a co-facilitated path amid
this stage. ___________________
___________________
Design Process
___________________
The levels of the input variables that are possible in the production
are identified and used in the design experimentation. The level of ___________________
a raw material (or ingredient) is the percentage in the formulation.
___________________
Raw materials and ingredients are sometimes differentiated. Raw
materials as the primary products from agricultural and marine ___________________
sources, and ingredients as processed material. Raw materials
___________________
include both, and mean all materials used in the process. The levels
of processing variables are related to physical, chemical and
manufacturing measurements and also the achievable and necessary
limits set by equipment and environmental conditions. There are
limits set on the input variables by the needs of the product,
processing and costs; there may be a lower level and a higher level,
or just one of these. Identifying these levels early in the design
reduces the time spent on experimentation.
The product qualities wanted by the consumer are identified and

quantified. Usually, a range is discovered within which the product
is acceptable. This sets the range within which the quality has to
be controlled. Again, there are usually low and high levels identified
for the product qualities. The yield of product necessary to give
acceptable costs is identified early in the design to direct the raw
material and process experimentation.
The design is a continuous study of the relationships between the

input variables and the product qualities, so that the final product
prototype is the optimum product under the conditions of the process.
The two main parts of product design are making and testing the
product prototypes, and the two important groups of people are the
designers (often called developers in the industry) and the
consumers. The prototype products are tested under the standards
set by the product design specifications, so that product testing
needs to be organised along with the product design and the
processing experiments. Regularly there is consumer input, to
confirm that the product is developing characteristics as identified
in the product concept and not developing characteristics which are
neither wanted nor needed by the consumer.
118
The product design ends with a final product prototype and a
Notes
feasibility report that includes:
___________________ • Defining the feasibility of the product for technical production,
the market and the company.
___________________
• Anticipating the technical and market success.
___________________
• Assessing the financial feasibility.
___________________
• Predicting associated impacts on the company and the market
___________________ of various levels of product success.
___________________
Considerations in Product Design and Process
___________________
Development
___________________
Costs
___________________
Expenses give a fundamental foundation to controlling the design;
___________________ they should be observed all through development to guarantee they
are inside the objective range. Toward the start of the design, the
organization’s cost structure and the objective scope of expenses for
the new item required to be concurred by all included. The
fundamental expenses for creating and appropriating the item can
be subdivided into assembling costs, circulation and advertising
expenses and general organization costs. A basic breakup of costs
is appeared in Table 11.1.
Table 11.1: Basic costs for producing and distributing a

product
Manufacturing costs Raw materials cost

Direct processing costs
Fixed costs
Plant overhead costs
Distribution and marketing costs Physical distribution costs

Market channel costs
Promotion costs
Sales and selling costs
General company costs Administration costs

Development costs
Financing costs
Optimization
The point in consideration is to streamline the general product
quality by deciding the levels of the input factors, which will give
the most ideal product quality. The issue is that regularly while
119
improving one product quality, another product quality is not as
Notes
much as ideal. So, it is an instance of setting the relative significance
of product characteristics, and for the most critical product
___________________
characteristics examining the plan and handling factors to locate
the ideal situation. ___________________
In any case, the limits that are worthy over all the product ___________________
characteristics should be known so that amid the enhancing tests
___________________
none of the other product characteristics wind up unsuitable.
___________________
Scale -up
Scale-up
___________________
Scale-up (or increase) of both the production and the Marketing is
___________________
the last phase of the product plan and process development. The
production scale-up is the in-plant test to check that the product ___________________
can be made at the desired quality and amount required, and the
marketing scale-up is a buyer test to confirm that the objective ___________________
buyers will purchase the product also, what promoting procedure ___________________
will energize this purchasing. The point of the handling scale-up is
to decide the ideal production process for product quality, product
yield, process control and expenses.
Information of the interrelationship of the preparing factors and

