Managing Technological Innovation: Competitive Advantage from Change, Third Edition

372 Pages·2005·5.33 MB·English

by  Frederick Betz(auth.)

MANAGING
TECHNOLOGICAL
INNOVATION
Managing Technological Innovation: Competitive Advantage From Change, Third Edition Frederick Betz
Copyright © 2011 John Wiley & Sons, Inc.
MANAGING
TECHNOLOGICAL
INNOVATION
COMPETITIVE ADVANTAGE
FROM CHANGE
THIRD EDITION
FREDERICK BETZ
John Wiley & Sons, Inc.
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Library of Congress Cataloging-in-Publication Data:
Betz, Frederick, 1937–
Managing technological innovation : competitive advantage from change / Frederick Betz.—3rd ed.
p. cm.
Includes index.
ISBN 978-0-470-54782-3 (hardback); 9780-4-70-92756-4 (ebk.); 978-0-470-92757-1 (ebk.);
978-0-470-92758-8 (ebk.); 978-047-0-92759-5 (ebk.); 978-0-470-95154-5 (ebk.);
978-047-0-95171-2 (ebk.)
1. Technological innovations—Management. 2. Research, Industrial—Management. I. Title.
HD45.B443 2011
658.5'14—dc22
2010030985

Printed in the United States of America
10 9 8 7 6 5 4 3 2 1
This book is dedicated to my wife, Nancy, and my
children, Sara, Fred, and David.
CONTENTS
Preface xi
I. TECHNOLOGY COMPETITIVENESS—
BUSINESS BASE OF INNOVATION
1 Technological Innovation 3
Timeline of Science, Technology, and Industrialization 4
Innovation Process 12
Technology and Wealth 17
Technical Savvy and Financial Savvy 20
Technical Personnel and Business Personnel 25
2 Innovation and Economy 27
Economic Scale of Innovations 29
Economic Long Waves 31
Measuring the Economic Impact of Technological Innovation in an Economy 37
Core Technologies of an Industry 41
Industrial Life Cycle 42
Industrial Standards and First Movers in a New Industry 44
Commodity Industry 48
3 Innovation and National Systems 51
Science Bases for Technology 54
Computer Technology 58
National Innovation System 60
Radical Innovation at the Macro and Micro-Levels 66
Radical Innovation and Next-Generation Product Lines 71
Circular Interactions in a National Innovation System 72
Performance of National Innovation Systems 75
vii
viii CONTENTS
4 Innovation Research 77
Logic of Research for Innovation 79
Logic of Radical Innovation—Technology Research 87
Logic of Radical Innovation—Engineering Research 89
Logic of Radical Innovation—Commercialization 91
Costs of Innovation 94
5 Innovation and Corporate R&D 97
Institutionalization of Scientifi c Technology 103
Objectives of Corporate Research 106
Planning Incremental Innovation 108
Two Cultures—Research Laboratory and Business Division 109
Evaluating Corporate R&D 112
6 Innovation and Markets 115
Business Model—Price and Value 118
Designing a Product for a Market 124
Completing High-Tech Products for Applications 127
Market Positioning 130
Proprietary Technology 132
Market Niches 134
7 Innovation and Product Development 137
Market-Pull or Technology-Push Innovation 139
Incremental Innovation in Product Development 142
Delays in a Product Development Process 145
Product Quality 152
8 Innovation and Strategy 153
Micro-level Innovation in a Business 156
Top-down and Bottom-up Strategy in Innovation 161
Top-level Innovation Strategy 164
Mid-level Innovation Strategy—New High-tech
Business Ventures 167
Lower Level of Innovation Strategy—Technical Programs 171
Bottom Level of Innovation Strategy—Technical Projects 172
II. TECHNOLOGY STRATEGY—
TECHNICAL BASE OF INNOVATION
9 Integrating Technology and Business Strategy 177
Industrial Value Chain 179
Technology Strategy 186
CONTENTS ix
Technology and Application Systems 192
Product-Line Planning 196
Product-Line Platforms 197
10 Inventing Technology 199
Technology and Potentials of Nature 206
Next-Generation Technologies 212
Innovation Process of Next-Generation-Technology Products 214
Types of Technologies 217
11 Technology Systems 220
Technology System 224
Physical Technology S-Curve 228
Technology Performance Parameters 230
Software Technologies 232
Planning Technology Discontinuities 235
Technological Progress 236
Systems Analysis for Alternative Technology Confi gurations 238
12 Product Systems 241
Sikorsky’s Helicopter 241
Hardware Product System 245
Systems Analysis in Hardware-Product Design 246
Specialized Languages in Science 249
Computer-Assisted Networks 252
Logic and Language in Software Design 255
Design Bugs 256
Comparing Software and Hardware Innovation 258
13 Service Systems 260
Services Science 260
Logic of Service Transactions 263
Strategic Business Vision—A Hardware Business or a Service Business? 266
Services and E-Commerce 270
Modeling Service Systems 272
Services Performance and Innovation 276
14 Biotechnology Systems 278
Science Bases for Technology 285
Profi ts in Biotechnology 288
Research and Complexity of Nature 290
Progress in Biotechnology 293
University Research Centers for Science and Technology 297
x CONTENTS
15 Ethics and Technology 299
Technology in Ethics as “Means and Ends” 302
Ethics and Regulation 305
Ethical Imperative and Technology Imperative 307
Control Systems for Intrinsically Evil Technologies 313
III. INNOVATION HANDBOOK
