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Innovation

VIEWS: 29 PAGES: 40

									L7 Technology Environments

    EC10: Innovation & Commercialisation
  Conducting business in the global economy
             and playing to win

               Marcus Thompson
               wmt1@stir.ac.uk

              7. Technology Environments      1
       Outline to Technology
           Environments
 The International Business
  Environment
 Organisational & Supply Chain
  Development
 Drucker on Innovation

 Changing the World

             7. Technology EnvironmentsL7:
                Techn9ology Environments     2
1. The International Business
        Environment

       EC10 Innovation &
       Commercialisation


           7. Technology Environments   3
International Business: Opportunity
            and Conflict
 Globalization creates wealth and benefits
 Critics say it increases the wealth of
 corporations and investors at the expense of the
 poor and does other damage to society in
 general.
 Failure to become part of the global market
 assures a nation of declining economic influence
 and a deteriorating standard of living.


                 7. Technology EnvironmentsL7:
                    Technology Environments:     4
      MOTIVES FOR
  INTERNATIONALIZATION
 INTERNAL DRIVERS:
 – Search for Growth
 – Exploitation of opportunity
EXTERNAL DRIVERS
 – Technology’s effects on customers/firms
 – The industrial context


                 7. Technology EnvironmentsL7:
                    Technology Environments:     5
1. Information Requirement
Preliminary Screening
– Estimating Market Potential
     Income Elasticity of Demand
                                                   These same issues
     Market Audit                                  apply regardless of
     Analogy                                       whether a study is
     Longitudinal Analysis                        undertaken on or off-
                                                           line.
     Gap Analysis
– Estimating Sales Potential
     Identifying Segments
Selection
– Concentration versus Diversification
                  7. Technology EnvironmentsL7:
                     Technology Environments:                         6
      2. Selection Issues
Factors to take into Account
    Market-Related Factors
    Mix-Related Factors
    Company-Related Factors
Market Matches
    Market-Related Factors
    Mix-Related Factors
    Company-Related Factors


               7. Technology EnvironmentsL7:
                  Technology Environments:     7
            Innovation Linkages

                                   Science &
                                Technology Base



                      Technological                  Needs of
                      Developments                    Market


“Innovation occurs through the interaction of the science base, dominated by the Universities,
 technological developments dominated by industry and the needs of the market. (Trott 2002)

                              7. Technology EnvironmentsL7:
                                 Technology Environments:                                        8
2. Growth Options
           EC10
    Innovation &
  Commercialisation

      7. Technology Environments   9
Strategy & Structure: Chandler’s contribution
Key points from Chandler’s research:
  – Chandler concluded that strategy came
    before organisation structure
  – Increased decentralisation:
    organisations that become more diverse
    in their products and markets, need to
    reorganise and probably devolve power
  – Means the centre can no longer make
    the relevant decisions.

                7. Technology Environments   10
Strategy or Structure: Williamson
   Williamson explored the role of the centre as
    organisations became more diverse.
   His observations:
     – The role of the a firm’s senior managers
       (HQ) was to allocate resources between its
       various divisions and then monitor and
       control them
     – The strategy of the firm needed to be
       resolved first, with the organisational
       structure to follow
   According to Williamson, strategy came
    before structure in a firm.
                  7. Technology Environments        11
Fit between strategy & structure
   For a firm to be economically effective, there
    needs to be a match between the firm’s strategy
    and its structure: (the concept of strategic fit and
    or congruency)
   Firms need to adopt an internally consistent set
    of practices in order to undertake a proposed
    strategy.
   Such practices go beyond organisation structure
    into other related areas of the business.
   These areas include: the strategic planning
    process, recruitment and training, reward
    systems, knowledge, information systems and
    processes.


