Technological Forecasting

1. Technological Forecasting • BPT 3113 – Management of Technology

2. Chapter Outline • Introduction • Definition • Forecasting Technology • Technological Forecasting Process • Forecasting Techniques • Current Status • Technology Discontinuity • Summary

3. Lesson Outcomes • Explain the significance, concept and process of forecasting • Describe the techniques of forecasting • Assess the current status of forecasting

4. Introduction • Future may not behave like the past – depends on characteristics and physical limits of the technology, the social and environmental factors influencing its development and market conditions • Predicting the future is more difficult with technology that is experiencing rapid change • The seeking of or anticipation of technological innovation has been called technology forecasting

5. TF Definition • Provides visions of the future that can be used to guide actions of the present in anticipation of future states • Forecast the character and role of technological advancement based on following established methodologies • A process of identifying the determinants of the direction and rate of technological change and establishing their relationship with the concerned technology to anticipate future trends • A process of predicting technology changes based on facts, assumptions and educated guesses with the help of a chosen technique

6. TF For Decision Making

7. Forecasting Problem & Objectives (data inputs) Forecasting Process & Techniques Forecast (output) Review mechanism Forecasting Technology Present Performance Forecasting Model Growth Pattern & Possible Future State of a Technology Future Traditional forecasting methods depend to a great extent on projecting past performance into the future Time

8. Forecasting Technology • A technology forecaster must have a good understanding of technology life cycles and the factors that influence technological development and the rate of innovation. • A good forecast must have: • Credibility and utility • An accurate information base • Clearly described methods and models • Clearly defined and supported assumptions • Quantitative expression whenever possible • A stated level of confidence in the forecasted information • The attributes of technology most often forecast are: • Growth in functional capability • Rate of replacement of an old technology by a newer one • Market penetration • Diffusion • Likelihood and timing of technological breakthroughs

9. Forecasting Technology Common mistakes and pitfalls in forecasting & analysis: • Failure to use appropriate data • Use of unreliable data; failure to use valid data due to the use of wrong technique • Mistakes in selecting appropriate methodology • Overemphasis on quantitative techniques; reliance on single expert • Lack of imagination in the form of • Failure to distinguish between signals and noises; neglecting uncertainty • Biases introduced by personal factors • Vested interest of the forecaster; unwillingness to alter other previous commitments

10. TF Process

11. Specify Expectations

12. Forecasting Techniques Approach to be used depends on the following factors: Purpose for which the forecast is being made Reliability needed for the forecast Precision of the available data The time frame for the forecast

13. Forecasting Techniques 5 Exploratory Methods: • Monitoring • Monitoring is the process of scanning the environment for information about the subject of a forecast • It’s a method for gathering and organizing information; assessment is to be done carefully based on the data • Expert opinion • This method collects opinions of chosen experts in a particular area and arrives at a forecast • This method is suitable when: • Identifiable experts in an area exist • Data are lacking • Modelling is difficult or impossible

14. Forecasting Techniques • Trend Analysis • Uses mathematical and statistical techniques to extend time series data into the future, it assume that past conditions and trends will continue in the future more • Accurate over short time frames and less reliable for long time frames • Delphi Technique • An attempt to arrive at a consensus in an uncertain area by questioning a group of experts repeatedly – process goes on till an agreement is reached in the forecast • Presumes the following conditions : panellists must be wide knowledge and experience of the subject in their expertise and the method presupposes that its conductors are objective in their job

15. Forecasting Technology • Scenarios • Scenarios are sets of snapshots of some aspect of the future situation and most useful in forecasting and in communicating complex, highly uncertain situations to non-technical audiences • A set of imaginative descriptions are developed based on quantitative and qualitative data

16. Forecasting Techniques 4 Normative Methods: • Dynamic Modeling • A model is a simplified representation of some part of the real world. A model can be used to forecast the behaviour of the system being model • Model range from flow diagrams, simple equations and scale models to sophisticated computer simulations • Cross Impact Analysis • Researchers identify a set of key trends those with high importance or probability • The question is then put: “if event A occurs, what will be the impact on all other trends?” • The results are then used to build set of ‘domino chains’

17. Forecasting Techniques • Morphological Analysis • Developed by the well known Swiss astronomer Zwicky in his work in the field of jet engines • Distinguishes 5 essential steps that constitute the morphological method • Series Indicators • Each company establishes favourite indices of those general economic conditions most relevant to its product / technology category • These indices should be examined for any indicators that may affect the life of the technology. 3 general categories of indicators: • Leading indicators • Simultaneous (coincident) indicators • Lagging indicators

18. Current Status Trends that have contributed to the sophistication and wider application of technological forecasting are: • Emphasis on Strategic Approach • More firms are adopting strategic approach and preparing long range plans to gain competitive advantage • Information Management Capabilities • Have profoundly changes  moved to computer driven operation • Increased Sophistication in Tools • Rise of Research Agencies

19. Technology Discontinuity • Example : Transportation Technologies - Speed • A technology forecaster predicts the natural performance limit of each mode of transportation technology • Use this information to guide decisions about when to start using or abandon a technology before the competition renders it obsolete • Besides that, the information can be use to make decisions about investing in a new technology, R&D or new products or about acquiring a new company that has the technological capability of the emerging mode of technology The cumulative curve is used to forecast maximum transportation speed

20. Technology Discontinuity A forecaster may use the trend to extrapolate the efficiency of white light into the future But there is no guarantee that the trend will indeed continue to hold in the future At least the trend will give added information, permitting an educated guess and better decision making Management by data is much more effective than management without adequate information

21. Summary • Technological forecasting helps managers in improving decision making, by providing knowledge of future changes and provides basis for planning • Forecasting problems are influenced by time period, nature of technology, characteristics to be exhibited by the technology and their probability • Forecasting has gained significance in this knowledge era and it continues to be an important function in technology management of organizations