Managing Technological Innovation

Competitive Advantage from Change

Frederick Betz

• Publisher: Wiley-Interscience
• Year: 2011
• ISBN:
  9780470927571
• Edition: 3
• Topic: Technology & Engineering
• Subtopic: Civil Engineering
• Index: Technology & Engineering

Written by the author who helped crystalize the field of technology management and the management of innovation with the first two editions of Managing Technological Innovation, this Third Edition brings the subject in line with current business strategy. It also presents information in a newer organized format that aligns more closely with how the topics are presented and discussed in the classroom. Also included is a wider discussion of how science and technology interact with the global economy.

PART I

TECHNOLOGY COMPETITIVENESS—BUSINESS BASE OF INNOVATION

Chapter 1

TECHNOLOGICAL INNOVATION

INTRODUCTION

Technological innovation is, without doubt, the major force for change in modern society—a force of knowledge. There are two basic issues about knowledge: (1) creating knowledge and (2) applying knowledge. The first is the domain of science and the second is the domain of technology. This book focuses on the second domain, technology—the application of knowledge.

But there is a difference between technology and scientific technology. The world has had technology since the dawn of the Stone Age—when humanity’s predecessors, the hominoids, chipped stones into tools. In fact, the history of humanity may be classified into ages of technologies—the Stone Age, the Bronze Age, the Iron Age. But what age shall we call our age, the modern age? As a reflection of its influence on society, a most descriptive term would be the age of science and technology. In historical fact, the transition from antiquity to modern arose from the origin of science and from thence all the technologies derived from science—scientific technology. Technologies are the “how” to do something; science is the “why” of something. So scientific technologies are both the how and why something can be done in nature. Science understands nature. Scientific technology manipulates nature. And this is good or bad—depending what we do to nature.

The basis for our modern age, characterized by so many new technologies and rapid technological progress, is the science base of modern technologies—scientific technology.

These are the modern connections—from science to technology to economy. Scientific technologies provide the basis for new high-tech products, services, and processes of modern economic development. The study of these connections is the focus of the topic of technological innovation. The field of management of technology (MOT) studies the principles of innovation, which describe the general patterns and principles in technological progress—the theory of innovation. As in any social theory, the context of the application of the theory affects the generality and validity of theory. So, too, with innovation theory, successful innovation is context dependent, and that theory needs to be illustrated and bounded by the contexts of actual historical examples of innovation. The first cases we will examine are the innovations of the Internet, Google, Xerography, and the Altos PC.

There is a “big picture” of innovation—science and technology and economy—and the historical industrialization of the world. There is also a “smaller picture” of innovation—businesses and competition and high-tech products/services. Innovation operates at two levels: macro and micro. We begin by looking at the macro level by asking the following questions:

• How does innovation create wealth?
• How does innovation transform scientific nature into economic utility?
• Who makes innovation?

TIMELINE OF SCIENCE, TECHNOLOGY, AND INDUSTRIALIZATION

Historically, the grand theme of innovation has been the invention of major new technologies and their dramatic impacts—changing all of a society and all societies. This story of the modern world has been both dramatic and ruthless. The drama has been the total transformation of societies in the world from feudal and tribal to industrial. The ruthlessness in technological change has been its force, which no society could resist and which has been called a technology imperative. Technological change has been irresistible—in military conflict, in business competition, and in societal transformations. (The latest of these imperatives is the globalization of the world, driven by the Internet. For example in 2010, the government of China decided that it would control Google in China or Google would have to leave China.)

Going back to the 1300s and 1400s in Europe, there were two technological innovations that provided the technical basis for the beginning of our modern era: the gun and the printing press. They were not scientific technologies, but only technologies; as scientific technologies were to begin later in the 1700s with the steam engine and the Bessemer steel process. The technologies of the gun and printing press had been invented in China, but were innovated in Europe. This is an important distinction between invention only and innovation as both invention and commercialization. The gun was improved and commercialized in Europe, and it was so potent a weapon that the gun ended the ancient dominance of the feudal warrior—a military technology imperative. In parallel, the improvement and commercialization of the printing press made books relatively inexpensive and fostered the secularization of knowledge. This combination of the rising societal dominance of a mercantile class (capitalist) and the deepening secularization of knowledge (science) are hallmarks of a modern society. After the fifteenth century, the political histories of the world became stories of the struggles between nations and peoples, wherein the determining factor has been the military and economic superiorities made possible by new scientific technologies.

When and how did scientific technologies begin? Figure 1.1 summarizes the major historical milestones of changes in science, technology, and economy.

Figure 1.1 Timelines of science, technology, and economy

Science began in European civilization in the seventeenth century, when Isaac Newton combined new ideas of physics (from Copernicus, Brahe, Kepler, and Galileo) with new ideas in mathematics (from Descartes and others) to develop the mathematical theory of space, time, and forces, the Newtonian paradigm of physics. In the next eighteenth century, these new ideas were further developed into the new scientific disciplines of physics, chemistry, and mathematics. The nineteenth and twentieth centuries had dramatic advances in these disciplines, along with the founding of the scientific discipline of biology By the end of that twentieth century the physics of the small parts of matter and the largest spaces of matter was established, the chemistry of inanimate and animate matter was established, the molecular biology of the inheritance of life was established, and the computational science of mind and communication was being extended. All this began in and took place in an international context from its very beginnings, so that one can see the four hundred years of the origin and development of science as a period of the internationalization of science as well.