the product characteristics can decrease these disappointments.
Evolutionary Operation (EVOP) are utilized as a part of advancing
the process factors, particularly if utilizing the production line in
scale-up. EVOP is a method for plant activity that tests little changes
in the process factors in a basic factorial outline. It persistently
changes the procedure factors until the point when ideal product
characteristics are achieved.
Product testing
Product testing is a basic piece of the product outline and process
improvement as it serves as a guide to accomplish the final product
prototype. It is vital that the product is tried at all phases amid its
outline for technical consistence, adequacy to the consumer, and
consistence with cost imperatives.
Technical testing
Technical testing out changes an extraordinary arrangement
depending on the sort of product, the testing focuses accessible,
environmental, processing and legal requirements. The evaluations
can be compound, mechanical physical or/and microbiological. The
technical testing for consumer is specifically related with the
consumers’ product profile and fitting technical test techniques are
looked with the product attributes perceived as basic to the customer.
Technical testing is additionally required to confirm that any rules
120
are being met, that consumer assurance is guaranteed. Technical
Notes
testing is created to screen the product particulars and record should
be taken of the precision and dependability of the outcomes.
___________________
___________________ Sensory evaluation

___________________ Sensory evaluation can be performed by method for proficient
sensory boards or by method for clients. Verifiably in product plan,
___________________
the master board decides the varieties amongst models. Consumer
___________________ boards are utilized for looking for in-force data about the product’s
attributes and employments. The expectation is to accomplish critical
___________________ data as conceivable.
___________________
Product and process specification
___________________
Final specification incorporates the raw material particulars, the
___________________ product plan, the process stream outline, the processing conditions
in the individual unit tasks, a fundamental - the testing of the
___________________
middle of the road and the last products, and the last product
characteristics.
Summary
Product design and process development is an important part of the
product development improvement venture, combining product,
method, market and consumer research. These multi-disciplinary
activities are completely interconnected and shape a tremendously
creative part of the task. Clients are a quintessential part of product
design and hence, remain in proximity for testing of the prototype
merchandise. Three test factors in product design are consumer
acceptability, technical feasibility and charges; those must be
considered at all degrees of the layout. Product design completes
with the exercise of defining the product specifications and the way
for the commercialization.

1. Draw a process flow chart for product design.
2. Enunciate different operational phases in the product design
process.
3. Outline an experimental plan to design the process to give the
desired product qualities.
4. What do you mean by “feasibility report”? Write a feasibility
report of an innovative online product design.
121
Unit 12 Notes
Managing Innovative Systems

___________________
___________________
___________________

\ Evolution of Innovation System
___________________
\ Types of Innovation Processes
\ Types of Innovation Management ___________________
___________________
Introduction ___________________
Innovation in control standards and procedures can create long- ___________________

lasting advantages and convey dramatic shifts in function. Over
the past one hundred years, process innovation, more than any
type of innovation, has allowed agencies to push new performance
thresholds. Maximum agencies have a formal methodology for
product innovation, and plenty have R&D agencies that discover
the frontiers of science. Each organization in the world has, in
latest years, labored systematically to reinvent its commercial
enterprise tactics for the sake of pace and performance.
An innovation technique “connects upstream idea valuation to

downstream manufacturing and launch to market”. As soon as a
properly described innovation method that aligns with enterprise
dreams is in place, the subsequent step will entail managing it
efficiently. Like any enterprise feature, innovation can be controlled.
This discipline of handling the innovation system harnesses creative

thoughts and makes use of them to build a steady pipeline of
improvements, which are dependable, repeatable, regular, and
profitable.
Innovation management programs, for one of a kind group, will

