18.8: Summary

key terms

technology

The branch of knowledge that deals with the creation and use of technical means and the application of this knowledge for practical ends.

management of technology

The planning, implementation, evaluation, and control of the organization’s resources and capabilities in order to create value and competitive advantage.

innovation

Invention, new product development, and process-improvement methods are all examples of innovation.

management of innovation

Includes both change management and managing organizational processes that encourage innovation.

strategic inertia

The tendency of organizations to continue on their current trajectory.

mergers/acquisitions (M&A)

For an acquisition, one firm buys another; for a merger, the two firms come together and form a new firm.

joint ventures

Long-term alliances that involve the creation of a new entity to specifically carry out a product/process innovation.

strategic drift

Occurs when a joint venture loses strategic focus on the reasons for the joint venture.

franchise agreements

Long-term agreements that involve long payoffs for the sharing of known technology.

licensing agreements

Involve technology acquisition without R&D.

formal and informal contracts

Used to allow firms to share technology between each other.

research and development (R&D)

Involves the seeking and developing of new technologies, products, and/or processes through creative efforts within the firm.

entrepreneurial activities

The implementation of new ventures and idea generation in organizations.

value proposition

A promise by a company to a customer or market segment.

organizational learning

The acquisition of knowledge through the collection of data that is analyzed to gather information, which is then transferred and shared through communication among members of the organization.

explicit knowledge

Information codified or written down as rules or guidelines.

tacit knowledge

Emerges from experience of an individual.

leadership

The action of leading a group of people or an organization.

followship

The process of seeking or accepting influence.

18.1 MTI—Its Importance Now and In the Future

1. What do we mean by the management of technology and innovation (MTI), and why is it crucial?

Management of technology and innovation is critical to the organization. Because of innovations and new technologies, we have historically seen the emergence of innovative organizational structures and new ways of performing work. The management of technology involves the planning, implementation, evaluation, and control of the organization’s resources and capabilities in order to create value and competitive advantage. Management of innovation includes both change management and managing organizational processes that encourage innovation.

18.2 Developing Technology and Innovation

1. How do organizations develop technology and innovation?

There are four things the firm should do to balance the conflicting demands of being agile in a dynamic environment. These are: design systems and processes, identify communication needs and efficiently turn data into information, develop employees through training and learning, and use good change management processes. There are three basic organizational processes—buying and partnering, developing newness within the firm, and entrepreneurially exploiting a space in the environment.

18.3 External Sources of Technology and Innovation

1. What are external sources of technology and innovation development, and when are they best used?

The external processes for developing and acquiring technology and innovation include a variety of options. They are most successfully used under the following circumstances:

1. The product line or the processes of the firm have fallen behind those of its competitors.
2. A new entrant into the market of the industry has changed the competitive dynamics.
3. A firm believes that its product mix or way of doing things is not going to be successful in the long run.

The most common types of external processes used to enhance technology and innovation in a firm include: mergers/acquisitions (M&A), joint ventures, franchise agreements, licensing agreements, and formal and informal contracts.

18.4 Internal Sources of Technology and Innovation

1. What are internal sources of technology and innovation development, and when are they best used?

The most common type of internal process for technology and innovation in the organization is research and development (R&D). R&D involves the seeking and developing of new technologies, products, and/or processes through creative efforts within the firm. The disadvantages of R&D are that it is usually slower and more costly and can be disrupted by the departure of key personnel.

18.5 Management Entrepreneurship Skills for Technology and Innovation

1. How and why do entrepreneurs develop MTI skills?

For an entrepreneurial firm, the value proposition is a key factor. New business entities (a type of entrepreneurial activity) are usually more flexible and agile in the marketplace; however, the failure rate for new entrepreneurial firms is high. Entrepreneurs, by definition, are more agile than more-established organizations. Agility is crucial within large firms that want to continue to be entrepreneurial in their activities.

18.6 Skills Needed for MTI

1. No matter what method is used, what skills do you need to successfully manage technology and innovation?

There are two skills the organization must develop to be successful—the ability to manage learning and knowledge processes, and the ability to analyze and forecast future trends. Individual skills that are critical to the organization’s success include leadership/followership and creative thinking. There are two types of knowledge that must be managed: explicit knowledge and tacit knowledge.

18.7 Managing Now for Future Technology and Innovation

1. How do you look into the future to keep pace?

To keep pace with changes in technology and to keep up with needed innovation processes, individuals within the firm must keep track of what competitors are doing as well as what inventions or discoveries may usurp an industry’s place in the market. This is an external process, and that involves scanning the environment.

