1、,Technology-based Industries & the Management of Innovation,Competitive advantage in technology-intensive Industries Appropriating the returns to innovation Strategies to exploit innovation Alternative approaches Timing: to lead or to follow? Managing risk Competing for standards Implementing techno
2、logy strategy The conditions for creativity From invention to innovation,OUTLINE,The Development of Technology: From Knowledge Generation to Diffusion,Basic Knowledge,Invention,Innovation,Diffusion,IMITATION,ADOPTION,Supply side,Demand side,The Development of Technology: Lags Between Knowledge Gener
3、ation and Commercialization,BASIC FIRST PRODUCT IMITATIONKNOWLEDGE PATENTS LAUNCH Xerography late 19th and 1940 1958 1974 early 20th centuries Jet Engines 17th- early 1930 1957 195920th centuries Fuzzy logic 1960s 1981 1987 1988 controllers MP3 players Early 1990s 1994 1997 1999,Appropriation of Val
4、ue:- How are the Benefits from Innovation Distributed?,Customers,Suppliers,Imitators and other “followers”,Innovator,The Profitability of Innovation,Legal protectionComplementary resourcesImitability of the technology Lead time,Profits from Innovation,Value of the innovation,Innovators ability to ap
5、propriate the value of the innovation,Legal Protection of Intellectual Property,Patents exclusive rights to a new product, process, substance or design. Copyrights exclusive rights to artistic, dramatic, and musical works. Trademarks exclusive rights to words, symbols or other marks to distinguish g
6、oods and services; trademarks are registered with the Patent Office. Trade Secrets protection of chemical formulae, recipes, and industrial processes.,Also, private contracts between firms and between a firm and itsemployees can restrict the transfer of technology and know how.,Complementary Resourc
7、es,Bargaining power of owners of complementary resources depends upon whether complementary resources are generic or specialized.,Manufacturing,Distribution,Service,Complementary technologies,Other,Other,Marketing,Finance,Core technological know-how,Lead Time,If rivals can imitatetime lag is the maj
8、or advantage of the innovator. But maintaining lead-time advantage requires continuous innovation Lead time is reinforced by learning effects,U.S. Managers Perceptions of the Effectiveness of Different Mechanisms for Protecting Innovation,Processes ProductsPatents to prevent duplication 3.52 4.33Pat
9、ents to secure royalty income 3.31 3.75Secrecy 4.31 3.57 Lead time 5.11 5.41Moving quickly down the learning 5.02 5.09curve Sales or service efforts 4.55 5.591 = not at all effective 7 = very effective,Source: Levin, Klevorick, Nelson & Winter. Brookings Papers on Economic Activity, 1987.,Risk & Ret
10、urn,CompetingResources,Examples,Licensing,Outsourcing certain functions,Strategic Alliance,Joint Venture,Internal Commercialization,Small risk, but limited returns also (unless patent position very strong,Limits investment, but dependence on suppliers & partners,Benefits of flexibility; risks of inf
11、ormal structure,Shares investment & risk. Risk of partner conflict & culture clash,Biggest risks & benefits. Allows complete control,Few,Allows outside resources & capabilities To be accessed,Permits pooling of the resources/capabilities of more than one firm,Substantial resource requirements,Konica
12、 licensing its digital camera to HP,Pixars movies (e.g. “Toy Story”) marketed & distributed by Disney.,Apple and Sharp build the “Newton” PDA,Microsoft and NBC formed MSNBC,TIs development of Digital Signal Processing Chips,Alternative Strategies for Exploiting Innovation,The Comparative Success of
13、Leaders and Followers,PRODUCT INNOVATOR FOLLOWER WINNER Jet Airliners De Havilland (Comet) Boeing (707) Follower Float glass Pilkington Corning Leader X-Ray Scanner EMI General Electric Follower Office P.C. Xerox IBM Follower VCRs Ampex/Sony Matsushita Follower Diet Cola R.C. Cola Coca Cola Follower
14、 Instant Cameras Polaroid Kodak Leader Pocket Calculator Bowmar Texas Instruments Follower Microwave Oven Raytheon Samsung Follower Plain Paper Copiers Xerox Canon Not clear Fiber Optic Cable Corning many companies Leader Video Games Players Atari Nintendo/Sony Followers Disposable Diapers Proctor &
15、 Gamble Kimberly-Clark Leader Web browser Netscape Microsoft Follower PDA Psion, Apple Palm Follower MP3 music players Diamond Multimedia Apple, Sony (&others) Followers,Leaders vs. Followers in Innovation,PRODUCT INNOVATOR FOLLOWER WINNER Jet Airliners De Havilland (Comet) Boeing (707) Follower Flo
16、at glass Pilkington Corning Leader X - Ray Scanner EMI General Electric Follower Office P.C. Xerox IBM Follower VCRs Ampex/Sony Matsushita Follower Diet Cola R.C. Cola Coca Cola Follower Instant Cameras Polaroid Kodak Leader Pocket Calculator Bowmar Texas Instruments Follower Microwave Oven Raytheon