range substantially. For instance, a rising commercial enterprise is
in all likelihood to be that specialized in one principal product,
unlike a mature employer that is seeking to improve its role within
the marketplace or discover new, disruptive improvements. Rapidly
growing companies will be searching out ways to extend their core
companies as determining between growing new innovations for
the future and revitalizing their present offerings may be
problematic.
122
In a turbulent and rapidly changing economic system, groups must
Notes
prepare themselves to innovate on a continuous basis, otherwise
their survival is critically threatened. Innovation management allows
___________________
to address the challenges that stem from the innovation procedure,
___________________ broadly, the benefits of dealing with innovation consist of the
subsequent:
___________________
• Improves efficiency.
___________________
• Guarantees long-term success.
___________________
• Increases market success.
___________________
• Decreases costs.
___________________
• Reduces processing time.
___________________
• Initiates the innovation process.
___________________
• Reduces risk of becoming obsolete due to competitors.
___________________ • Improves chances of survival due to better solutions spawned
from newer technologies.
Evolution of Innovation System Diagram
Generation Context Innovation approach Disadvantages of approach
Post WWII- • Society in favour of R&D Technology push • No attention to entire

mid-1960s activities – > funding from process or market place
government • No strategic goals or
• Organisations were focus
technology-oriented • on commercial aspects
• No project management
practices
Mid-1960s- • Less economic growth Market pull • No long-term innovation

late 1970s than in first generation processes
• Organisations adopted • Focus on incremental
growth strategies in order innovation
to obtain economics of
scale and diversification
Late 1970- • Period defined by two oil Market pull and • Focus on product and
early 1990s crises, inflation and technology push (due process innovation
unemployment stimulation of innovations instead
• Organisations focus on in networks and feed- • Focus on creation of
cost control and reduction, back from market needs) innovation instead of
and flexibility exploitation
Early 1990s- • Globalisation Innovation in alliances • Too complex innovation

early 2000s • Technology gains strategic process
importance • Fundamental research is
• Organisations focus on core endangered
Figure 12.1. Four innovation generations

Source: The Evolution of Innovation Management Towards
Contextual Innovation (2008)
Innovation may be incremental, radical, architectural, modular, and

many others. In incremental innovation, a business enterprise
Unit 12: Managing Innovative Systems
123
improves or upgrades the present product, procedure, or provider.
Notes
In radical innovation, an organization replaces its present business
model with an entirely new one. In architectural innovation, the
___________________
core layout principles are bolstered; however, the interactions among
the core components exchange. In modular innovation, the ___________________
architecture stays unchanged; however, the modules are changed.
___________________
Ten Types of Innovation Processes ___________________
Network Process Product system Channel Customer ___________________

Connections Signature or Complimentary How your offerings engagement
with others to superior methods products and are delivered to Distinctive ___________________
create value for doing your services customers and interactions
work users your foster
___________________
___________________
Profit Network Structure Process Product Product Service Channel Brand Customer
Model perfor- system engage-
mance ment
___________________
Configuration Offering Experience ___________________
Profit Model Structure Product Service Brand

The way in which Alignment performance Support and Representation
you make money of your talent Distinguishing enhancements of your offerings
and assets features and that surround and business
funtionality your offerings
Figure 12.2. Types of innovation processes
Companies may be centralized, decentralized, organic, mechanistic,

etc. In centralized organizations, many importants elections are
made at higher ranges of the hierarchy, while in decentralized
companies, decisions are made and problems are solved at lower
stages by way of personnel who’ rein the direction of the hassle in
question. Two organic systems are decentralized and flexible, while
mechanic systems are centralized and highly formalized (like a
bureaucracy). Innovation is lesser in practical systems than in
divisional structures.
For organizations with workplaces across the world, a decentralized

method will work better as they have to deal with extraordinary
markets, prison structures, etc. Google and 3Mare accurate examples
of this model. Studies display that for open innovation (OI), which
uses each internal and external thoughts, an informal organizational
shape is higher. For example, in open innovation fashions,
organizations maintain strong relationships with external events
throughout there search, improvement, and commercialization
phases of innovation.
The market can be excessive-tech, FMCG, provider-pushed and so

