Solution Manual For Strategic Management of Technological Innovation 7th Edition By Melissa Schilling

1 © MCGRAW HILL LLC. ALL RIGHTS RESERVED. NO REPRODUCTION OR DISTRIBUTION WITHOUT THE PRIOR WRITTEN CONSENT OF MCGRAW HILL LLC. Solution Manual For Strategic Management of Technological Innovation 7th Edition by Melissa Schillin CHAPTER 1 The Importance of Technological Innovation SYNOPSIS OF CHAPTER The purpose of this chapter is to set the stage for the course by establishing the importance of managing technological innovation strategically. First the chapter overviews the importance of technological innovation for a firm‟s competitive success and the advancement of society in general. The chapter points out that 1) many firms are relying on pr oducts developed in the previous three to five years for large portions of their sales and profits; 2) globalization has increased competition putting more pressure on firms to compete through innovation; 3) advances in information technology have enabled both process improvements and the efficient generation of product variants which facilitates the execution of a differentiation strategy at a reasonable cost; and that 3) the residual growth in the GDP can be attributed to technological change. Both the po sitive and negative effects of technological innovation are described. Advances in food production are an example of the first and pollution is an example of the latter. Next the innovation funnel is introduced to show students that on average 3,000 raw id eas must enter the funnel in order to arrive at 1 successful new product launch. Second, the chapter discusses the risks and cost of innovation. On average, many more innovation projects fail than succeed. Firms are much more likely to be successful if th ey have a 2 © MCGRAW HILL LLC. ALL RIGHTS RESERVED. NO REPRODUCTION OR DISTRIBUTION WITHOUT THE PRIOR WRITTEN CONSENT OF MCGRAW HILL LLC. well-crafted strategy for technological innovation. The book is organized to follow the chronological sequence of developing and deploying a rigorous technological innovation strategy, leading the students through each of the primary aspects that should be considered. The final section of the chapter outlines the layout of the book, reviewing the contribution each chapter makes to our understanding of the innovation process. TEACHING OBJECTIVES 1. Introduce students to the role technological innovat ion plays in the competitive dynamics of industries and how technological innovation affects society both positively and negatively. 2. Identify the drivers of technological innovation. 3. Discover the attributes of successful innovation strategies including an in-depth understanding of the dynamics of innovation, a well -crafted innovation strategy, and a well-developed process for implementing the innovation strategy. LECTURE OUTLINE I) Overview a) In many industries technological innovation is now the single most important driver of competitive success and because the pace of innovation has increased many firms now rely on products developed within the prior five years for a large portion of their sales and profits. This period is reduced to three years for firms in fast-paced industries such as computers, software and telecommunications. 3 © MCGRAW HILL LLC. ALL RIGHTS RESERVED. NO REPRODUCTION OR DISTRIBUTION WITHOUT THE PRIOR WRITTEN CONSENT OF MCGRAW HILL LLC. b) Innovation is also a very powerful driver of increased effectiveness and efficiency in producing goods and bringing them to market; firms that do not constantly innovate to make their development, production, and distribution processes more effective and efficient are likely to fall behind their competitors. c) The globalization of markets has played a significant role in increasing the importance of innovation as a competitive stra tegy by increasing competitive pressure. d) Advances in information technology have also played a role in driving up the pace of innovation. These technologies also help firms to develop and produce more product variants enabling them to out-focus their comp etitors. i) For example, Toyota produces dozens of different passenger vehicle lines, each with several different models and Samsung introduced 43 unique smartphones in 2021 . e) Adoption of these new technologies has triggered industry -wide shifts to shortened development cycles and more rapid new product introductions . f) The proportion of funds for technological innovation provided by firms relative to government funding has been increasing but governments do play a significant role in the innovation process. II) The Impact of Technological Innovation on Society a. Technological innovation increases the range of goods and services available to a society, and the efficiency of providing them . For example, innovation has increased the development of new medical treatments and the efficiency of food production. 4 © MCGRAW HILL LLC. ALL RIGHTS RESERVED. NO REPRODUCTION OR DISTRIBUTION WITHOUT THE PRIOR WRITTEN CONSENT OF MCGRAW HILL LLC. i. The Solow residual is the GDP growth represented by technological change. Average world GDP per capita has risen steadily since 1971 and cannot be attributed solely to the growth of labor and capital inputs. Show Figure 1.2 b. The story is not all positive, however . Sometimes technological innovation results in negative externalities such as pollution and medical technologies can have unanticipated consequences. III) Innovation By Industry: The Importance of Strategy a. Succes sful innovators have clearly defined innovation strategies and management processes that result in a greater percentage of successful products and shorter development cycles. b. How Long Does New Product Development Take? Cycle time varies with the “innovativ eness” of the project. Incremental improvements take less time than next generation improvements while new -to-the-world products or technologies take the longest. c. The Innovation Funnel depicts the new product development process as beginning with many new product ideas going in the wide end and ending with very few projects making it through the development process (the bottom of the funnel). Show Figure 1.3 IV) The Strategic Management of Technological Innovation a. A firm‟s innovation projects should align with its resources and objectives , leverage its core competencies and should help the firm achieve its strategic intent .