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Why Strategic Technology Management Matters? Rev: Sep, 2012 Euiho (David) Suh, Ph.D. POSTECH Strategic Management of Information and Technology Laboratory.

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Presentation on theme: "Why Strategic Technology Management Matters? Rev: Sep, 2012 Euiho (David) Suh, Ph.D. POSTECH Strategic Management of Information and Technology Laboratory."— Presentation transcript:

1 Why Strategic Technology Management Matters? Rev: Sep, 2012 Euiho (David) Suh, Ph.D. POSTECH Strategic Management of Information and Technology Laboratory (POSMIT: Dept. of Industrial & Management Engineering POSTECH

2 1-2 Importance of Technological Innovation Technological innovation now the single most important driver of competitive success in many industries Many firms earn over one-third of sales on products developed within last five years Product innovations help firms protect margins by offering new, differentiated features. Process innovations help make manufacturing more efficient.

3 1-3 Product Development Life Cycle Raw Idea Conceptualization (Scientific Approach) R&D Production Pilot Delivery to Customers Full-Scale Production Logistics A Traditional View of Product Cycle Life-Cycle Phases

4 1-4 Importance of Technological Innovation Advances in information technology have enabled faster innovation CAD/CAM systems enable rapid design and shorter production runs Importance of innovation and advances in information technology have lead to: Shorter product lifecycles (more rapid product obsolescence) More rapid new product introductions Greater market segmentation

5 1-5 Impact on Society Innovation enables a wider range of goods and services to be delivered to people worldwide More efficient food production, improved medical technologies, better transportation, etc. Increases Gross Domestic Product by making labor and capital more effective and efficient However, may result in negative externalities, E.g., pollution, erosion, antibiotic-resistant bacteria

6 1-6 Impact on Society Timeline of some of the most important technological innovations in the last 200 years YearTechnological innovations 1800 - 1820 Electric battery Steam locomotive Internal combustion engine Telegraph Bicycle 1821 - 1840 Dynamo Braille writing system Hot blast furnace Electric generator Five-shot revolver 1841 - 1860 Bunsen battery (voltaic cell) Sulfuric ether-based anesthesia Hydraulic crane Petroleum refining Aniline dyes 1861 – 1880 Gatling gun Typewriter Telephone Phonograph Incandescent light bulb 1881 - 1900 Light steel skyscrapers Internal combustion automobile Pneumatic tire Electric stove X-ray machine YearTechnological innovations 1901 - 1920 Air conditioner (electric) Wright biplane Electric vacuum cleaner Electric washing machine Rocket 1921 - 1940 Insulin (extracted) Television Penicillin First programmable computer Atom fission 1941 – 1960 Aqua lung Computer Nuclear reactor Transistor Satellite Integrated circuit 1961 – 1980 Portable hadheld calculator ARPANET (precursor to Internet) Microprocessor Mobile (portable cellular) phone Supercomputer 1981 - 2000 Space shuttle (reusable) Disposable contact lenses High-definition television World Wide Web protocol Wireless Internet 2001 - 2020 Map of human genome Smart phone / Tablet PC Electric car

7 1-7 Impact on Society GDP per Capita for the world, US, etc. from 1970 to 2008 The average of GDP per capita has risen steadily Because of Technological Innovation (By Economist Robert Merton Solow) GDP (Gross domestic Product) : The total annual output of an economy as measured by its final purchase price GDP converted into U.S. dollars and adjusted for inflation

8 1-8 Innovation by Industry: The Importance of Strategy Successful innovation requires carefully crafted strategies and implementation processes. Innovation funnel Most innovative ideas do not become successful new products.

9 1-9 How long does new product development take? Study administered by the Product Development and Management Association found: Length of development cycle varies with innovativeness of project Incremental projects took 6.5 months from concept to market introduction More innovative projects took just over 14 months. New-to-the-world products took 24 months. On average, firms reported 12% to 40% shorter cycle times than they reported in 1995. Research Brief

10 INNOVATION + STRATEGY 10 Old: –God helps those who help themselves! –INNOVATION alone works??? New: –God helps those who have strategies!

11 The VCR Battle (Betamax vs. VHS) 11 SONY: The biggest loser of standards war? SONY: Betamax, 1974JVC: VHS, 1976 95% of the VCR market, 1988

12 12 Apple had better quality with a higher level of technology Due to its closed platform, less technical supports were provided IBM made bigger profits than Apple, relying on the compatibilities with other software and hardware providers (e.g. Microsoft Windows) Even though Apples technology was better than IBMs, IBM beat Apple because of their high compatibilities PC - Apple vs. IBM Open PlatformClosed Platform VS.

13 13 Game - Atari vs. Nintendo Atari released the first successful video game console using plug-in cartridges, instead of having built-in games Because Atari accepted both low-quality games and high-quality games, the Ataris customers who played low-quality games were unsatisfied with their products Nintendo controlled video game manufacturers and constructed library containing only qualified games This strategy insured that Nintendo remained profitable and achieved remarkable success in video game market VS. High quality games Low quality games

14 14 Game Console - Playstation vs. Wii Playstation 3 has more excellent graphics and outstanding processing power over Nintendo Wii The advantages (e.g. gesture based control, availability to everyone, lower price, family- friendly image) of Wii lead itself to a big success in the game market VS.

15 15 MP3 player - Zune vs. Ipod Zune and iPod provide their own music management software; Zune: Zune player, iPod: iTunes Zune player only supports the songs purchased in Zune market while iTunes supports any songs Even though Zunes spec is better than iPods, iPod have more compatibility and convenience iPod got an overwhelming victory over Zune VS.

16 16 Lotus 1-2-3 (1983) and Microsoft Excel (1985) have similar functions in both quality and efficiency perspectives Lotus only focused on OS/2 while MS Excel could be compatible with Window As Window had became more and more popular, MS Excel beat Lotus 1-2-3, even though they have no big differences. Spreadsheet - Lotus 1-2-3 vs. Excel VS.

17 17 Beverage - Pepsi vs. Coca-Cola Pepsi Cola is a much sweeter beverage than Coca cola The popularity of Coke's brand image misleads people to think Coca-Cola itself tastes better, even though it really doesn't taste very different from Pepsi First-mover Advantage 815 Cola (Released in 1998) –Customers didnt tell 815 Cola from Coca-Cola in blind test –At first, it was successful, occupying 13.7% of market share –However, 815 Cola went bankrupt in 2007 because of major cola companies product flooding VS.

18 18 E-Mart developed VESS Cola with Cott, a beverage company in U.S. (OEM)* –Lower price than cola from major companies (66% lower than convenience store price, 37% lower than supermarket price) In domestic cola market, Coca-Cola occupies 75-80% of market share and Pepsi cola occupies the remaining market share –Some brands have developed cola products but they failed due to the reputation of Coca-Cola VESS Cola is developed through about 40 times of blind tests What would be the result? What would be the result? * OEM: Original Equipment manufacturer VESS Cola vs. Coca-Cola VS.

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