forth. The focus vicinity (new markets, new makes use of, the source
of ideas, line extensions, product improvement, etc.) for a consumer-
124
product agency or a commercial enterprise-product one or the
Notes
excellent practices for product improvement in low-tech and high-
tech companies will be distinct.
___________________
___________________
The country wide culture can be understood by means of
characterizing them primarily based on Hofstede’s way of life
___________________ dimensions. Cultural values will determine, for example, studies
have shown that ecu international locations, which are greater
___________________
individualistic and feature low electricity distance and uncertainty
___________________ avoidance are extra progressive. Organizational culture (values,
ideals, assumptions, myths, norms, and desires) has a large effect
___________________
on the creativity and innovation. For instance, an adaptive culture
___________________ will inspire hazard-taking, rapid decision making, initiative,
willingness to experiment, and innovation. Also, flat groups have
___________________
an extra egalitarian structure in which all employees share the
___________________ same duties and strength. In hierarchical businesses, there are a
couple of management levels and properly described roles and
___________________
compliance are expected.
Types of Innovation Management

A process innovation is the implementation of a brand new or
significantly stepped-forward production or transport approach. This
includes tremendous changes in techniques, device and/or software.
(OECD, 2005) in contrast to incremental or non-stop improvements.
As a way to most possibly generate little price, method improvements
are normally expected to deliver game-changing shifts. Delivery,
manufacturing, and guide offerings are ripe for method innovation.
Examples of procedure innovation could be decreasing the price
consistent with carrier supplied or the time taken and increasing
the number of services or products supplied within a particular
time. Henry Ford’s assembly line innovation is a ground-breaking
instance. Fashion leader Zara is another famous example of a success
procedure innovation.
A product innovation is the advent of a great provider that is new

or considerably stepped forward with respect to its traits or supposed
makes use of. This includes massive improvements in technical
specifications, additives, and materials, incorporated software,
consumer-friendliness or other functional traits. (OECD, 2005)
locating new products, adding new functions or new uses of a product
are examples of product innovation. Apple’s iPhone, wrinkle-resistant
fabrics, Amazon’s Kindle, mountain motorcycle suspensions, intense-
movement cameras, which include GoPro, wearable computer
systems, and dual-snatch transmissions are easily recognizable
examples.
125
A marketing innovation is the implementation of a brand-new
Notes
advertising approach related to considerable changes in product
layout or packaging, product placement, product promoting or pricing
___________________
(OECD, 2005). Research suggests that it is a consequence of
competitiveness; to increase sales, it will deal with purchaser desires ___________________
better, open new markets, and discover new methods for positioning.
___________________
In sustaining improvements, incumbents win. In disruptive
improvements, new entrants win. Check out L’Oréal’s makeup ___________________
Genius app and IKEA’s Catalogue app to recognize the concept.
___________________
Organizational innovation leads to the implementation of a brand-
___________________
new organizational technique within the venture’s commercial
enterprise practices, place of business agency or outside members ___________________
of the family (respectable magazine of the EU). The organizational
___________________
changes can be imposing new ways to create public fee and could
result from letting go essential assumptions and locating constant ___________________
predictors of achievement.
___________________
Managing Innovation
To effect change in an effort to generate consumer value, a nicely-
designed innovation framework needs to be in place. Groups need
innovation control methods to reply to outside or inner opportunities
and leverage its creativity. Innovation investment is a key aspect
of a company’s price range.
Innovation management is not simply R&D. It channelizes

innovative inputs from people at some stage in an organization.
Massive corporations often have many innovation fashions or use a
level gate manner. In no way is it smooth to implement because of
the organizational and monetary roadblocks. Thinking about it, there
are so many extraordinary varieties of improvements, there is no
one-size-fits-all control technique.
Once organizations analyze their commercial enterprise and identify

innovation challenges based totally on insights, they can arrive at
standards for idea choice. Unlocking hidden cost propositions inside
your enterprise and developing differentiation can be rewarding.
Getting your personnel to discover viable and thrilling alternatives
is what internal innovation is all about. Inner innovation facilitates
lessening employee turnover and streamlines operations.
Employees throughout the organization can provide you with novel