16 Innovation Practice 317
Introduction 317
How to Manage Innovation Processes 317
How to Manage Research and Development (R&D) 323
How to Manage Product Development 329
How to Manage High-Tech Marketing 332
How to Manage Service Innovation 334
How to Manage Biotechnology Innovation 335
Summary—Overview of Innovation Theory 337
Bibliography 339
Index 349
PREFACE
INNOVATION PRACTICE
Our focus is on practicing successful innovation, which will be summarized, at the
end, as a kind of guide to practice—a handbook of innovation. We will describe the
theory for six practical management procedures in innovation:
1. How to manage innovation processes
2. How to manage research and development
3. How to manage product development
4. How to manage high-tech marketing
5. How to manage service innovation
6. How to manage biotechnology innovation
We will build toward these useful procedures—by examining the details of inno-
vation theory—to summarize these procedures in chapter.
CASES AND THEORY
To get to practice, one must review theory in cases of actual practice. What is
different about this book is that it not only tells stories—stories about technology
and business—but it also deepens these stories with a theory of innovation. This is
different because grounding theory in research has not often been a typical practice
in the business literature. Instead, the usual literary style is to use case studies of
best practice—what some company did at some time—in other words, a business
process. This has been called the Harvard Business School case method.
But case studies by themselves may not develop or validate theory. They may be
not of much practical use, because how something worked in one company is not
a complete story. It does not necessarily tell why. And it is not only the “how” of
xi
xii PREFACE
companies doing something (a best practice) but the “why” of it working (or fail-
ing). The “why” can only be found in research on such cases of real practice—but
relevant to theory. It is research-grounded theory that is useful. What worked for
one company may or may not work for another company—nor even work for the
same company in the future. We describe all cases in this book in a theoretical
framework—cases relevant to theory and theory in the context of cases.
For example, a famous case of best practice in product innovation was the use
of “concurrent engineering design,” dramatically illustrated by the development of
the Ford Taurus car in 1981. This development was extensively written about and
studied in the business literature. Lew Veraldi, the Ford project leader wrote:
[T]he team sought out the best vehicles in the world and evaluated more
than 400 characteristics on each of them to identity those vehicles that were
the best in the world for particular items. These items ranged from door
closing efforts, to the feel of the heater control, to the under-hood appear-
ance. The cars identified included BMW, Mercedes, Toyota Cressida and
Audi 5000. Once completed, the task of the Taurus Team was to imple-
ment design and/or processes that met or exceeded those “Best Objectives”
(Veraldi 1988, 5).
The Taurus car saved the Ford Motor Company from bankruptcy in the early
1980s. Yet in 2008, Ford terminated the model, as it had not sold well for years
and Ford had allowed it to become technically obsolete. Why? Why had Ford not
improved Taurus over the years? It could have used that best practice of “concur-
rent engineering design” to continually improve the car into a brand-recognized,
quality product. And a competitive Taurus might have saved Ford from its near
bankruptcy in 2007–2008, when Ford desperately needed a brand-recognized quality
compact car—stylish, fuel efficient, high performance. It is the whys in the business
world that constitute theory. Why is concurrent engineering design insufficient as
a business process to maintain continual product improvement in a product and its
technologies? This is one of many questions we address in our cases and theory of
innovation.
Briefly, the “why” of the Taurus story is that subsequent CEOs at Ford were not
committed to innovation as a competitive strategy, only to business acquisitions.
After the success of Taurus in the 1980s, in the 1990s Ford bought other brands of
cars, such as Volvo and Jaguar. But later in the 2000s, facing bankruptcy, Ford sold
these brands off—after losing a great deal of money on them. In 2009, Jaguar, once
a British car and then an American Ford car, became an Indian car. In 2010, Volvo,
once a Swedish car and then an American Ford car, became a Chinese car. This is
an example of a failure of proper innovation strategy—a lack of proper top-down
and bottom-up technology implementation at Ford—and theory that we will discuss
in Chapter 8, “Innovation and Strategy.”
Grounded theory is what counts—both the how and why. Here we will use sto-
ries of real practice—some “best practice” and some “worst practice”—to ground
innovation theory and/or raise challenges to theory—both the how and why of
successful innovation.