Management of Technology and Operations

482 Pages·1998·26.579 MB·English

by  R. Ray Gehani

MANAGEMENT
OF TECHNOLOGY
AND OPERATIONS
R. Ray Gehani, D. Eng., Ph.D.
The University of Akron
JOHN WlLEY & SONS, INC.
- - .
New York Chichester Weinheirn Brisbane Singapore * Toronto
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To
my fatherf or his lifelong pursuit of excellence with honesty
my mother for her selfless love
many teachers for their dedication and help
my children, Rashmi and Gautam, who have provided immense joy and
pride and through whose dreams I live mine
and my wife, Meena, who shared this journey with me
This book is printed on acid-free paper.
Copyright 0 1998 by John Wiley & Sons, Inc. All rights reserved.
Published simultaneously in Canada.
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Library of Congress Cataloging-in-PublicationD ata:
Gehani, R. Ray.
Management of technology and operations / by R. Ray Gehani.
p. cm.
lncludes index.
ISBN 0-47 1 - 17906-X (cloth)
1. Technology-Management-Case studies. 2. Production
managementdase studies. 3. Industrial management-case studies.
I. Title.
T49.5.G44 1998
658.44~12 97-53199
-
PREFACE
This book is an attempt to help the managers, engineers, and the students of
technology management to learn about some of the principles and practices
technology-driven organizations use. These organizations compete in an in-
tensely competitive and dynamic marketplace. They do so by carefully man-
aging their core and supportive technology-related competencies.
In this book the fast-moving technology-driven organizations are mod-
eled as a high-performance yacht (or a race car) powered by a six-cylinder
V-6 turbo-engine of technology. The six cylinders of the engine represent
the major technology-related competencies. Managed in an interdependent
synchronous manner, these competencies are the alternate sources of sus-
tainable competitive advantage and produce the wealth for the corporation.
HOW IS THIS BOOK DIFFERENT?
Many managers, engineers, and students in the time-compressed work envi-
ronment of the 1990s are very busy in their day-to-day rush to meet their
immediate-term expectations. They can barely pay adequate attention to
fighting the fires and managing the latest assignment that they must work
on. They hardly have any slack time to sit back, reflect, and learn about all
the latest expertise developed for a complex and multidisciplinary subject
like the management of technology.
To help a busy learner comprehend the “big picture” of management of
technology, the technology-driven organization is modeled here as a yacht.
The yacht is powered by a V-6 turbo-engine with six cylinders pumping in
unison. The six cylinders of the engine of technology are the six core and
supportive technology-related competencies.
The turbo-engine of the yacht is connected to an efficient transmission
system and a steering wheel. The transmission integrates and converts the
power generated from each cylinder of competencies.
The steering wheel is guided by a pioneering visionary captain. The chal-
lenge for the captain of the yacht, or the manager of a technology-driven or-
ganization, is to steer the yacht through rough waters and stormy weathers
to its destination of a yet-to-be claimed treasure island with big profits. The
“captain” managing a technology-driven organization is sort of like Christo-
pher Columbus on his journey to claim the Oriental spice islands that
xi
XI1 PREFACE
possess an abundant supply of silver and spices. The captain must get to the
treasure island while competing with the pirates and captains of other ships
trying to get to the same destination first.
BENEFITS TO FIVE GROUPS OF READERS
Based on my accumulated experience of teaching management of technol-
ogy to a wide variety of students and other professional learners, a number
of groups of learners will find this book interesting and useful. The benefits
to each group of learners are outlined below.
1. Working Engineers in Small, Medium, and Big Businesses. Manage-
ment of technology has increasingly become a cross-cultural, cross-
functional effort, where engineers work side by side with the production
managers and marketing supervisors. The professional from different func-
tional areas and diverse training and educational backgrounds must work to-
gether from the same “music sheets.” To help them manage enterprise-wide
technology, this book will provide them a common understanding of the
management of technology and operations.
2. General Business Managers. The busy decision makers who have to
make decisions which affect or are affected by the management of technol-
ogy wish to know how to deploy their technology-related resources more
profitably. They often have neither the time nor the inclination to dig into
intricate details. This book will give them some of the best practices of
other technology-driven organizations.
3. Upper-Level Undergraduate and Graduate Students of Science and En-
gineering. An increasingly larger number of engineering and science (partic-
ularly computer and imaging science) students are taking courses related to
management of technology and operations. On graduation, some of them as-
pire to start their own technology-driven businesses. Others will work for
technology-driven organizations. As a chair and executive officer of the Tech-
nology Management Section (an international group of professors and profes-
sionals interested in management of technology, in the Institute for Opera-
tions Research and Management Science), I learned that many universities are
offering management of technology programs jointly between their College
of Engineeringkience and the College of Business. The students registered
in such programs will learn the theoretical principles and the common prac-
tices followed by successful technology-driven organizations.