                     7. Technology Environments        12
      Forms of Organisation
 Bureaucratic,  hierarchical
 Flat structure, few management
  layers
 Team-oriented structure

 Matrix structure with a combination
  of vertical and horizontal authority
 Product or service-oriented
  structures
              7. Technology Environments   13
             The Functional Structure
                                             Board

       Production        Sales & marketing           Accountancy        Personnel

   Main features                             Limitations
    – Organised around tasks                  – Succession problems
    – Centralised                             – Unlikely to be entrepreneurial or
   Situations where appropriate                   adaptive
    – Small companies, few plants,            – Profit responsibility exclusively with
       limited products                            CEO
    – Relatively stable – repetitive tasks – Become stretched by growth
   Advantages                                – Functional Managers may concentrate
                                                   on short term routine activities at
    – Controlled by strategic                      expense of longer-term strategic
       leader/CEO]                                 developments
    – Efficient                               – Problems of ensuring co-ordination
    – Clearly delineated external                  between functions – rivalry may
       relationships                               develop
    – Specialist managers                     – Functional specialist may seek to build
    – Simple line of control                       mini-empires
    – Can promote competitive
       advantage through functions
                                7. Technology Environments                            14
      The Entrepreneurial Structure
   Main Features
    – Organised around the entrepreneur
    – Totally centralised; no division
      responsibility
                                                     Entrepreneurial Manager
   Situations where appropriate
    – Simple companies in early stages of
      development                   Employee               Employee      Employee
   Advantages
    – Enables the founder, who logically
      understands the business to control its
      early growth and development.
   Limitations
    – The founder may not have sufficient
      specialist knowledge
    – Only appropriate to a certain size


                        7. Technology Environments                             15
   3. Organisational
     Development
             EC10
Innovation & Commercialisation



         7. Technology Environments   16
    The Effective Organisation
 The strategic purpose of the
  organisation
 Its mission, vision and values
 Customer characterisation and
  requirements
 The culture and environment of the
  organisation
              7. Technology Environments   17
         Strategy & Structure
 The organisation's mission and strategy
  drive the structure
 The culture and environment of the
  organisation plays a large role in
  determining structure.
 Informal and formal structures need to be
  aligned


                7. Technology Environments    18
 Strategy & Structure: Chandler’s contribution
Key points from Chandler’s research:
  – Chandler concluded that strategy came before
    organisation structure
  – Increased decentralisation: organisations that
    become more diverse in their products and
    markets, need to reorganise and probably
    devolve power
  – Means the centre can no longer make the
    relevant decisions.

                  7. Technology Environments         19
Strategy or Structure: Williamson
 Williamson explored the role of the centre as
  organisations became more diverse.
 His observations:
   – The role of the a firm’s senior managers (HQ) was
     to allocate resources between its various divisions
     and then monitor and control them
   – The strategy of the firm needed to be
     resolved first, with the organisational
     structure to follow
 According to Williamson, strategy came before
  structure in a firm.

                   7. Technology Environments              20
Fit between strategy & structure
 For a firm to be economically effective, there needs to
  be a match between the firm’s strategy and its
  structure: (the concept of strategic fit and or
  congruency)
 Firms need to adopt an internally consistent set of
  practices in order to undertake a proposed strategy.
 Such practices go beyond organisation structure into
  other related areas of the business.
 These areas include: the strategic planning process,
  recruitment and training, reward systems, knowledge,
  information systems and processes.

                    7. Technology Environments              21
Six ‘pulls’ on organisations

            To centralise




            To balkanise


         To professionalise




         7. Technology Environments   22
Mintzberg’s six organisational
       configurations
                       SITUATIONAL FACTORS                  DESIGN PARAMETERS

CONFIGURATION ENVIRONMENT             INTERNAL         KEY PART OF  KEY CO-
                                                       ORGANISATION ORDINATING
                                                                    MECHANISM

Simple structure   Simple / dynamic Small              Strategic apex   Direct
                   Hostile          Young                               supervision
                                    Simple task
                                    CEO control

Machine            Simple /static     Old             Technostructure   Standardisation
bureaucracy                           Large                             of work
                                      Regulated tasks
                                      Technocrat
                                      control

Professional       Complex / static   Simple systems   Operating core   Standardisation
bureaucracy                           Professional                      of skills
                                      control


                              7. Technology Environments                                  23
 Mintzberg’s six organisational
        configurations
                     SITUATIONAL FACTORS                   DESIGN PARAMETERS

