CSE 410: Management of Information Technology
CSE 564: Advanced Topics on Management of Technology
Lec 02: Introduction
Faculty: Dr. M. Rokonuzzaman
Zaman.rokon@yahoo.com
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What is the lesson?
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We have recently discovered a concept that illustrates many of the ways most
organizations really operate
Square wheels
LOOK AT THE PICTURE FOR 2 MINUTES
© Performance Management Company, 1993 Not for Reproduction
Form Groups of three. Discuss and note down your comments on the cartoon.
Courtesy: DR.Scot J Simmerman 3
How do we add value in production?
1. Supplying energy
2. Doing manipulation
3. By sensing and perception
4. By memorizing and recalling
5. Taking decision
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What do you read?
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Do you see technology?
Do you see money?
What to manage?
What is it?
What do consumer and producer surplus mean in this technology
based innovation? 6
Do you see technology evolution?
Do you see money?
Do you see risk, loss, and profit?
What is the role of management? 7
How does our income grow?
By delivering those roles to machines?
Technology enables us the delivery of those roles to machines with
our income growth?
To maximize income growth or to avoid income loss, we need to
manage the technology development.
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Why do you need technology?
• To innovate new products
• To improve existing products
• To improve production process to reduce cost
and improve quality of replication of products
Technology is for innovation: Successful
commercialization of ideas.
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1. We would like to increase both consumer and
producer surpluses simultaneously.
2. We would like to offer better products at
lower price.
3. We would like to offer new products.
We would like to create new wealth.
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Technology and science
• Technology refers to the theoretical and practical
knowledge, skills, and artifacts that can be used to
develop products and services as well as their
production and delivery systems.
• A process, technique, or methodology embodied in a
product design or in a manufacturing or service
process which transforms inputs of labor, capital,
information, material, and energy into outputs of
greater value.
• Basic science versus Applied science
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Innovation
• To make something new
• A process of turning opportunity into new
ideas and of putting these into widely used
practice
• Change (product or process)
• Sociocultural evolutionary processes of
variation, selection, and retention.
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Types of Innovation?
• Sustaining
• Efficiency
• Disruptive
Can it be managed? yes
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Sustaining Innovation
• A sustaining innovation does not create new
markets or value networks but rather only
evolves existing ones with better value,
allowing the firms within to compete against
each other’s sustaining improvements.
Sustaining innovations may be either
“discontinuous” or transformational, or
revolutionary or continuous.
•
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• These replace old products with new. The Toyota
Prius hybrid is marvelous--yet every time a
customer buys a Prius, a Camry is not sold.
• Sustaining innovations replace yesterday's
products with today's products.
• They keep our economy vibrant--and, in dollars,
they account for the most innovation.
• But they have a zero-sum effect on jobs and
capital.
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Efficiency” Innovations
• The 2nd type are "efficiency" innovations. These reduce the
cost of making and distributing existing products and
services--like Toyota's just-in-time manufacturing in
carmaking and Geico in online insurance underwriting.
• Efficiency innovations almost always reduce the net
number of jobs in an industry, allow the same amount of
work (or more) to get done using fewer people.
• Efficiency innovations also emancipate capital for other
uses.
• Without them, much of an economy's capital is held
captive on balance sheets, tied up in inventory, working
capital, and balance-sheet reserves. 16
• Investing in efficiency innovations can lead to a cycle
of increased profits and re-investing in more
efficiency.
• But that cycle vastly decreases investment in the
kinds of research-and-development toward longer-
term, potentially disruptive innovations--therefore
decreasing overall economic growth and job creation.
• Here, Christensen says, is where successful
companies faces a capitalist dilemma: Where should
money flow?
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Disruptive Innovations
• These are "empowering" innovations.
• These transform complicated, costly products that
previously had been available only to a few people,
into simpler, cheaper products available to many.
• The Ford Model T was an empowering innovation,
as was the Sony transistor radio.
• Empowering innovations create jobs for people
who build, distribute, sell and service these
products.
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• A disruptive innovation is an innovation that helps
create a new market and value network, and eventually
disrupts an existing market and value network (over a
few years or decades), displacing an earlier technology.
• The term is used in business and technology literature to
describe innovations that improve a product or service
in ways that the market does not expect, typically first
by designing for a different set of consumers in a new
market and later by lowering prices in the existing
market.
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• The term disruptive technologies was coined by
Clayton M. Christensen and introduced in his 1995
article Disruptive Technologies: Catching the Wave,
which he co-wrote with Joseph Bower. The article is
aimed at managing executives who make the
funding/purchasing decisions in companies rather
than the research community.