thoughts to help higher income or lower fees, enhance degrees of
worker engagement, productiveness, and collaboration, raise patron
reports, deliver operational efficiencies, or deal with a social purpose.
Corporations are trying to integrate idea era as a critical part of
normal sports.
126
Businesses can pressure internal innovation through dedicated
Notes
innovation teams, workshops, innovation outposts, hackathons, and
in-house accelerators.
___________________
___________________
Externally sourced innovation can be inside the form of incubators,
partnerships, accomplice-led mergers and acquisitions, patron crowd
___________________ sourcing, social listening, and accelerators.
___________________
Case Study
___________________
March was a good month for Google. Its market capitalization
___________________ breached a record high $260 billion. Since its IPO in 2004, its shares
___________________
have soared over 900%. The company’s success stems from its
continuous innovation and its extraordinary management practices.
___________________ Laszlo Bock, Senior Vice President of Google’s People Operations,
talked to me on Thursday on the side-lines of The Economist’s
___________________
Innovation Forum at UC Berkeley about Google’s innovation secrets.
___________________
Google has been keeping the pipeline of innovation going by tapping
its employees and letting ideas percolate up, Bock said.
The company has a relatively small group of employees—more than

30,000 workers (excluding 20,000 it gained when acquiring Motorola
Mobility). Google is smaller than Exxon Mobil (76,900 employees)
and Apple (72,800). It is trying to create an arena where people can
be brought together in surprising ways to innovate.
“We try to have as many channels for expression as we can,

recognizing that different people, and different ideas, will percolate
up in different ways, “ Bock said.
The channels include:
Google Cafés, which are designed to encourage interactions between

employees within and across teams and to spark conversation about
work as well as play.
Direct emails to any of the company’s leaders.
Google Moderator, an innovation management tool designed by

Google’s engineers. The simple idea behind it is that when people
have tech talks or company-wide meetings, it lets anyone ask a
question and then people can vote up the questions that they’d like
answered. Through Moderator, people can discover existing ideas,
questions or suggestions, vote for ideas, questions or suggestions
and see the aggregate votes to date, create a new series asking for
ideas organized by topic, event or meeting. Google Moderator itself
is one of Google’s infamous “20 percent” projects. By allowing its
engineers to spend 20% of their work week on projects that interest
them, Google is able to tap into the many talents of its employees.
127
TGIF: Google’s weekly all-hands meetings, where employees ask
Notes
questions directly to the company’s top leaders and other execs
about any number of company issues.
___________________
Google Universal Ticketing Systems, or ‘GUTS’, which is a way to ___________________
file issues about anything, and is then reviewed for patterns or
problems. ___________________
‘FixIts’, 24-hour sprints where Googlers drop everything and focus ___________________
100 percent of their energy on solving a specific problem.
___________________
Internal innovation reviews, which are formal meetings where ___________________
executives present product ideas through their divisions to the top
executives and a wide range of surveys. ___________________
“We regularly survey employees about their managers, and then ___________________
use that information to publicly recognize the best managers and ___________________
enlist them as teachers and role models for the next year. The
worst managers receive intense coaching and support, which helps ___________________
75 percent of them get better within a quarter.”
Bock mentioned a survey called ‘Googlegeist, ’ which solicits feedback

on hundreds of issues and then enlists volunteer employee teams
across the entire company to solve the biggest problems.
“Personally, I believe this culture is an insight about the human

condition. People look for meaning in their work. People want to
know what’s happening in their environment. People want to have
some ability to shape that environment, “ he said. As a result, Bock
said, Google has cultivated a creative and passionate workforce
that holds the key to the company’s innovation.
Any company can benefit from learning how to better attract and
manage innovators, foster engagement, and ultimately lead to
success.
The greatest innovations are the ones we take for granted, like
light bulbs, refrigeration, and penicillin. But in a world where the
miraculous very quickly becomes commonplace, how can a company,
especially one as big as Google, maintain a spirit of innovation year
after year?
Nurturing a culture that allows for innovation is the key. As we’ve