CONFIGURATION ENVIRONMENT          INTERNAL          KEY PART OF  KEY CO-
                                                     ORGANISATION ORDINATING
                                                                  MECHANISM

Divisionalised   Simple / static   Old               Middle line      Standardisation
                 Diversity         Very large                         of outputs
                                   Divisible tasks
                                   Middle-line
                                   control

Adhocracy        Complex /         Often young       Operating core   Mutual
                 dynamic           Complex tasks     Support staff    adjustment
                                   Expert control

Missionary       Simple / static   Middle-aged      Ideology          Standardisation
                                   Often ‘enclaves’                   of norms
                                   Simple systems
                                   Ideological
                                   control


                              7. Technology Environments                                24
                   The simple structure

The firm
Small firms run by one person
often highly informal with strategy
made at the top. Simple structures exist                 The strategy?
where the industry is fragmented and
is comprised of small highly competitive
                                                      Some form of differentiation strategy
firms.
                                                      is needed for survival. A niche or
                                                      marketing strategy is beneficial in
                                                      targeting a market that is
The environment                                       least competitive.
 Simple technologies are used to
 produce products or deliver services
 Barriers to entry are low leads to market
 instability, cost/price squeezes and firm
  vulnerability. Firms often have very
 little bargaining power over customers
                                   7. Technology Environments                                 25
           The Machine Bureaucracy

The firm
Very rigid with co-ordination achieved via
standardisation of work. Firm highly specialised                The strategy?
as tasks are broken down. Very bureaucratic with
many rules and regulations with no real power at
lower levels of the firm.                               Strategic options limited due to their
                                                        inflexibility and gearing towards
                                                        efficiency. Innovation out of the
The environment                                         question and markets not growing
                                                        much. So market differentiation and
Such firms thrive only in stable settings               cost leadership the
Industries are often highly concentrated                only two option open to such firms.
with most firms of a large size. Little uncertainty
as competitor and customer behaviour predictable
with stable demand and market share.

                                   7. Technology Environments                                    26
        The Divisionalised Structure
The firm
Consists of divisions that are responsible for                   The strategy?
producing and marketing a discrete product.
Divisions may be driven to become bureaucratised
and formalised leading to standard products.
Performance controls ensure a degree of conformity
                                                          Due to the structure will require
although divisions autonomous.
                                                          strategies based on the context of the
                                                          divisions operating in
                                                          different markets.
                                                          Due to the control element it
                                                          precludes strategies based upon
                                                          business differentiation through
                                                          innovation. However, marketing
The environment                                           differentiation and cost leadership
                                                          may be useful.
Varies from division to division. May need
environment to be stable, but also operates in
some turbulent sectors of the economy.
                                   7. Technology Environments                               27
                         The Adhocracy
The firm
Performs unusual and complex tasks which
can change constantly. Groups of highly
trained people working together to design
and produce complex and rapidly changing
products. Power decentralised to those with                    The strategy?
the skills and based on expertise
                                                  Because of flexible structure and collaborative
                                                  working a strategy of differentiation through
                                                  innovation is beneficial. Not too broad or too
                                                  narrow a focus due to the competition
The environment
Very complex and dynamic. Technologies
change rapidly as do product design and customer
needs. ‘Knowledge’ barriers to entry. Markets may
be unstable as firms ‘leapfrog’ each other with new
creative advances. Moderately competitive.
                                  7. Technology Environments                               28
4. Changing the
World
EC10
Innovation & Commercialisation


              7. Technology Environments   29
Consequences of Change

  Rogers identifies three consequences or
   changes:
    Desirable versus undesirable consequences
    Direct versus indirect consequences, and
    Anticipated versus unanticipated
     consequences.