17、 Samsung Follower Plain Paper Copiers Xerox Canon Not clear Fiber Optic Cable Corning many companies Leader Video Games Players Atari Nintendo/Sony Followers Disposable Diapers Proctor & Gamble Kimberly-Clark Leader Web browser Netscape Microsoft Follower Cholesterol lowering Raisio Unilever Followe
18、r margarine MP3 players Diamond Multimedia Apple Follower,The Strategic Management of Technology: To Lead or to Follow?,Key considerations: Is innovation appropriable and protectable against imitation?If so, advantages in leadership. The role of complementary resourcesFollowers may be able to avoid
19、investing in complementary resources due to better- established industry infrastructureFirm possessing complementary resources has theluxury of waiting Is owning/ controlling industry standard critical to competitive advantage?if so, advantage in being a leader.,Uncertainty & Risk Management in Tech
20、-based Industries,Sources of uncertainty,Technological uncertainty,Selection process for standards and dominant designs emerge is complex and difficult to predict, e.g. future of 3G,Customer acceptance and adoption rates of innovations notoriously difficult topredict, e.g. PC, Xerox copier, Walkman,
21、Market uncertainty,Strategies for managing risk,Cooperating with lead usersearly identification of customer requirements assistance in new product development,Flexibility keep options open use speed of response to adaptquickly to new information learn from mistakes,Limiting risk exposure avoid major
22、 capital commitments (e.g. lease dont buy) outsource alliances to access other firms resources & capabilities keep debt low,The Emergence of Standards,Emergence of a dominant design paradigm Model T in autos IBM 360 in mainframes Douglas DC3 in passenger aircraft Emergence of technical standards Eme
23、rge in industries where there are network extremities Entrenchment of the dominant designs and technical standards Learning effects: incremental improvement of the dominant design Switching costs Need for coordinated action by multiple players,Sources of Network Externalities,User linkages, e.g. Tel
24、ephone systemsonly value of telephone is connection to other users Video game consolessame platform allows users to exchange games and play interactively On-line auctionvalue of auction depends on number of buyers and sellers participating Also, social identificationlistening to same music, watching
25、 same TV shows, wearing same clothes in order to conform Availability of complementary products, e.g. Most PC applications software written for Windows, not Mac. In economy autos, easier to get parts and repair for a Ford Focus or Honda Accord than a Kia, Proton, or Lamborghini Economizing on switch
26、ing costs, e.g. E.g. office software (Microsoft Office vs. Lotus SmartSuite),Companies that Own Technical Standards,COMPANY PRODUCT CATEGORY STANDARD Microsoft PC operating systems Windows Intel PC microprocessors *86 series Matsushita Videocassette recorders VHS system Iomega High capacity PC disk
27、drives Zip drives Intuit Software for on-line financial transactions Quicken AMR Computerized airline reservations system Sabre Rockwell/ 3Com 56K modems V90 Qualcomm Digital wireless telecom signals CDMA Adobe Systems Common file format for creating and viewing documents Acrobat,Competing for Stand
28、ards: Value Appropriation vs. Market Acceptance,Maximize value appropriation,Maximize market acceptance,LOOSE,TIGHT,VHS,IBM-PC,Apple Mac,Betamax,Fighting Standards Wars,Determine the potential for standards emergenceanalyze network externalities Building a bandwagonenlist partners (requires licensin
29、g & sharing returns from the technology) Pre-empting the marketBuild user base quickly: May require sharing benefits with consumers (penetration pricing) Manage expectations (the Microsoft advantage)What if youre a loser? (a) ensure compatibility (b) go for nicheHow can the winner sustaining the sta
30、ndard?-Dont fall behind on technology-Ensure backward compatibility-Meet threat of disruptive technology by offering customers a migration path-Reinforce standard with other resourcese.g. brand,The Conditions for Creativity: “Operating” and “Innovating” Organizations,Strategy Implementation: Inventi
31、on to Innovation,While invention depends upon creativity, successful innovation requires integrating new knowledge with multiple business functions. Need to link R&D departments with other functions (the problem of Xeroxs PARC) The role of cross-functional new product development teams as vehicles for integration The role of product champions-in achieving integration and counteracting organizational inertia.,