grown to over 26,000 employees in more than 60 offices, we’ve worked
hard to maintain the unique spirit that characterized Google way
back when I joined as employee #16.
At that time, I was Head of Marketing (a group of one), and over

the past decade, I’ve been lucky enough to work on a wide range of
products. Some were big wins, others weren’t. Although much has
128
changed through the years, I believe our commitment to innovation
Notes
and risk has remained constant.
___________________ What’s different is that even as we dream up what’s next, we face
___________________
the classic innovator’s dilemma: should we invest in brand new
products, or should we improve existing ones? We believe in doing
___________________ both and learning while we do it. Here are eight principles of
innovation we’ve picked up along the way to guide us as we go.
___________________
As we’ve grown to over 26,000 employees in more than 60 offices,
___________________
we’ve worked hard to maintain the unique spirit that characterized
___________________ Google way back when I joined as employee #16.
___________________ Have a mission that matters
___________________
Work can be more than a job when it stands for something you care
___________________ about. Google’s mission is to ‘organize the world’s information and
make it universally accessible and useful.’ We use this simple
___________________
statement to guide all of our decisions. When we start work in a
new area, it’s often because we see an important issue that hasn’t
been solved and we’re confident that technology can make a
difference. For example, Gmail was created to address the need for
more web email functionality, great search and more storage.
Our mission is one that has the potential to touch many lives, and
we make sure that all our employees feel connected to it and
empowered to help achieve it. In times of crisis, they have helped
by organizing life-saving information and making it readily available.
The dedicated Googlers who launched our Person Finder tool (to
learn more see Missions that Matter) within two hours of the
earthquake and tsunami in Japan this March are a wonderful recent
example of that commitment.
Think big but start small

No matter how ambitious the plan, you have to roll up your sleeves
and start somewhere. Google Books, which has brought the content
of millions of books online, was an idea that our founder, Larry
Page, had for a long time. People thought it was too crazy even to
try, but he went ahead and bought a scanner and hooked it up in
his office. He began scanning pages, timed how long it took with a
metronome, ran the numbers and realized it would be possible to
bring the world’s books online. Today, our Book Search index
contains over 10 million books.
Similarly, AdSense, which delivers contextual ads to websites,

started when one engineer put ads in Gmail. We realized that with
more sophisticated technology we could do an even better job by
devoting additional resources to this tiny project. Today, AdSense
129
ads reach 80 percent of global internet users – it is the world’s
Notes
largest ad network – and we have hundreds of thousands of
publishers worldwide.
___________________
Strive for continual innovation, not instant perfection ___________________
The best part of working on the web? We get do-overs. Lots of them. ___________________
The first version of AdWords, released in 1999, wasn’t very successful
___________________
– almost no one clicked on the ads. Not many people remember that
because we kept iterating and eventually reached the model we ___________________
have today. And we’re still improving it; every year we run tens of
thousands of search and ads quality experiments, and over the past ___________________
year we’ve launched over a dozen new formats. Some products we ___________________
update every day.
___________________
Our iterative process often teaches us invaluable lessons. Watching
users ‘in the wild’ as they use our products is the best way to find ___________________
out what works, then we can act on that feedback. It’s much better ___________________
to learn these things early and be able to respond than to go too far
down the wrong path.
Iterating has served us well. We weren’t first to Search, but we

were able to make progress in the market by working quickly,
learning faster and taking our next steps based on data.
Look for ideas everywhere