4. Upper-Level Undergraduate and Graduate Business Students. They will
learn how to integrate principles of management of technology with what they
learn in other functional management areas such as marketing, manufacturing,
accounting, finance, productiodoperations, and information management. The
material covered here will also facilitate a better understanding of the capstone
strategic management course in the business program.
PREFACE Xlll
5. Students Majoring in Management of Technology. The students ma-
joring in management of technology will find this book a good primer for
their expert interest. After a good grasp of some of the basics discussed in
this book, they will be well-prepared to tackle the details provided in other
sources.
6. As a Core Course for All Programs. This book should be particularly
useful to the students of a core course in an engineeringkience or business
program, for either undergraduate or graduate work. This book assumes
very little prior knowledge, nor does it contain hard-to-understand quantita-
tive models. Such models are introduced in a narrative form.
7. A Primer for Foreign Students and Managers. This book is particu-
larly recommended to the foreign students. In my experience they are often
lost because they do not have much background knowledge about America’s
historical evolution. Many of the milestones in America’s growth as a world
leader are described here.
DUAL GOALS: TO INFORM AND TO INSPIRE
Managing a complex technology-driven organization is a big challenge. The
field of management of technology, as understood today, is inundated with
many details. Even among the experts of management of technology there
is little consensus about what should be covered and what should be left out
in this area.
This book defines and analyzes the multidisciplinary-and in some ways
still emerging-field of management of technology. This is done by six ma-
jor technology-related value-adding competencies. Managing these compe-
tencies can provide a sustainable competitive advantage. These six strategic
sources for sustainable competitive advantage are like the six cylinders of a
V-6 engine that can be used to power a high-performance yacht (or a racing
automobile).
The principles and practices of management of technology are presented in
this book in an easy-to-understand manner appropriate for managers, engi-
neers, and students with busy schedules. Mainly the major principles and prac-
tices of each of the “cylinders” of the technology “turbo-engine” are high-
lighted. There are many other sources available to gain advanced knowledge
on these individual competencies. The reader should be able to capture the
essence of managing a technology-driven organization and its operations.
Many real-world examples from technology-driven organizations are
used to inform as well as to inspire. From my personal experiences in man-
agement of technology-driven organizations and their operations, the need
to be inspired is as important as the need to be informed. Most of the time,
managing a technology involves making risky decisions under uncertain
conditions. The inspiration that can be gained from the successes and fail-
ures from the lives of the pioneers of technology is invaluable. The lessons
XIV PREFACE
thus learned should help immensely in our journey into wilderness of uncer-
tain future, with a hope for “a pot of gold at the end of the rainbow.”
Overview of the Chapters
As stated earlier, we will discuss the management of technology-driven or-
ganizations and their operations by discussing their technology-related com-
petencies. For each competency, some theoretical models and principles of
management of technology will be illustrated with real-life practices in
leading technology-driven organizations. Wherever possible, brief profiles
of the pioneers of different technologies, along with the cases of manage-
ment trends in technology-driven organizations, will be provided to elabo-
rate as well as enlighten the readers.
The stage will be set in Chapter 1, which is an introduction to technol-
ogy, management of technology, and global competitiveness. These terms
will be defined, and the basis of the V-6 engine model of technology will be
clarified further. The various different forms of technology which we en-
counter in our day-to-day life will be discussed. A brief historical review of
the role of contextual environment in the development and evolution of
technology will help readers understand why certain technologies were de-
ployed at certain times. A general discussion of global competition in tech-
nology-driven industries will be provided.
The Core-Transformational Competencies
of the Technology Turbo-Engine
Chapters 2, 3, and 4 discuss the primary technology-related competencies in
the core-transformational process of a technology. Their scope spans from a
concept to the commercialization of products and services. For a technology-
driven organization, the primary strategic sources for sustainable competitive
advantage are derived from managing three primary competencies. These are:
(1) production automation and engineering, (2) proprietary know-how and in-
tellectual property based on research and development, and (3) new product
development for customer loyalty in targeted market segments.
Production operations and automation engineering competency will be
described and analyzed in Chapter 2. The early mechanization of the textile
industry as well as the use of steam power, which started the Industrial Ma-
chine Revolution in England, will be reviewed. The learning curve advan-
tages, as well as the economies of scale and scope, will be introduced. Other
practices such as Just-In-Time manufacturing, Kanban inventory manage-
ment, and Lean manufacturing will be discussed.
Chapter 3 discusses the creation of proprietary know-how and intellec-
tual property by scientific research and systematic experimentation. We will
review how in the 20th century the American corporations gained world
leadership with the Scientific Industrial Revolution. Setting up of “invention
PREFACE XV
factories” and research and development laboratories made America the
home of electrical and chemical technologies. Some comments will be
made on patenting and ownership of intellectual property. Controversial is-
sues such as the piracy of patents and whether patents are a property or a
privilege will be introduced. Management of research and development
(R&D) by acquisition and strategic alliances with universities, collabora-
tors, and competitors will be discussed.