                 7. Technology Environments   30
4. Imperatives for
Scotland
    SMEs need to be motivated in a way that is meaningful to them to spend
     scarce resources on R&D activity.
    Universities and Research Institutes need incentivised to spend scarce
     resources (people, money, and time) on creating meaningful interactions
     with SMEs.
    Meaningful interaction between the worlds of business and academia will
     only grow if there are people dedicated to building the links, through
     actively engaging with the SME base face to face, assessing their needs,
     and then matching these needs to where appropriate academic expertise
     lies. Such interactions need to happen coherently over a lengthy period of
     time, probably a minimum of ten years.
    4. Ongoing growth will require links between technologically-aware local
     businesses and academic institutions to be nurtured, in order to develop,
     and to exploit commercially, “orphan” Intellectual Property (IP)
    (Technology Ventures Scotland, 2005)



                             7. Technology Environments                      31
The First Rule of
Innovation



    deal with failure

          7. Technology Environments   32
The Learning Organisation

  An organisation that learns and
   encourages learning among its people. It
   promotes exchange of information
   between employees hence creating a
   more knowledgable workforce. This
   produces a very flexible organisation
   where people will accept and adapt to
   new ideas and changes through a shared
   vision.
                7. Technology Environments   33
Generic Learning Organisation
Strategies
 Accidental
     Not initiated through awareness of the Learning Organisation
      concept. Company may already be taking steps to achieve their
      business goals that, in hindsight, fit the framework for implementing a
      Learning Organisation.
 Subversive
     Once an organisation has discovered the Learning Organisation
      philosophy, they make a decision as to how to proceed. This is a
      choice between a subversive and a declared strategy. The subversive
      strategy differs from an accidental one in the level of awareness; but it
      is not secretive! Thus, while not openly endorsing the Learning
      Organisation ideal, they are able to exploit the ideas and techniques.
 Declared
     The principles of Learning Organisations are adopted as part of the
      company ethos, become company "speak" and are manifest openly in
      all company initiatives.
     Senge, 1990 Five Disciplines of Learning Organisations
                            7. Technology Environments                      34
Risk Analysis
  to be effective, the change must be drastic and not
   introduced slowly as time is money
  not all employees want to learn and will resist the change
  the openness created endangers the trust between
   employees
  ignorance about learning; that is not following the proper
   learning cycle
  `Over the top': too much emphasis on learning and not
   enough on getting the job done
   too much freedom and information can create
   misunderstandings
  information overload, too much to absorb at once "To love
   knowing and not learning: shallowness" , Confucius
  the culture of the country may be a disadvantage
  the perils of being a 7. Technology Environments
                         pioneer                                35
10 Routes to Success (1 of 5)

 1. Invest in Technology
          Look inside and outside the business
          Existing technologies combines are as good as
           new technologies
          The technology has to fulfil a need.
        Invest in People                           Source: Business
                                                    2.0, February
          People are long-term                     2001, pp19 -35

          Work culture & job content are more important
           than share options
          Don’t employ portfolio careerist who hop from
           job to job
                       7. Technology Environments                      36
10 Routes To Success (2 of 5)

  Form alliances
    Choose partners strategically
    Leverage brands                           Source: Business 2.0,

    Partner for tangible benefits             February 2001, pp19 -35


  Invest in Customer Care
    CRM is not rocket science
    Help customers, don’t smother them
    Past trend are not a guide to future ones.

                  7. Technology Environments                       37
10 Routes to Success (3 of 5)

  Be prepared to Fail
    Adapting to changing conditions means reviewing
     business models
    Lower burn rates through effective customer
     acquision
    Learn from mistakes                Source: Business 2.0,
                                        February 2001, pp19 -35
  Stretch Your Business
    Explore new ways to do business
    Employ established brands
    Exploit synergies between on and off-line activity
                      7. Technology Environments              38
10 Routes to Success (4 of 5)

  Talk to your Competitor
    Some projects are too good to go it alone.
    Alliances minimise risk.
    Don’t put eggs in one basket.        Source: Business 2.0,
                                                   February 2001, pp19 -35
  Share the Power
    Centralise guiding principles & decentralise
     everything else.
    Looks outside for ideas & people.
    Empower individuals to make decisions.
                      7. Technology Environments                       39
10 Routes to Success (5 of 5)

  Lead Your Market
    Have a proposition that can be sold to
     investors
    Map out technical difficulties
    Stay focussed.
  Plan for a Revolution
    Take the long-term view

                  7. Technology Environments   40

								
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