Master in Engineering Policy and Management of Technology, 8 th Edition Science, Technology and Innovation Policy “Automobiles" 1 Charles H. Fine Daniel M. G. Raff “Technological Innovation and Economic Performance” Chapter 17: “Automobiles” B. Steil, D.G. Victor and R. Nelson, “Technological Innovation and Economic Performance” Princeton Univ. Press, pp Chapter 17: “Automobiles” Students: João Castro Rui Carvalho

Master in Engineering Policy and Management of Technology, 8 th Edition Science, Technology and Innovation Policy “Automobiles" 2 INDEX 1.INTRODUCTION 2.PRODUCT AND DESIGN INNOVATION 3.INNOVATION IN PRODUCTION SYSTEMS 4.ORGANIZATION INNOVATION: INTERNAL OPERATIONS AND THE EXTENDED ENTERPRISE 5.CONCLUSIONS

Master in Engineering Policy and Management of Technology, 8 th Edition Science, Technology and Innovation Policy “Automobiles" 3 1. Introduction -Mature sector in industrialized economies (US, Japan, Europe) -Accounts for a fraction of GDP (Portugal 7%, 23% of exports) [1] -Scale Intensive Sector (Pavvits Taxonomy) Complex product, incremental innovations, VP -Productivity influenced by technology and managerial innovation law and policy -The authors consider 3 types of innovation: product, process and organizational -Focus on US (Competitive market)

Master in Engineering Policy and Management of Technology, 8 th Edition Science, Technology and Innovation Policy “Automobiles" 4 The Value of Product Innovations

Master in Engineering Policy and Management of Technology, 8 th Edition Science, Technology and Innovation Policy “Automobiles" 5 WW II Ford T ( units) Great Depression (US) WW I (US) Ford A ( units) Oil Crises Prices drop as quantity explodes

Master in Engineering Policy and Management of Technology, 8 th Edition Science, Technology and Innovation Policy “Automobiles" 6 2. Product and Design Innovation complex -Automobile is a complex good -At least 10,000 parts that must work well together inventory problems -Long history of inventory problems (superficial changes as marketing strategy) -Design and production evolved as technology did -Regulation on safety and emissions affect product innovation

Master in Engineering Policy and Management of Technology, 8 th Edition Science, Technology and Innovation Policy “Automobiles" 7 Geographic Differences -Natural oil reserves -Spatial limitations (large cars vs. small cars) -Bias of innovation value -Efficiency in product development Japanese volume producer U.S volume producer European volume producer Year of Introduction Average engineering [million hours] Lead Time [months]42,661,957,6

Master in Engineering Policy and Management of Technology, 8 th Edition Science, Technology and Innovation Policy 8 3. INNOVATION IN PRODUCTION SYSTEMS before fordism. spirit of enterprise/ companies formed in profusion. products made in small number. skilled mechanics/artisans. unit costs high. good environment for local firms aquisition

Master in Engineering Policy and Management of Technology, 8 th Edition Science, Technology and Innovation Policy 9 fordism think the PRODUCT. undifferrentiated. cheap. sturdy. easy to repair. car for the multitudes but also the PROCESS. mechanism of parts and components. economies of scale very important. new internal organization. large number of unskilled workers

Master in Engineering Policy and Management of Technology, 8 th Edition Science, Technology and Innovation Policy 10 Toyota Production System - TPS (lean production) QUALITY IMPROVEMENT a. precedents. oil price shock (1970). blue – collar employees were alienated. oligopolists competed among themselves (...) b. main characteristics. flexibility. efficiency. quality in the production process. learn from mistakes and continuously improve operations EFFICIENCY

Master in Engineering Policy and Management of Technology, 8 th Edition Science, Technology and Innovation Policy 11 Alfred Sloan. minimized the degree of competition between divisions producing final goods. import and redifine financial concepts for managerial control. collective scale of the divisions without depressing divisional profits. brand culture diffussion 4. Organization innovation: internal operations and the extended enterprise early years. entrepreneurs (engineers and businessmen). tremounds rates of entry and exit. close to metal suppliers (upper Midwest)

Master in Engineering Policy and Management of Technology, 8 th Edition Science, Technology and Innovation Policy 12 Crysler – Extended Entrepise System (90’s). based on the model of Honda. based on pitting the suppliers against one another. long-term relationships. more responsility to its suppliers. sharing the rents and incremental cost savings. advantage in mini vans and jeeps. more cooperative relationship with a stronger more technologically capable supply IT’S POSSIBLE TO REPLICATE THE CRYSLER MODEL? (DAIMLER BENZ)

Master in Engineering Policy and Management of Technology, 8 th Edition Science, Technology and Innovation Policy 13 other important aspects. marketing toll – annual model changes. consumer finance units. Dealer´s Day In Court Act... Can Internet change the balance of power?. coordination challenges of a rapid make-to-order system

Master in Engineering Policy and Management of Technology, 8 th Edition Science, Technology and Innovation Policy Conclusions. great influence in other manufacturing industries. great number of factors that influnce the development of the produt, system process, and organizational (urban structure, regulatory context, innovations infrastructures. organizational innovation more difficult to import than produt innovation. tendences to concentration – some few giants (Ford, GM, Daimler Chrysler, Renaut, Wolkswagen)