Chapter 4 explores the critical role of product development and customer
trust. We will also cover the role of positioning of products and technologies
for customer satisfaction and long-term loyalty. A clear understanding of the
new product development strategies, new product development process, and
organizational designs for reducing the cycle time for new product develop-
ment should help a manager of technology gain competitive advantage over
the firm’s competitors. Building up relationships with customers rather than
bargaining transactions with them should add more to the bottom line. Lis-
tening to the voice of customers should help build trust and long-term rela-
tionships. Customer satisfaction, dissatisfaction, and delighting should be
considered in the context of customer loyalty.
Supportive Competencies of Technology
The above-mentioned primary competencies for converting proprietary
know-how or concepts into commercially successful products in the market-
place must be integrated and synergized with three supporting competencies
of management of technology. These supportive sources, when deployed ef-
fectively and efficiently, can also contribute to gain a sustainable competi-
tive advantage over competitors. These competencies are (1) promise of
high quality and reliability, (2) processing of information and cross-func-
tional communication for integration, and (3) the best people, high-perform-
ance teams, and human capital for innovation and creativity.
The promise of quality and reliability in products and production
processes is the subject of Chapter 5. The shifting focus of total quality
management (TQM) from products to processes and profits will be re-
viewed. The available assessment models and the quality standards, such as
the Malcolm Baldrige National Quality Award and IS0 9000/1SO 14000,
have played increasingly important roles in the management of technology,
particularly in the way customers perceive such achievements of technol-
ogy-driven organizations when making their purchasing decisions.
The processing of information for cross-functional communication is the
subject of Chapter 6. Computer interface and integration is discussed in con-
junction with the topics covered in earlier chapters. Advanced manufacturing
technologies use a high intensity of information processing and computer tech-
nologies. Implications of both the Internet and Intranets will be spotlighted.
This is a very fertile field with many fast-changing developments with signifi-
cant impact on the competitiveness of a technology-driven organization.
XVI ACKNOWLEDGMENTS
Finally, the sixth cylinder of the V-6 engine for a fast-racing technology-
driven enterprise involves management of people resource and human capi-
tal for innovation, creativity, and change, is discussed in Chapter 7. We will
learn from the historical developments in human resource management
practices for management of technology and operations. The most recent
tides of massive downsizing, as well as the implications of other related is-
sues, need to be considered too.
integration and Pioneering of Technology
The core and supportive competencies of management of technology must
be integrated together and guided carefully, just like the efficient transmis-
sion and steering of a yacht. These higher-level competencies are to be
managed carefully if the yacht is expected to get to the treasure island be-
fore other pirates or competitors do so.
Project management and cross-functional integration is covered in Chap-
ter 8. For success, the six competencies of the technology turbo-engine
must be managed to move in a smooth coordinated manner. Project man-
agement does that coordination across different competencies for the one-
time initiatives, which have clearly defined starting and finishing points. On
the other hand, similar ongoing cross-functional integration is needed for
the continuous process.
Chapter 9 discusses the role of pioneering vision and leadership in devel-
oping sustainable competitive advantages for technology-driven organiza-
tions. Analytical tools such as a leader’s preferred sources of power to influ-
ence others will be briefly discussed. A comparison will be made between the
transactional leaders driven by reducing the expense lines and the transforma-
tional leaders driven by the top line. In fast-changing technology-
driven enterprises, a value-based vision provides a dynamic guidance system.
The projected future of technology and success in society is explored by
way of conclusion in Chapter 10. This chapter explores issues such as the
macroscopic roles, rights, and responsibilities of different technologies and
their management.
ACKNOWLEDGMENTS
I would like to thank many of my fellow journeymen and women trying to
decode the distinct patterns for the effective management of a technology-
driven enterprise. As the Chairman of the Technology Management Sec-
tion of The Institute for Operations Research and Management Science
(INFORMS), a professional association of about 400 academics and execu-
tives involved with management of technology, I learned a lot from my per-
sonal exchanges with a wide range of fellow professionals interested in this
area. I will particularly like to thank Dave Gibson, Raymond Smilor, and
ACKNOWLEDGMENTS XVll
George Kozmetsky of the University of Texas at Austin; Michael Badawy of
the Virginia Polytechnic Institute and State University; Charles Hofer of
Georgia State University; Bill Riggs of Georgia Institute of Technology;
Dave Tansik of the University of Arizona; Bob Mason and Arnold Reisman
of the Case Western Reserve University; Dundar Kocaoglu of Portland State
University; R. Balachandra of Boston University; Frederick Betz of NSF;
Tarek Khalil of the University of Miami; Glenn Dietrich of the University
of Texas at San Antonio; Jeff Liker and John Ettlie of the University of
Michigan; Fariborz Damanpour of Rutgers University; Jamaluddin Hussein
of Purdue University; William Souder of the University of Alabama; Eli
Geisler of University of Wisconsin, and many more.
