Instructor’s Manual
Strategic Management of Technological Innovation, 4e
Instructor’s Manual
1
© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any
manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
,Instructor’s Manual
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 products 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 positive 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 ideas 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 they have a
2
© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any
manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
, Instructor’s Manual
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 innovation 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
© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any
manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
, Instructor’s Manual
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 strategy 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 competitors.
i) For example, Nokia produces almost 80 models of wireless phones and Sony
produces over 50 models of its portable audio players.
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.
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.
4
© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any
manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Strategic Management of Technological Innovation, 4e
Instructor’s Manual
1
© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any
manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
,Instructor’s Manual
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 products 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 positive 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 ideas 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 they have a
2
© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any
manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
, Instructor’s Manual
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 innovation 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
© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any
manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
, Instructor’s Manual
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 strategy 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 competitors.
i) For example, Nokia produces almost 80 models of wireless phones and Sony
produces over 50 models of its portable audio players.
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.
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.
4
© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any
manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
