summary: strategic management of
technological innovation v2
latest update.
chapter 1: introduction .............................................................................................................................2
chapter 2 sources of innovation ...............................................................................................................3
chapter 3 types and patterns of innovation..............................................................................................7
chapter 4 standards battles and design dominance ...............................................................................10
chapter 5 timing of entry ........................................................................................................................14
chapter 6 defining the organization’s strategic direction........................................................................18
chapter 7 choosing innovation projects..................................................................................................22
chapter 8 collaboration strategies ..........................................................................................................28
chapter 9 protecting innovation .............................................................................................................32
chapter 10: organizing for innovation.....................................................................................................37
chapter 11: managing the new product development process ..............................................................41
chapter 13 crafting a deployment strategy.............................................................................................45
1
,chapter 1: introduction
the importance of technological innovation
- technological innovation: the act of introducing a new device, method, or material for application to
commercial or practical objectives.
- the increasing importance of innovation is due in part to the globalization of markets. introducing
new products helps firms protect their margins (stay differentiated), while investing in process
innovation helps firms lower their costs.
the impact of technological innovation on society
- innovation enables a wider range of goods and services to be delivered to people worldwide.
- gross domestic product (gdp): the total annual output of an economic as measured by its final
purchase price. >technological innovation increased the amount of output achievable from a given
quantity of labour or capital. next to this, gdp growth from growth in labour and capital inputs.
- technological innovation: the creation of new knowledge that is applied to practical problems.
innovation by industry: the importance of strategy
- the majority of effort and money invested in technological innovation comes from industrial firms.
the innovation funnel
- many potential new product ideas go in the wide end, but very few making it through the
development process.
the strategic management of technological innovation
- a firm’s innovation projects should align with its resources and objectives, leveraging its core
competencies and helping it achieve its strategic intent.
- a firm’s organizational structure and control system should encourage the generation of innovative
ideas while also ensuring efficient implementation.
- a firm’s new product development process should maximize the likelihood of projects being both
technically and commercially successful.
- to achieve the above three things, a firm needs:
1. an in-depth understanding of the dynamics of innovation
2. a well-crafted innovation strategy
3. well-designed process for implementing the innovation strategy.
2
,chapter 2 sources of innovation
overview
innovation (the practical implementation of an idea into a process or product) can arise from many
different sources. individuals who have their own needs, researchers on universities, government
laboratories and non-profit organizations. firms are a primary source of innovation, since they have
resources and management to allocate these resources. besides that they have strong incentives to
innovate, such as competition.
one of the most powerful sources of innovation are not the individuals but the network between
these actors. the sources of innovation can be seen as a system of innovation.
creativity
innovation start with ideas (something imagined or pictures in the mind. the ability to create new
ideas is called creativity. it is defined as the ability to produce novel (different from other, not the
logical next step) and useful work. how novel a product is, is a function of the deviation from
previous work, and the audience prior experiences.
individual creativity
the creativity of an individual is the function of his/hers: intelligence, knowledge, style of thinking,
personality, motivation and environment.
the intellectual abilities include: the ways to look at a problem, the ability to see what to pursuit or
not and the ability to articulate those ideas to others to convince them that they are worth going for.
knowledge is double-edged, lack of knowledge makes that it is hard to contribute, however it can
also limit in creative thinking.
referring to own skills, intrinsic motivation, self-efficacy, tolerance for ambiguity, taking risk, and
willingness to overcome obstacles play a role.
organizational creativity
the creativity of an organization is a function of the creativity of the individuals, and the processes
and context in which these individuals interact and behave. it is not simply the sum of all individuals.
one way to tap creativity is the suggestion box. nowadays some firms have very large ways to deal
with these tapped ideas often based on the intranet of an organization.
the suggestions are only one first step, many companies have creativity training programs. this must
give employees the sign that there is worked with their ideas. rewarding sometimes is based on the
wrong motivation, so not leading to more creativity.
translating creativity into innovation
innovation is more than only creating ideas, it is implementing these ideas into products or
processes. therefore ideas need to be combined with resources and expertise.
the inventor
research suggest that successful inventor have the following traits:
- mastered basic tools and operations of more than one field they are working in
- curios and more interested in problems than solution
-question the assumptions made in earlier work
- sense that knowledge is unified, global solution, and generalists
innovation by users
innovation often come with those who solve own needs. they understand the unmet needs and have
an incentive to solve them. users are often not motivated by making profits out of the solutions. they
may improve products themselves or suggest it to manufactures.