• He describes the term further in his book
The Innovator's Dilemma. Innovator's Dilemma
explored the cases of the disk drive industry.
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• In practical world, the popularization of personal computers
illustrates how the knowledge contributes to the ongoing
technology innovation.
• The original centralized concept (one computer, many persons)
is a knowledge-defying idea of the computing prehistory and its
inadequacies and failures have become clearly apparent.
• The era of personal computing brought powerful computers
“on every desk” (one person, one computer).
• This short and transitional period was necessary for getting
used to the new computing environment, but was inadequate
from the knowledge-producing vantage point.
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• Adequate knowledge creation and management come mainly
from networking and distributed computing: one person, many
computers.
• Each person’s computer must form an access to the entire
computing landscape or ecology through the Internet of other
computers, databases, mainframes, as well as production,
distribution and retailing facilities, etc. For the first time our
technology empowers individuals rather than external hierarchies.
• It transfers influence and power where it optimally belongs: at the
loci of the useful knowledge. Even though hierarchies and
bureaucracies do not innovate, free and empowered individuals
do; knowledge, innovation, spontaneity and self-reliance are
becoming increasingly valued and promoted.
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Start of Disruptions..
• Dominant companies prosper by making a good product and
keeping their customer base by using sustaining technologies to
continue improving it.
• The products get ever better—but at some point their quality
overshoots the level of performance that even the high end of
the market needs.
• Typically, this is when a disruptive innovation lands in the
marketplace at a lower price and relatively poor level of
performance—but it’s a level adequate for what the lower end of
the market seeks.
• The disruptive technology starts to attract customers, and is on
its way to staggering the industry’s giants.
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• Examples abound. Small off-road motorcycles from Honda,
Kawasaki, and Yamaha disrupted the hegemony of large,
powerful bikes from Harley-Davidson and BMW.
• Transistors overthrew vacuum tubes.
• Discount retailing and home centers savaged the dominance of
Sears.
• Online courses are barging into higher education.
• Drones challenge manned fighters and bombers.
• With mHealth, Nurse practitioners underprice medical doctors.
• Digital photography eclipsed film, and mobile telephones are
replacing landline service.
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• Consider the hegemony of Detroit’s Big Three—General Motors, Ford,
and Chrysler.
• At one time, they dominated the auto industry, producing bigger,
faster, safer, more comfortable cars with more and more features. But
these improving products also “create a vacuum underneath them,”
Christensen says, “and disruptive innovators suck customers in with
fewer features and a cheaper price.”
• Toyota, Honda, and Nissan disrupted the Big Three’s marketplace by
introducing smaller, lighter, less safe, and less comfortable but reliable
cars that needed few repairs and got good gas mileage—at a
significantly lower price.
• Within a few years, they had garnered a large share of the market.
Says Christensen: “The leaders get killed from below.”
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Competing with Non-Consumption
• THE THEORY of disruptive innovation “allows you to predict whether a
competitor will flee you or fight you,” Christensen says.
• Essentially, competitors fight each other when they make similar
products and target the same customers.
• But in the case of disruptive innovation, the established competition
typically leaves a virgin marketplace wide open to the newcomer.
• The disruptor is thus competing not against other suppliers, but against
“non-consumption.”
• It is creating new consumers.
• “The innovation transforms something that used to be so costly, only the
very rich had access to it,” he explains. “These innovations make it so
affordable and simple that normal people can do what only the rich and
very skilled could do before.”
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Does it happen in all industries?
• THE THEORY of disruptive innovation in fact does not apply to some
businesses.
• The reason is that in most industries, “there’s a technological core—a
system inside the product that defines its performance and can be
extended upmarket to do better things.”
• In steel, for example, the electric furnace was the technological core that
enabled mini-mills to disrupt integrated steel mills, which use blast
furnaces to extract iron from raw ore. Mini-mills began by melting scrap
metal, making every batch (with different ingredients and characteristics)
of such low quality that the mills could sell it only for rebar (used inside
concrete construction). But the electric-furnace technology evolved so that
the mini-mills could monitor and control the proportions of specific metals,
like nickel and zinc, in the mix, and eventually produce automobile-quality
steel.
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• The complexities of technology markets can also pose challenges to
Christensen’s framework.