I have learned a lot from the presentations and papers of a large number
of fellow researchers in this field too numerous to list. I have enjoyed learn-
ing from the writings of Robert Burgleman of Stanford; David Teece,
Richard Nelson, Laura Tyson, and many others at the University of Califor-
nia at Berkeley; Kim B. Clark, Michael Porter, Rosabeth Moss Kanter, John
Kenneth Galbraith, and others at Harvard University; Michael Cusumano,
Lester Thurow, and others at MIT; C. K. Prahalad of the University of
Michigan; Charles Hill at Washington University; Michael Tushman and
Kathy Harrigan at Columbia University; and Ed Mansfield at Wharton, to
name a few.
I have benefited from my discussions with Dr. Edwards Deming during
his visits to Columbia University, with Joseph Juran for a joint executive
program I co-organized with the Juran Institute, and with Kaoru Ishikawa
for a presentation at a conference in Tokyo sponsored by the Association for
Overseas Technological Scholarship of the Ministry of International Trade
and Industries of Japan.
At Akron University Dean Stephan Hallam, Dean Frank Kelley, Dean
James Strong, Dean James Inman, Professors Ken Dunning, Gary Meek,
John Hebert, Jay Patankar, Ken Aupperle, Bruce Simmons, David Myers,
Bob Figler, Susan Hanlon, Alan Krigline, and others have provided me a
constant source of intellectual stimulation in our collective search for new
ways to organize and present knowledge to our students.
In my previous professional life as a manager in the technology-driven
enterprises in industrialized and emerging economies, 1 learned a lot from
many caring mentors. Noteworthy among these mentors were Kazunaga
Murayama, Michihiko Tanaka, and Shunro Kataoka, who helped me gauge
the challenges of developing sophisticated new technologies in Japan for the
global markets. Chief executive officers like Sam Gibara of Goodyear,
George Fisher of Eastman Kodak, Andy Grove of Intel, David Kearns of
Xerox, and others like Arun Bharat Ram, Raunaq Singh, B. B. Mathur, and
Manhar Bhagat, from different enterprises, taught me the art of balancing
the diverse economic, political, social, and technological forces in running a
technology-driven enterprise in the global economy.
I admit that I could not have come to where I am professionally without
XVlll ACKNOWLEDGMENTS
the help of many of my dedicated teachers, too many to list here. Professor
S. Prakash Sethi has been a beacon of inspiration and guidance for me dur-
ing the past many years. I am thankful to Professor Harris Jack Shapiro for
his affectionate nurturing when I needed it most. I will also like to thank
Professors Michael Chanin, Donald Vredenburgh, George Sphicas, William
McCutchen, T. K. Das, R. Parthasarthy, T. S. Srinivasan, Ramesh Mehta, J.
D. Singh, Ichitaro Uematsu, Akihro Abe, Toru Kawaii, Junji Watanabe,
Norimasa Okuii, V. B. Gupta, P. Bajaj, D. S. Varma, A. P. Kudchadkar, C. V.
Sheshadri, and many more teachers and well-wishers who constantly urged
me to give my best.
Beside these mentors, exchanges with many friends, classmates, and ac-
quaintances working worldwide in technology-driven enterprises have
helped me mold my ideas about technology, management of technology,
and ways to gain a sustained global competitiveness. Friends and colleagues
like Julian and B.J. Yudelson, Dean Siewers, Paul Karen, Tom Comte, Paul
Bernstein, Richard Rosett, Jeff Lassard, Don Zrebiec, Bill Wiggenhorn, An-
drew DuBrin, Janet Barnard, Guy Johnson, Eugene Fram, Bob Pearce, Gary
Bonvillian, Michael Prosser, Edward Schilling, Masatoshi Sugiyama, James
Chung, Takeshi Utsumi, Paul Petersen, Hideo Hayashi, Ivan Abel, Ken and
Patricia Ehrensal, Sharon Badenhop, Ron Hilton, Kumiko and Osamu
Shima, Shinya Watanabe, Beat and Franzi Schwarzenbach, and others
helped me during the ups and downs of a multidiscipline professional life.
I would also like to thank the team of editors at John Wiley & Sons, par-
ticularly Bob Argentieri, Akemi Takada, Bob Hilbert, and many others for
copyediting, proofreading, and fine-tuning my ideas and the manuscript.
I salute you all for what I learned from you, and am now able to share
with more readers through this book. Thank you very much. I hope that the
readers will carry this torch of knowledge further. If you have any sugges-
tions for making improvements, please send them to me.