chapter review questions

1. How do we define technology and innovation, and how are they related?
2. What are the four areas that need to be managed by the firm if it is going to take advantage of the technology it has and the technology it needs to create?
3. What are the five Cs of managing innovation, and how do they help direct a firm’s innovation activities?
4. How does an organization enhance its agility? When is more agility needed in the firm?
5. Compare and contrast the advantages and disadvantages of the three approaches for technology and innovation development.
6. What circumstances indicate a firm should consider an external process for developing/acquiring technology?
7. How does a firm determine the type of external process for developing/acquiring technology it should pursue?
8. What are the benefits of using internal sources for developing new technologies, products, and/or processes? What are the potential disadvantages?
9. How does an entrepreneurial firm identify and utilize a value proposition?
10. How does knowledge management impact the management of technology and innovation?
11. Followership is critical to MTI—how does the quality of followership in the organization impact the ability of leadership to create value?
12. How does the management of technology and innovation help a firm create value? Why should the firm strive to have a unique value proposition?

management skills application exercises

1. Assess the education that you have received from grade school up to this course. What technology has been used to provide education to you? What technology and innovation would improve the “product” of education?
2. Come up with 50 alternative uses for the following products: day-old newspapers, old television sets, ballpoint pens, used Dixie cups. Share your results with other students as see if that develops new ideas.
3. Think of the best experience you have had using a smartphone app (e.g., banking, rideshare, etc.) and a bad experience that could be improved through an app. Describe the features and functionality and the benefits for both the customers and the organization that would use the app.

managerial decision exercises

1. You are a manager at a traditional automobile manufacturer (Ford, GM, Daimler-Chrysler). You know that Tesla is an up-and-coming competitor, and you’re also working on electric cars for your company. An article in the Wall Street Journal about electric cars and the future of gas stations has caught your interest.⁸ One sentence has caught your eye: “Until you drive an EV, you are colored by 135 years of going to the gas station. Under that scenario, you say ‘Where is the new company that’s doing EV charging on street corners or in my highway entrance?,’ but that isn’t really how this works.” What innovations regarding recharging or other aspects of traditional “driving” could be incorporated into the electric vehicles you are developing?
2. You are a sales manager and know that technologies like automation, robotics, artificial intelligence, and the Internet of things are changing the way that you use and interact with the products that you use. You sense that your customers might be a good source for forecasting future product innovations. You decide to ask your salespeople to interview their toughest customers to generate ideas. Write up eight questions that your sales representatives can use to gather the information.
3. In October 2015, Google restructured into Alphabet, a holding company, which analysts said would facilitate innovation among its diverse subsidiaries. What are the benefits and risks of this decision, and would you have made a similar or alternative decision?

Critical Thinking Case

Novartis’s Prescription for Invoice Processing

What do you do when you have more than 600 business units operating through 360 independent affiliates in 140 countries around the world—processing complex invoices in various languages and currencies? You seek out the best technology solution to make the job easier.

At global pharmaceutical giant Novartis, the IT department is a strategic resource, a community of 2,000 people serving 63,000 customers in 200 locations and 25 data centers. Because most of the company’s invoices come from international suppliers, they have differences in design, language, taxes, and currency. Consequently, many ended up as “query items” requiring manual resolution by Novartis accounting staff—which delayed payments and made those invoices extremely costly to process. In fact, finance personnel spent so much of their time resolving queried invoices that other work suffered. A solution was badly needed.

To maximize its investment, Novartis needed a flexible solution that would meet its current and future needs and function in other business departments in a variety of geographic locations. It should provide fast, accurate document capture and multilanguage support, and should extend to other types of information—such as faxes and electronic data—in addition to paper documents. Finally, in order to obtain financing for the project, return on investment (ROI) was required within nine months of project implementation.

Input Accel for Invoices from EMC/Captiva was the answer. The software extracts data from paper documents, applies intelligent document recognition (IDR) technology to convert them to digital images, and sends relevant data to enterprise resource planning, accounts payable (A/P), and other back-end management systems. The specialized Input Accel server manages output by recognizing and avoiding holdups in the workflow process. It also ensures if a server goes offline, others will carry on functioning, thus avoiding downtime.

Now Novartis scans incoming invoices at a centrally located site, and the images are transmitted to the Input Accel for Invoices server for image improvement. Invoice data is then extracted and validated against supplier information. Most invoices are transferred directly for payment, with relatively few invoices requiring transfer to one of three accounts payable clerks who deal with queries manually. Novartis is a global leader in research and development of products that improve health issues. Input Accel was selected by Novartis to be part of its accounting system.

Thanks to IT, overall efficiency has increased, processing errors are reduced, and accounting personnel can use their time and expert knowledge for more meaningful tasks than resolving invoice errors. For Novartis, it is “mission accomplished.”

critical thinking questions

1. What factors contributed to Novartis’s invoice processing being so complex?
2. How did IT help the company solve that problem?
3. What other uses and functions does Input Accel serve, and how will this be useful to Novartis over the long term? (You may want to visit the EMC/Captiva website, www.emc.com, for more information on Input Accel’s capabilities.)

sources

“OpenText Acquires EMC Enterprise Division,” MetaSource, http://www.metasource.com, September 20, 2016; Novartis corporate website, http://www.novartis.com, March 20, 2006; “Processing Invoices From Around the World,” ECM Connection, www.ecmconnection, February 2, 2006; Kathryn Balint, “Captiva’s Paper Chase Paying Off,” San Diego Union-Tribune, December 9, 2005, pp. C1, C5.