As the leader of our Ads products, I want to hear ideas from everyone
– and that includes our partners, advertisers and all of the people
on my team. I also want to be a part of the conversations Googlers
are having in the hallways.
Several years ago, we took this quite literally and posted an ideas
board on a wall at Google’s headquarters in Mountain View. On a
Friday night, an engineer went to the board and wrote down the
details of a convoluted problem we had with our ads system. A
group of Googlers lacking exciting plans for the evening began re-
writing the algorithm within hours and had solved the problem by
Tuesday.
Some of the best ideas at Google are sparked just like that – when
small groups of Googlers take a break on a random afternoon and
start talking about things that excite them. The Google Art Project,
which brought thousands of museums work online, and successful
AdWords features like Automated Rules, are great examples of
projects that started out in our ‘micro kitchens.’ This is why we
make sure Google is stocked with plenty of snacks at all times.
130
Share everything
Notes
Our employees know pretty much everything that’s going on and
___________________ why decisions are made. Every quarter, we share the entire Board
___________________ Letter with all 26, 000 employees, and we present the same slides
presented to the Board of Directors in a company-wide meeting.
___________________
By sharing everything, you encourage the discussion, exchange and
___________________ re-interpretation of ideas, which can lead to unexpected and
___________________ innovative outcomes. We try to facilitate this by working in small,
crowded teams in open cube arrangements, rather than individual
___________________ offices.
___________________ When someone has an idea or needs input on a decision, they can
___________________
just look up and say, ‘Hey…’ to the person sitting next to them.
Maybe that cubemate will have something to contribute as well.
___________________ The idea for language translation in Google Talk (our Gmail chat
client) came out of conversations between the Google Talk and Google
___________________
Translate teams when they happened to be working near one
another.
Spark with imagination, fuel with data

In our fast-evolving market, it’s hard for people to know, or even
imagine, what they want. That’s why we recruit people who believe
the impossible can become a reality. One example is Sebastian Thrun
who, along with his team, is building technology for driverless cars
to reduce the number of lives lost to roadside accidents each year.
These cars, still in development, have logged 140, 000 hands-free
miles driving down San Francisco’s famously twisty Lombard Street,
across the Golden Gate Bridge and up the Pacific Coast Highway
without a single accident.
We try to encourage this type of blue-sky thinking through ‘20

percent time’ – a full day a week during which engineers can work
on whatever they want. Looking back at our launch calendar over
a recent six-month period, we found that many products started life
in employees’ 20 percent time.
What begins with intuition is fueled by insights. If you’re lucky,

these reinforce one another. For a while the number of Google search
results displayed on a page was 10 simply because our founders
thought that was the best number. We eventually did a test, asking
users, ‘Would you like 10, 20 or 30 search results on one page?’
They unanimously said they wanted 30. But 10 results did far better
in actual user tests, because the page loaded faster. It turns out
that providing 30 results was 20 percent slower than providing 10,
and what users really wanted was speed. That’s the beautiful thing
about data – it can either back up your instincts or prove them
131
totally wrong.
Notes
Be a platform
___________________
There is so much awe-inspiring innovation being driven by people
___________________
all over the globe. That’s why we believe so strongly in the power
of open technologies. They enable anyone, anywhere, to apply their ___________________
unique skills, perspectives and passions to the creation of new
___________________
products and features on top of our platforms.
___________________
This openness helps to move the needle forward for everyone
involved. Google Earth, for example, allows developers to build ___________________
‘layers’ on top of our maps and share them with the world. One
___________________
user created a layer that uses animations of real-time sensor data
to illustrate what might happen if sea levels rose from one to 100 ___________________
meters. Another famous example of open technology is our mobile
platform, Android. There are currently over 310 devices on the ___________________
market built on the Android OS, and close to half a million Android ___________________
developers outside the company who enjoy the support of Google’s
extensive resources. These independent developers are responsible
for most of the 200, 000 apps in the Android marketplace.
Google is known for YouTube, not Google Video Player. The thing
is, people remember your hits more than your misses. It’s okay to
fail as long as you learn from your mistakes and correct them fast.
Trust me, we’ve failed plenty of times. Knowing that it’s okay to fail
can free you up to take risks. And the tech industry is so dynamic
that the moment you stop taking risks is the moment you get left
behind.
Two of the first projects I worked on at Google, AdSense and Google