3
, research and development by firms
research and development or often lumped together but they represent different things, having
different investment and innovation related activities.
research can refer to basic research (increasing scientific knowledge for own stake, might have long
term commercial application. applied research is targeted at gaining knowledge for a specific target
or need.
development refers to activities that apply knowledge to produce useful materials, devices or
processes. firm see their r&d as most important source of innovation.
in the 50’s and 60’s scholars emphasized a science-push approach for innovation (r&d). it assumes
that an innovation proceeded linear from discovery to invention, engineering, manufacturing, and
finally marketing. the sources of innovation were the scientific finding translated into products.
from the 60’s the demand-pull model was more prominent. research would have to respond to
customer needs. this is however criticized as being too simplistic.
nowadays a kind of combination between pull and push is used. successful firm have:
-in-house research
-linkages to customers and potential users
-linkages to external firms
-linkages to external sources of information and knowledge
firm linkages with customers, suppliers, competitors, and complementors
firms often form alliances to work on innovation, the types are discussed in chapter 8. collaborator
can pool resources, knowledge and capital, and they can share the risk.
the most frequent collaboration are between firms, their customers, suppliers and local universities.
firms might also collaborate with competitors and complementors. complementors are the
producers of complementary goods and services. sometimes firms can be both competitor and
complementor, making complex relationships.
external versus internal sourcing of innovation
empirical evidence shows that external knowledge is complement to internal gained knowledge is can
hardly replace it. doing thing in house raises more networks, and it builds on the absorptive capacity,
the ability to recognize, assimilate and utilize new knowledge.
universities and government-funded research
many companies say that universities and so have a contribution in innovations.
universities
universities can come up with patentable and unpatentable innovations and they often share the
income of it with the inventor. universities have established technology transfer offices to transform a
research innovation into a commercially environment.
government-funded research
governments stimulate innovation with the creation of science parks and incubators. in these
governments invest in projects which would otherwise lack in resources. the parks give rise to
technology clusters and have long-lasting and self-reinforcing advantages.
private nonprofit organizations
are another way to get resources allocated to their projects. they can do both in-house research or
support research performed by others.
4
technological innovation v2
latest update.
chapter 1: introduction .............................................................................................................................2
chapter 2 sources of innovation ...............................................................................................................3
chapter 3 types and patterns of innovation..............................................................................................7
chapter 4 standards battles and design dominance ...............................................................................10
chapter 5 timing of entry ........................................................................................................................14
chapter 6 defining the organization’s strategic direction........................................................................18
chapter 7 choosing innovation projects..................................................................................................22
chapter 8 collaboration strategies ..........................................................................................................28
chapter 9 protecting innovation .............................................................................................................32
chapter 10: organizing for innovation.....................................................................................................37
chapter 11: managing the new product development process ..............................................................41
chapter 13 crafting a deployment strategy.............................................................................................45
1
,chapter 1: introduction
the importance of technological innovation
- technological innovation: the act of introducing a new device, method, or material for application to
commercial or practical objectives.
- the increasing importance of innovation is due in part to the globalization of markets. introducing
new products helps firms protect their margins (stay differentiated), while investing in process
innovation helps firms lower their costs.
the impact of technological innovation on society
- innovation enables a wider range of goods and services to be delivered to people worldwide.
- gross domestic product (gdp): the total annual output of an economic as measured by its final
purchase price. >technological innovation increased the amount of output achievable from a given
quantity of labour or capital. next to this, gdp growth from growth in labour and capital inputs.
- technological innovation: the creation of new knowledge that is applied to practical problems.
innovation by industry: the importance of strategy
- the majority of effort and money invested in technological innovation comes from industrial firms.
the innovation funnel
- many potential new product ideas go in the wide end, but very few making it through the
development process.
the strategic management of technological innovation
- a firm’s innovation projects should align with its resources and objectives, leveraging its core
competencies and helping it achieve its strategic intent.
- a firm’s organizational structure and control system should encourage the generation of innovative
ideas while also ensuring efficient implementation.
- a firm’s new product development process should maximize the likelihood of projects being both
technically and commercially successful.
- to achieve the above three things, a firm needs:
1. an in-depth understanding of the dynamics of innovation
2. a well-crafted innovation strategy
3. well-designed process for implementing the innovation strategy.