• In the computer industry, as a general rule, in the first years after a
new technology appears, “the dominant companies almost always
have a closed, proprietary architecture—one in which the design of
one component depends on the design of all other components,” he
explains (and writes about in The Innovator’s Solution). “That is
because the technology isn’t yet very well understood. But as it
becomes good enough for what customers in the less-demanding end
of the market need, it gets overturned by modular or open
architectures. Hewlett Packard, Sun Microsystems, and Silicon
Graphics give way to Dell, Compaq, and IBM. They don’t perform as
well as the closed ones, but they are good enough.
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• “Then you had smartphones disrupting laptops, “ Clayton says “In smartphones, Nokia and RIM
[which makes BlackBerrys] were the dominant companies. They had closed, proprietary
architectures.
• Apple came in later than RIM and came in with a better product, the iPhone. The theory said
Nokia and RIM should have killed them: you disrupt with a cheaper, simpler product, not a
more expensive, better one. I said, ‘I don’t think the iPhone will succeed.’ Two things happened
that I didn’t see at the beginning. One, the iPhone was a closed, proprietary system on the
inside, but to the outside world, it was open to lots of apps that you could plug into it.
• Nokia and RIM were closed to the outside—you couldn’t stick in apps. They fell off the cliff, and
Apple had the field almost to itself.
• But then comes the Android operating system from Google, which by definition makes the
devices open and modular all the way through. So the people using the Android operating
system are now Motorola, Samsung, LG. And they are killing Apple: now, Android accounts for
about 80 percent of the market. So I was wrong, and then I was right.”
• Why???
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FOUR FUNCTIONS OF THE
MANAGERIAL PROCESS
PLANNING
CONTROLLING ORGANIZING
LEADING
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• Technology management is a link among
engineering, science and management
disciplines to plan, develop and implement
technological capabilities to shape and
accomplish the strategic and operational
objectives of an organization.
• Knowledge on how to solve technical
problems, embedded in business and social
contexts.
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• Technology Management is set of management
disciplines that allows organizations to manage their
technological fundamentals to create competitive
advantage.
– Ability to compete
• Cost
• Quality
• Time to deliver
• Predictability
• Scale
• Continuous improvement
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• Typical concepts used in technology management
are
– technology strategy (a logic or role of technology in
organization),
– technology forecasting (identification of possible relevant
technologies for the organization, possibly through
technology scouting),
– technology roadmap (mapping technologies to business
and market needs), technology project portfolio ( a set of
projects under development) and technology portfolio (a
set of technologies in use).
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• The role of the technology management function in
an organization is to understand the value of certain
technology for the organization.
• Continuous development, acquisition, and
deployment of technology is valuable as long as
there is a value for the customer and therefore the
technology management function in an
organization should be able to argue when to invest
on technology development and when to withdraw.
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• Technology Management can also be defined
as the integrated planning, design,
optimization, operation and control of
technological products, processes and
services, a better definition would be the
management of the use of technology for
human advantage to create and sustaian new
business.
– Case study of iLine of Apple products
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Technology Management
Micro-level
• Identification (Forecasting/ Intelligence)
• Selection (Technology Strategy/Planning)
• Internal acquisition (R&D Management)
• External acquisition (Technology Acquisitions
and Collaborations)
• Exploitation/Assimilation (Technology
Transfer/Utilization/Commercialization)
• Protection (Knowledge Management, R&D
Management)
• Learning (Knowledge Management)
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Technology Management
Macro Level
• Innovation and technology systems
– Financial organizations (Venture capital…)
– Universities, research organizations
– Technoparks, incubators
– Government agencies (regulation bodies)
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Crossing disciplines:
Innovation, technology and knowledge management
1. Knowing Technology, and the underlying
science
2. Economic value that could be created out of Innovation
innovations around that technology Management
3. Affinity of the society for such economic value
4. Viability of creating profitable business out of
Technology Knowledge
delivery of that economic value to the society Management Management
5. Public policy and regulation for encouraging
private investments to compete to offer
possible best value to consumer and to
generate tax revenue for the government.
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How does technology fit in work processes?
• Any work process has six system elements
1. Human
2. Computing technology
3. Computing HW
4. Software
5. Database
6. Connectivity
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• Technology is a tool to improve work
processes and/or engineering artifacts.
