INNOVATION & TECHNOLOGY MANAGEMENT CHAPTER 5: PATHS: EXPLOITING TECHNOLOGICAL TRAJECTORIES 1

INTRODUCTION Firms’ innovation strategies are strongly constrained by their current position and by the specific opportunities open to them in future, i.e. they are path-dependent. Two Constraints: Present and likely future state of technological knowledge Limits of Corporate Competence

INTRODUCTION Learning is incremental; trying to learn in too many directions can be costly Hence, innovation is, by and large, focused and constrained. From the concept of path-dependency has emerged the notion of Technological Trajectories.

TECHNOLOGICAL TRAJECTORIES There are marked differences amongst industrial sectors in the sources and direction of technological change, such as: Size of the Firm: Typically BIG in Chemicals, Road vehicles, Material Processing, Aircraft and Electronics Products, and small in machinery, instruments and software. Type of product made: Typically PRICE SENSITIVE in bulk materials and consumer products, and PERFORMANCE SENSITIVE in drugs and machinery. Objectives of Innovation: Typically PRODUCT INNOVATION in drugs and machinery; PROCESS INNOVATION in Steel; Both in Automobiles.

TECHNOLOGICAL TRAJECTORIES Sources of innovation: SUPPLIERS OF EQUIPMENT and other production inputs in agriculture and textiles; CUSTOMERS in machinery, equipment and software; IN-HOUSE R&D in chemicals, electronics and transport; BASIC RESEARCH in drugs. Locus of own innovation: R&D LABS in chemicals and electronics; PRODUCTION ENGINEERING DEPARTMENTS in Automobiles and bulk materials; DESIGN OFFICES in machine-building and SYSTEMS DEPARTMENTS in banks and supermarket chains.

5 MAJOR TECHNOLOGICAL TRAJECTORIES 1. SUPPLIER DOMINATED FIRMS Technical change comes from suppliers of machinery and other production inputs e.g. Agriculture and Textiles Main task of this innovation strategy is TO USE TECHNOLOGY FROM ELSEWHERE TO REINFORCE COMPETITIVE ADVANTAGE

5 MAJOR TECHNOLOGICAL TRAJECTORIES 2. SCALE INTENSIVE FIRMS Technological accumulation is generated by the design, building and operation of complex production systems and products e.g. large civil engg. Projects, extraction and processing of bulk material Main tasks of this innovation strategy are THE INCREMENTAL IMPROVEMENTS IN TECHNOLOGY, EARLIER EXPERIENCE, DEVELOPMENT OF BEST PRACTICES

5 MAJOR TECHNOLOGICAL TRAJECTORIES 3. SCIENCE-BASED FIRMS Technological accumulation is generated by corporate R&D labs Heavily dependent on knowledge, skill techniques emerging from academic research Main tasks of this innovation strategy are TO MONITOR AND EXPLOIT ADVANCES MADE IN BASIC RESEARCH, TO DEVELOP TECHNOLOGICALLY RELATED PRODUCTS, RECONFIGURE IN LIGHT OF CHANGING TECHNOLOGY AND TO ACQUIRE THE COMPLEMENTARY ASSETS

5 MAJOR TECHNOLOGICAL TRAJECTORIES 4. INFORMATION-INTENSIVE FIRMS Have begun to emerge only in the last 10-15 years Services sector mostly; finance, publishing, telecom and travel Main sources of technology are in-house software and systems departments, suppliers of IT hardware & software applications Main purpose is developing systems for information processing Main tasks of this innovation strategy are THE DEVELOPMENT AND OPERATION OF COMPLEX INFORMATION PROCESSING SYSTEMS AND RADICALLY NEW SERVICES

5 MAJOR TECHNOLOGICAL TRAJECTORIES 5. SPECIALIZED SUPPLIER FIRMS Generally small and provide high performance inputs into complex production systems, information processing and product development in the form of machinery, components, instruments and software They accumulate skills to match advances in technologies with user requirements Main tasks of this innovation strategy are TO KEEP UP WITH NUSER NEEDS, LEARNING FROM ADVANCED USERS AND MATCHING NEW TECHNOLOGIES TO USER NEEDS.

REVOLUTIONARY TECHNOLOGIES BIOTECHNOLOGY ADVANCED MATERIALS INFOTECH

DEVELOPING FIRM SPECIFIC COMPETENCIES The sustainable competitive advantage of firms resides not in their products but their CORE COMPETENCIES. Examples of core competencies; SONY in miniaturization PHILIPS in optical media 3M in coatings CANON in precision mechanics, fine optics and microelectronics PEPSI & NIKE in marketing Examples of core products: HONDA in light transport vehicles INTEL in high-performance microprocessors