In contrast to this international context of science, the economic and technological developments occurred within purely national contexts. Each nation industrialized on a national basis and in competition with other nations. From about 1765 to 1865, the principal industrialization occurred in the European nations of England, France, and Germany. From 1865 to about 1965 (the second hundred years) other European nations began industrializing, but the principal industrialization shifted to North America.

By the 1940s, the industrial capacity in the United States alone was so large and innovative as to be a determining factor in the conclusion of the Second World War. For the second half of the twentieth century, U.S. industrial prowess continued, and European nations rebuilt their industrial capabilities that had been destroyed by that war. From 1950 to the end of the twentieth century, several Asian countries began emerging as globally competitive industrial nations: Japan, Taiwan, South Korea, and Singapore.

After the economic reforms in China by Deng Xiaoping, China began to rapidly industrialize, quickly becoming a major manufacturing nation in the world in the twenty-first century. India also, throwing off decades of socialism, began to further industrialize, particularly in the information technologies. All other Asian countries were also moving toward globally competitive capability: Vietnam, Thailand, Philippines, Malaysia, and Indonesia. (Note that historically, Asian industrialization actually begun in Japan in 1865—but was diverted principally to a military-dominated society. After the Second World War, a reindustrialization of Japan occurred.)

In summary, we see a pattern of three hundred years of world industrialization in which different regions of the world began to develop globally competitive industrial industries:

• First hundred years (1765–1865)—Europe
• Second hundred years (1865–1965)—North America
• Third hundred years (1965–2065)—Asia

As with industry, the patterns of developing technological progress was also on a national basis, with technology viewed as a national asset. However, the pace at which modern technology was transferred around the world increased in the second half of the twentieth century, so that when the twenty-first century began, a new pattern of change in the modern world emerged, the beginning of the globalization of technological innovation.

Thus, by the time the twentieth century ended, there was worldwide appreciation that science and technology were critical to international economic competitiveness. World markets and industrial production had become global affairs. In 1980, global trade had already accounted for about 17 percent of total economic activity, increasing by 2000 to 26 percent, worldwide (Kahn 2001). The economic mechanism of the global trade were multi-national firms: “Global trade increased rapidly throughout the 1990s, as multinational companies shipped products through a global supply chain that minimized costs and maximized efficiency with little regard for national borders (Kahn 2001, p. A4).

But while the entire world was industrializing, it is important to make clear the difference between globally effective and ineffective industrialization. For example, Michael Porter identified several factors in effective national competitive structures: political forms, national and industrial infrastructures, domestic markets, and firm strategies. Also, an effective national research infrastructure was necessary for effective industrialization. Elements of necessary national infrastructure include educational systems, police and judicial systems, public health and medical systems, energy systems, transportation systems, and communication systems. Economic development of all nations in this global context remains an important problem. Technological progress has enabled some but not yet all nations to develop economically.

One important research feature for national competitiveness lies in proper strategic interactions between universities and high-tech companies in the nation. For example, Peter Gwynne described some of the science and technology parks developed in Singapore, South Korea, and Taiwan to build their science and technology infrastructure for high-tech industries (Gwynne 1993). The model for such science and technology parks was the Silicon Valley in northern California in the United States for the building of the chip industry and personal computer industry. Stanford University and the University of California at Berkeley both played an important role in the rise of Silicon Valley, along with venture capital firms in growing high-tech industries there (e.g., computer chips, computers, and multimedia).

CASE STUDY:

Innovation of the Internet

Let look at our first case, the innovation of the Internet, a major technological innovation at the end of the twentieth century. The Internet is both an idea of a technology and an implementation of the technology as a connected set of businesses, as sketched in Figure Figure 1.2. The Internet is constructed of many, many units that continually are connecting into or out of the network at different time—either as businesses directly connecting to the Internet or as home-based customers connecting to the Internet through connection services. The operations of this functional system enable users (as businesses or as consumers) to log onto the Internet through their respective personal computers or Web servers, and thereby communicate from computer to computer.

Figure 1.2 Architecture of the Internet

The technological innovation of the Internet was commercialized by a set of business:

• Sale of personal computers (e.g., Dell, Mac), containing a microprocessor (e.g., Intel CPU), an operating system (e.g., Microsoft Windows), and a modem
• An Internet service provider (e.g., AOL, Vodaphone, Comcast, etc.)
• A server and router (e.g., Cisco, Dell, IBM)
• A local-area network or wide-area network in a business (e.g., Cisco, Erickson)
• An Int...

Table of contents

• Cover
• Contents
• Title
• Copyright
• Dedication
• Preface
• Part I: Technology Competitiveness—Business Base of Innovation
• Part II: Technology Strategy—Technical Base of Innovation
• Part III: Innovation Handbook
• Bibliography
• Index