• Basic structure of work processes
– Man/Woman
– Machine/Tool
• Software Policy
• Database Procedure Process Goal
• Hardware Standard
– Computing
– Non-Computing
• Communication network
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Work Process Design
PROCESS ELEMENTS:
1. Production purpose(s)
1.1. Performance goals
1.2. Key performance indicators or parameters (KPIs) and high level breakdown of it into measurable data.
1.3 Current performance level (i.e., base line)
2. Policies to follow to achieve performance goals in meeting purpose(s)
3. Practices and the Procedure of their execution, along with terminal and intermediary inputs/outputs
4. Terminal as well as intermediary inputs and outputs and their standards
5. Human Actors: Knowledge and skill required to perform activities in compliance with policies in meeting performance goals
6. Tools, machines along with software applications to perform activities in producing outputs
7. Environment and resources for doing the job
8. Breakdown of KPIs into measurable data developing measurement framework; defining and taking Measurement for
monitoring progress of producing outputs and assessing performance levels
9. Control for ensuring planned outputs and targeted performance goals
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10. Improvement for meeting enhanced performance goals and additional purposes 42
Basic Performance Indicators?
1. Efficiency (degree of utilization of inputs)
2. Effectiveness (conformance to purpose)
3. Wastage
4. Pilferage
5. Accuracy
6. Time
7. Cost
8. Ease of use
9. Predictability
10. Availability
11. Reliability
12. Security Technology
13. Safety Management
• etc
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Four Major Process
Improvement Areas
The point to note here is
that, irrespective of the class
of the task - whether manual 1.
Effectivenes 2. Efficiency
or computerised - it is s
important that each task -
and hence the process as a
whole – is designed and 4.
periodically reviewed, Compliance
improved, or substituted by 3. Internal
to various
control
another task, with a view to statutes and
continuous improvement in policies
four major areas.
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Example: mHealth
How can we benefit from such potentials?
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Focus on ecosystem, including policy
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How should I manage it?
What are challenges?
How to deal with them?
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KPI Centric Approach
• Key Performance Indicator (KPI)
– a measure of a critical success factor.
• Performance Indicator (PI)
– a measure used to support or demonstrate the
performance of a KPI or KPI stream.
• Benchmark the best performance achieved.
– Benchmarking: comparing performance against others,
and using the lessons learned from the best to help
target and drive improvement.
• Benchmarking is an ongoing process.
KPI Centric Approach Should be the Focus of
Technology Management Program:
• The purpose of KPIs
– Clients want their goods and services delivered to the highest possible
standards of quality, cost and time, while at the same time respecting
the environment and the people involved.
– The KPI framework allows organisations implement a simple method of
measuring and analysing performance at both Project and Organisation
level
– Target and drive improvement to process
– Identify performance trends
– Compare performance anonymously to others in the industry
– Compare performance more widely
– Share best practice through a network of Sector specific improvement
club
Key Terms and Concepts:
• Critical Success Factor (CSF): A factor that must be present if an
objective is to be obtained.
• Key Performance Indicator (KPI): A specific measure of an
organisation’s performance in an area of its business.
• Value for money: achieving a return on money spent that is seen to be
worth it.
• Quantitative indicator: an indicator that measures some tangible thing
and usually has some precise measurement scale
• Qualitative indicator: an indicator that measures some intangible
values, such as people’s views; these indicators do not often use a
precise measurement scale.
• Benefits realisation management (BRM): this approach monitors and
guides actions taken to achieve specific outcomes for projects.
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How can software or ICT help?
Perform cost/benefit
analysis and
Model/redefine
optimize role
business process
allocations to system
elements.
Implement
redefined
process
Redefine roles of system
elements at each step with Define, measure,
focus of giving more roles to and compare KPIs
software.
Analyze existing
roles of system
Target for improved
elements at each
values of KPIs
activity, sub-process 54
and process
Basic steps of KPI centric approach:
1. Articulate the work process with clear boundary having clearly defined inputs, outputs and
interfaces with other processes.
2. Define and determine value of key performance indicators (KPIs).
3. Assess organizational performance improvement need of the work process.
4. Decompose the work process into a collection of small steps and establish sequence of execution
of these steps.
5. Determine current roles of system elements at each step.
6. Understand current policies, procedures, and standards
7. Determine contribution of each element at step to each KPI.
8. Set achievable improvement of KPIs to meet organizational performance improvement need.
9. Redefine roles of system elements for achieving targeted improvement of KPIs.
• System design and technology acquisition, including R&D
10. Redefine steps and their sequence of execution
11. Bring changes in policy, procedures, and standards
12. Implement changes
• Develop and deploy technology
13. Assess improvement of KPIs upon implementation
14. Determine gap of planned and achieved improvement and investigate causes of the gap.
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Technology Management Field
Topics that will be emphasized in this class include
• Technology Strategy
• Development of Technological capability
• Innovation management
• Technology management and business
competitiveness interface
• Technology adoption
• E-business and Virtual Corporation
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Definitions
• Technology (for the purpose of this class) refers to
information technology (IT), which includes
computer hardware/software,
telecommunications, networks, and database.
