Strategic Management T9 Innovation strategies and high tech industries Business Administration Prof.Dr. E.Vatchkova

Contents J&Sh,02 1.Technology, innovation and strategic success 2.Technological trajectories (paths) 3.Strategic advantage trough innovation 4.Strategy and technology 5.The diffusion of innovation 6.Funding and location of R&D 7.Enabling success through technology

Innovation emphasis in mission statements (1) Willin,T, Hunger, D  AT&T:” We believe innovation is the engine that will keep us vital and growing. Our culture embraces creativity, seeks different perspectives and risks perusing new opportunities. We create and rapidly convert into products and services, constantly searching for new ways to make technology more useful to customers”

Innovation emphasis in mission statements (2) Willin,T, Hunger, D  Intel: ”To succeed we must maintain our innovative environment. We strive to: embrace change, challenge the status quo, listen to all ideas and view points, encourage and reward informed risk taking, and learn from our successes and mistakes”

Innovation emphasis in mission statements (3) Willin,T, Hunger, D  Merck &Co: ”We are dedicated to achieving the highest level of scientific excellence and commit our research to maintaining human health and improving the quality of life”  Gillete: “We will invest in and master the key technologies vital to category success”

Innovation – the key strategic issue 1.What is the relationship between technology, innovation and the strategic success? 2.How the technology will assist in the creation and sharing of knowledge in the organization? 3.What forms technological innovation can take? 4.How this process will provide competitive advantage?

Technological trajectories  Supplier dominated innovation  Sale-intensive  Information intensive  Science-based

Innovation, enabling strategic success  How technology changes the competitive situation?  How technology influence the strategic capacity?  How to organize technological change to achieve strategic advantage?

Strategic advantage through innovation MECHNISM STRATEGIC ADVANTAGE Offering something: Novelty in product or service No one else can Novelty in process In ways others can’t match – faster, lower cost, more customized In ways others can’t match – faster, lower cost, more customized Complexity Which others find difficult to master Legal protection of intellectual property Which others can not do unless they pay you a license or other fee Robust design Which provides the platform on which other generations can be built Rewriting the rules Which represents a completely new product or process which makes the old ones redundant

Strategy and technology Strategy Technology and the competitive situation Competitive forces Technology diffusion Technology and the strategic capability Core competences Developing/acquiring technology Organizing technology Location and funding Enabling processes

Diffusion of innovations (the extent and pace at which a market is likely to adopt new products)  Supply – side models: product features  Degree of improvement in performance  Compatibility with other factors  Complexity  Experimentation  Demand - side models: the market processes between consumers  Integration of these two sets of knowledge

Developing or acquiring technology - General principles  In – house development -Gaining first mover advantages  Alliances -Appropriate for “threshold” technologies  Acquisition of current players or rights - if speed is important

Funding and location of R&D Assessing new technologiesCommercializing New technologies Exploratory Development of new technologies Incremental product or process improvements LOCATED AT FUNDED BY CorporateDivisional Corporate Divisional

Processes, enabling the success of strategies  Scanning the business environment  Resourcing developments adequately  Developing creative climate, where innovation is fostered  Creating learning organization

Corporate entrepreneurship (Intrapreneurship) “ the birth of new business within existing organizations, that is, internal innovation or venturing; and the transformation of organizations through renewal of the key ideas on which they are built, that is, strategic renewal” Guth, Ginsburg

Organizational designs for corporate entrepreneurship (1) Wheelen, Hunger 1.Direct integration 2.New product business department 3.Special business units 4.Micro new ventures department 5.New venture division 6.Independent business unit 7.Nurturing and contracting 8.Contracting 9.Complete spin-off