1. Why Innovate, Management of Technological Innovation 1 Why Innovate?

2. Why Innovate, Management of Technological Innovation 2 Management of Technological Innovation Lesson 2 Why Innovate? Changes in World Industry Why Innovate?

3. Why Innovate, Management of Technological Innovation 3 World Region HKSAR You as Innovator and Technical Manager Dragons Japan China Mainland

4. Why Innovate, Management of Technological Innovation 4 Factors of Production and Economic Growth Capital (Now, reasonable in HK) Raw materials (Nil in HK) Land (Very little in HK) Labor (Limited in HK) Technology or Technovation (Some technology transfer in the past but very little technovation in HK) Technology and its development need to be managed effectively for the generation of wealth and resources.

5. Why Innovate, Management of Technological Innovation 5 Change is the only thing constant these days. Much of this change is due to growth in technology. Growth in technology takes place through continual innovations.

6. Why Innovate, Management of Technological Innovation 6 Changes in world industry Shorter product life cycles Shorter product changeover cycles Higher rate of new product development Shorter production runs Quality, and productivity-quality integration (ISO 9000, zero defects) Company-wide total quality management (TQM) Equipment and process technology as a strategic resource Flexible manufacturing systems (FMS)

7. Why Innovate, Management of Technological Innovation 7 Emphasis on flexibility and innovativeness beyond efficiency and productivity Emphasis on customer responsiveness, agility and speed to market Worker training and worker participation Extensive use of CAD, CAM, rapid prototyping Increasing use of decision support systems (DSS), expert systems, simulation, etc. Increasing use of information technology

8. Why Innovate, Management of Technological Innovation 8 Dominant Trends Localization Automation Knowledge-intensive nature of production and service related activities Faster metabolism through IT and Internet Transnational strategic alliances between firms, organization networks and inter- organizational structures.

9. Why Innovate, Management of Technological Innovation 9

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11. Why Innovate, Management of Technological Innovation 11 Common problems in industry Over-capacity of production facilities Increasing market segmentation and saturation Changing customer values and more exacting user requirements of cost, quality and performance Emergence of unexpected competitors across the world Unsteady currencies, exchange rates, and markets

12. Why Innovate, Management of Technological Innovation 12 Toyota’s approach to car manufacturing : ‘It’s a wrong notion to believe that mass production will guarantee you less cost. That was true in the 1960s,in those days, where there was a high demand. But the notion has become a myth that no longer applies in the 1980s and beyond. Now production capacity exceeds demand. For some reason many people in the world still believe in this myth and they still take for granted that if they increase mass production they can reduce costs.’

13. Why Innovate, Management of Technological Innovation 13 P roductivity Q uality I nnovation Industrial Progress

14. Why Innovate, Management of Technological Innovation 14 Innovation is not easy Although innovation is increasingly seen as a powerful way of obtaining competitive advantage and more secure approach to defending strategic positions, success is not guaranteed. After all, innovation is by its nature a risky business. And we need to remember that there is a great deal of uncertainty in innovation, made up of technical, market, social, political and other factors.

15. Why Innovate, Management of Technological Innovation 15 Innovation is essential Because the innovation process is so uncertain, it sounds that it is forgivable for many organizations to decide not to innovate. But, the approach of doing nothing is rarely an option, especially in the rapid change of the technology and the economics.

16. Why Innovate, Management of Technological Innovation 16 We have no option but to learn to manage innovation So the question is not one of whether or not to innovate but rather of how to do so successfully. What lessons can we learn from research and experience, and is there any pattern to these which might be used to guide actions? (Visit the case Study on the “Decline of Wang” here)

17. Why Innovate, Management of Technological Innovation 17 Per Capita GDP Ranking, 1997 1. Luxembourg 2. USA 3. Switzerland 4. Kuwait 5. Hong Kong (US$26,400) Ref: 1st Report of Chief Executive’s Commission on Innovation and Technology, September 1998.

18. Why Innovate, Management of Technological Innovation 18 % Share of Mfg in HK GDP

19. Why Innovate, Management of Technological Innovation 19 % Share of Mfg in HK Employment

20. Why Innovate, Management of Technological Innovation 20 Gross Output of HK Mfg Sector HK$ Billion

21. Why Innovate, Management of Technological Innovation 21 Value Added Per Person (HK$)

22. Why Innovate, Management of Technological Innovation 22 Is manufacturing hollowing out in Hong Kong? Or, Is there an industrial transformation?

23. Why Innovate, Management of Technological Innovation 23 Transformation: Mfg Moves to the Mainland To Lower Costs Over 4M workers in the mainland 1995: HK exports to mainland up by 20% 1995: 71% of domestic exports and 40% of re-exports attributed to outward processing activities in the mainland 1995: 74% of imports and 82% re-exports of mainland origin

24. Why Innovate, Management of Technological Innovation 24 A quote from the second report (1999) of HKSAR Chief Executive’s Commission on Innovation and Technology “There is strong competition [to HKSAR] from neighboring economies for Hong Kong’s regional role in trade, finance, transportation and communications. With respect to manufacturing, Hong Kong must strive to support and further develop high-value activities. Hong Kong is also facing stiff competition from low-cost economies. A fundamental challenge is how Hong Kong should position itself in the knowledge-based, global economy of the 21st century.”

25. Why Innovate, Management of Technological Innovation 25 Maslow’s Theory of Human Needs Physiological Needs Safety Needs Belonging and Love Needs Esteem Needs Self- Actualization Needs

26. Why Innovate, Management of Technological Innovation 26 Human Needs: Maslow’s Theory Physiological needs, Safety needs, Belonging and love needs, Esteem needs, and Needs for self- actualization. Esteem needs prompt users to move to new products quickly - you buy a new shirt you like even if you already have too many shirts. Modern customers are demanding more product variety and more innovative products.

27. Why Innovate, Management of Technological Innovation 27 Missionary you work enthusiastically towards your own vision of the organization Self-fulfilling (and) you identify your own values and goals, and work towards them. Proactive (and) you identify with the goals you have been set, and actively work towards them. Reactive (and) you understand and work towards the goals you have been set, responding to constraints and limitations Sluggish (and) you do what you are told (when the boss is looking) Free Controlled Intrinsically motivated you respond to your own vision you are creative with high motivation Extrinsically motivated you respond to the expectations of others you are less creative with low motivation [Petty 1997]

28. Why Innovate, Management of Technological Innovation 28 Success So I create original and workable ideas Self-belief I trust my abilities my taste, and my judgement Courage I am prepared to take risks be original persevere in the face of difficulties

29. Why Innovate, Management of Technological Innovation 29 Controlling Management Style It is necessary to control you You feel powerless, unappreciated, and perhaps resentful You do poor work. Your self-esteem and motivation fail

30. Why Innovate, Management of Technological Innovation 30 Trusting Management Style You are trusted You feel valued, respected and responsible You do better work. Your self-esteem and motivation rises