Answers, were both uncharted territory for the company. While
AdSense grew to be a multi-billion-dollar business, Google Answers
(which let users post questions and pay an expert for the answer)
was retired after four years. We learned a lot in that time, and we
were able to apply the knowledge we had gathered to the
development of future products. If we’d been afraid to fail, we never
would have tried Google Answers or AdSense, and missed an
opportunity with each one.
Our growing Google workforce comes to us from all over the world,
bringing with them vastly different experiences and backgrounds.
A set of strong common principles for a company makes it possible
for all its employees to work as one and move forward together. We
just need to continue to say ‘yes’ and resist a culture of ‘no’, accept
the inevitability of failures, and continue iterating until we get
things right.
132
As it says on our homepage, ‘I’m feeling lucky.’ That’s certainly how
Notes
I feel coming to work every day, and something I never want to
___________________
take for granted.
___________________ Questions for Discussion

___________________ 1. Explain the factors that contributed to Google’s success in
___________________
managing innovation.
2. How is Google able to manage a culture of innovators?
___________________
___________________
___________________
___________________
___________________
___________________
www.cce.upes.ac.in
ISBN: 978-81-945077-9-6
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UPES

CENTRE FOR CONTINUING EDUCATION

SLM Development Team

Mr. Tarun Batra Mr. Rahul Sharma Mr. Shantanu Trivedi

Course Code: MB403D

Version: July 2018

Unit 1 Dynamics of Technology—Evolution, Stages and Categories .......................... 1

Unit 2 Strategic Management of Technology and Innovation ..................................... 7

Unit 3 Dynamics of Technology—Theories and Models ............................................. 39

Unit 4 Strategic Agility: Dynamics of Information Technology and Structure ....... 47

Unit 5 Dynamics of Production Technologies and its Impact on Business .............. 55

Unit 6 Case Study I ....................................................................................................... 59

Unit 7 Case Study II ...................................................................................................... 65

Unit 8 Dynamics of Technology: Evolution, Stages and Categories ......................... 67

Unit 9 Technology and Business Environment ........................................................... 75

Unit 10 Implementing Strategic Technology Management ........................................ 103

Unit 11 Product Design.................................................................................................. 113

Unit 12 Managing Innovative Systems ........................................................................ 121

Learning Objectives: ___________________

Innovation is going up against an inexorably focal and deciding

___________________ It ought to be underscored that embracing advances that give

Dynamics of Technological Cycles: Evolution

Innovation from 1900 to 1945

Types and Forms of Technology

Technology and Cost and Quality

Technology and Scale Effects

Questions for Discussion

Strategic Management of TTechnology

and Innovation ___________________

Learning Objectives: ___________________

For example, some of these technologies and associated industries

Technology is found to be equally important in both emerging and

The process of innovation

An innovation could be the output of a single or many inventions

Figure 2.1. The Development of Technology: From Knowledge Creation to Diffusion

One of the critical challenges in any innovation is its ultimate

The first patent related to printing was awarded in 1940 to Chester

MP3, which was meant to compress audio files in software, was

___________________ Innovation and its profitability

The value created by the innovators is shared between different

This has been witnessed in many product categories, for example,

Innovators Suppliers ___________________

NutraSweet made by Searle is also a huge profit-making brand of

How an innovator can appropriate maximum from the innovation

Intellectual Property Right (IPR)

___________________ Patent The use, manufacture or the sale of inventions.

Patents A technical 20 years Annual free for Before

Source: Obtained from google.com on 4 June 2018

Although patent is a significant step in protecting novelty, its main

Some of the companies have set forward remarkable examples in

When Toyota implemented the total quality principles created a

___________________ Technology Complexity

Financial Customer service

Figure 2.4. Complementary resources

The moment a company wants to form an alliance with another ___________________

Protecting Innovation – The Conundrum?

___________________ Process Innovations

Notes: These data show the percentage of companies reporting that

Source: W.M. Cohen, R.R. Nelson, and J P. Walsh, “Protecting Their

Patents product and process, both have a history to be imitated in ___________________

Table 2.4: Why do companies patent?

Source: W. M. Cohen, R. R. Nelson, and J. P. Walsh, “protecting Their

Licensing Outsourcing Strategic Joint Internal