2
,chapter 2 sources of innovation
overview
innovation (the practical implementation of an idea into a process or product) can arise from many
different sources. individuals who have their own needs, researchers on universities, government
laboratories and non-profit organizations. firms are a primary source of innovation, since they have
resources and management to allocate these resources. besides that they have strong incentives to
innovate, such as competition.
one of the most powerful sources of innovation are not the individuals but the network between
these actors. the sources of innovation can be seen as a system of innovation.
creativity
innovation start with ideas (something imagined or pictures in the mind. the ability to create new
ideas is called creativity. it is defined as the ability to produce novel (different from other, not the
logical next step) and useful work. how novel a product is, is a function of the deviation from
previous work, and the audience prior experiences.
individual creativity
the creativity of an individual is the function of his/hers: intelligence, knowledge, style of thinking,
personality, motivation and environment.
the intellectual abilities include: the ways to look at a problem, the ability to see what to pursuit or
not and the ability to articulate those ideas to others to convince them that they are worth going for.
knowledge is double-edged, lack of knowledge makes that it is hard to contribute, however it can
also limit in creative thinking.
referring to own skills, intrinsic motivation, self-efficacy, tolerance for ambiguity, taking risk, and
willingness to overcome obstacles play a role.
organizational creativity
the creativity of an organization is a function of the creativity of the individuals, and the processes
and context in which these individuals interact and behave. it is not simply the sum of all individuals.
one way to tap creativity is the suggestion box. nowadays some firms have very large ways to deal
with these tapped ideas often based on the intranet of an organization.
the suggestions are only one first step, many companies have creativity training programs. this must
give employees the sign that there is worked with their ideas. rewarding sometimes is based on the
wrong motivation, so not leading to more creativity.
translating creativity into innovation
innovation is more than only creating ideas, it is implementing these ideas into products or
processes. therefore ideas need to be combined with resources and expertise.
the inventor
research suggest that successful inventor have the following traits:
- mastered basic tools and operations of more than one field they are working in
- curios and more interested in problems than solution
-question the assumptions made in earlier work
- sense that knowledge is unified, global solution, and generalists
innovation by users
innovation often come with those who solve own needs. they understand the unmet needs and have
an incentive to solve them. users are often not motivated by making profits out of the solutions. they
may improve products themselves or suggest it to manufactures.
3
, research and development by firms
research and development or often lumped together but they represent different things, having
different investment and innovation related activities.
research can refer to basic research (increasing scientific knowledge for own stake, might have long
term commercial application. applied research is targeted at gaining knowledge for a specific target
or need.
development refers to activities that apply knowledge to produce useful materials, devices or
processes. firm see their r&d as most important source of innovation.
in the 50’s and 60’s scholars emphasized a science-push approach for innovation (r&d). it assumes
that an innovation proceeded linear from discovery to invention, engineering, manufacturing, and
finally marketing. the sources of innovation were the scientific finding translated into products.
from the 60’s the demand-pull model was more prominent. research would have to respond to
customer needs. this is however criticized as being too simplistic.
nowadays a kind of combination between pull and push is used. successful firm have:
-in-house research
-linkages to customers and potential users
-linkages to external firms
-linkages to external sources of information and knowledge
firm linkages with customers, suppliers, competitors, and complementors
firms often form alliances to work on innovation, the types are discussed in chapter 8. collaborator
can pool resources, knowledge and capital, and they can share the risk.
the most frequent collaboration are between firms, their customers, suppliers and local universities.
firms might also collaborate with competitors and complementors. complementors are the
producers of complementary goods and services. sometimes firms can be both competitor and
complementor, making complex relationships.
external versus internal sourcing of innovation
empirical evidence shows that external knowledge is complement to internal gained knowledge is can
hardly replace it. doing thing in house raises more networks, and it builds on the absorptive capacity,
the ability to recognize, assimilate and utilize new knowledge.
universities and government-funded research
many companies say that universities and so have a contribution in innovations.
universities
universities can come up with patentable and unpatentable innovations and they often share the
income of it with the inventor. universities have established technology transfer offices to transform a
research innovation into a commercially environment.
government-funded research
governments stimulate innovation with the creation of science parks and incubators. in these
governments invest in projects which would otherwise lack in resources. the parks give rise to
technology clusters and have long-lasting and self-reinforcing advantages.
private nonprofit organizations
are another way to get resources allocated to their projects. they can do both in-house research or
support research performed by others.
4