• Management function include planning,
organizing, coordinating, and controlling
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Fact
• Effective use of IT provides a competitive
edge.
• IT is a means, not an end.
• People are the most important resources.
• Most projects fail due to poor
management.
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Innovation
• Innovation refers to new products, new
processes, new managerial approaches,
and combinations of the above.
• An important aspect of innovation is
“Adoption and implementation of IT.”
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Variables related to Innovation
(Burgelman & Maidique 1988)
1. Resource availability and allocation
2. Ability to understand competitors’
innovative strategies
3. The business’ technological environment
4. Structure and cultural context
5. Strategic management capacity in dealing
with entrepreneurial behavior
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Success Factors of TM
(Maidique & Hayes in Burgelman & Maidique 1988)
• Business focus
• Adaptability
• Organizational cohesion
• Entrepreneurial culture
• A sense of integrity
• Hands-on top management
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Framework for Reviewing Technological
Innovation: 8 Stages
1. Discovery of a new idea or product
2. Emergence of the proposed idea or design concept
3. Verification of the theory or design
4. Demonstration of a prototype
5. Trail and evaluation
6. Commercial introduction or initial operation of the
innovation
7. Innovation adoption
8. Innovation proliferation
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IT and Market
• Balancing between technology push and
market pull
• Proactive approach for technical
development
• Feasibility of an innovation: technologically
and commercially
• Congruent of an innovation with corporate
objectives and goals
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Manager Perspective on Managing
Technology
• Advanced technology can create an abrupt
change in businesses.
• New technology requires (Beatty 1992)
– A skilled champion
– A plan for systems integration
– Organizational integration
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Barriers to Success
• Failure of a champion
• Lack of systems integration
• Incompatible systems
• Lack of a cross-functional team
• Lack of performance focus
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Lessons Learned
• Imbalance between technology generation and
technology diffusion in the US (Alic 1993)
• Requirements of international facility location
and technology transfer (Woodward & Liu 1993).
• Technology will be useful only when it is used.
• More emphasis needs to be placed on adoption,
adaptation, and exploitation of technology
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Lessons Learned (Con’t)
• Protecting existing technology rather than
promptly embracing new technology becomes a
“dead end” strategy (Ali & Zahra 1994). E.g., IBM vs. HP.
• Customer involvement leads to success.
• Managers today must understand
– Impact of IT on the strategic and organizational
changes
– New role of IT in integrating different business
functions in systems design
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Technology Transfer (Hunter 2001,
http://www.nwci.org.uk/resources/licensing.ppt)
• Similar to tangible assets, technology can
be bought, sold, or lease
• Intellectual property rights can also be
bought and sold, or licensed for a limited
time, to another party
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Technology Licensing
• Inward and outward licensing deals with
the issue of intellectual property, which is
beyond the scope of this study
• Example: Infocus
http://www.i-infocus.co.uk/main.php
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Flexibility and Technology
• Flexible systems and computer integrated
manufacturing (CIM) are used in manufacturing.
• It is not clear whether or not there is a direct link
between flexibility and increased performance.
• Other factors such as organizational structure,
culture, and management processes can influence
the outcome.
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Technology Forecasting (TF)
Evolution of R&D Management
• 1950-1975: TF is tactical, isolated, and not a
pervasive part of strategic planning.
• 1975-1990: TF is a data-gathering and
environmental scanning exercise, still an isolated
subtask of strategic planning.
• 1990-present: TF is an integral part of strategic
planning and business intelligence.
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Technology & People
• It is true that people’s abilities haven’t changed much while
technology (esp. IT) has changed dramatically Harrison & Samson
(2002). However, people’s behavior has changed significantly,
which the authors fail to emphasize. Thus, the way we manage
people must be changed as well.
• Although Harrison & Samson (2002) argue “technological resources
are becoming more important than human resources in
determining competitive outcomes” (p. 15), I disagree as we’ve
seen so many IS project failures due to lack of skilled people
and poor management. Research in the past few years has
begun to call for more studies done on the human factor
because it has been ignored for too long.
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Example 1: Glaxo-welcome
(Farrukh et al. 2004)
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Summary
• Technology management is critical for not only
creating but also sustaining a competitive advantage
of an organization.
• Technology consideration must be an integral part of a
firm’s, as well as Nation’s, business strategy.
• Change in technology without change in the way it is
used can lead to failure.
• Technology and human resources must be working in
an integral manner to ensure success.
• Leaders must have a strong knowledge and capability
in managing both technology and people.
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