L7 Technology Environments

1. L7 Technology Environments EC10: Innovation & Commercialisation Conducting business in the global economy and playing to win Marcus Thompson wmt1@stir.ac.uk 7. Technology Environments

2. Outline to Technology Environments • The International Business Environment • Organisational & Supply Chain Development • Drucker on Innovation • Changing the World 7. Technology EnvironmentsL7: Techn9ology Environments

3. 1. The International Business Environment EC10 Innovation & Commercialisation 7. Technology Environments

4. International Business: Opportunity and Conflict • Globalization creates wealth and benefits • Critics say it increases the wealth of corporations and investors at the expense of the poor and does other damage to society in general. • Failure to become part of the global market assures a nation of declining economic influence and a deteriorating standard of living. 7. Technology EnvironmentsL7: Technology Environments:

5. MOTIVES FOR INTERNATIONALIZATION • INTERNAL DRIVERS: • Search for Growth • Exploitation of opportunity EXTERNAL DRIVERS • Technology’s effects on customers/firms • The industrial context 7. Technology EnvironmentsL7: Technology Environments:

6. 1. Information Requirement • Preliminary Screening • Estimating Market Potential • Income Elasticity of Demand • Market Audit • Analogy • Longitudinal Analysis • Gap Analysis • Estimating Sales Potential • Identifying Segments • Selection • Concentration versus Diversification These same issues apply regardless of whether a study is undertaken on or off-line. 7. Technology EnvironmentsL7: Technology Environments:

7. 2. Selection Issues • Factors to take into Account • Market-Related Factors • Mix-Related Factors • Company-Related Factors • Market Matches • Market-Related Factors • Mix-Related Factors • Company-Related Factors 7. Technology EnvironmentsL7: Technology Environments:

8. Innovation Linkages Science & Technology Base Technological Developments Needs of Market “Innovation occurs through the interaction of the science base, dominated by the Universities, technological developments dominated by industry and the needs of the market. (Trott 2002) 7. Technology EnvironmentsL7: Technology Environments:

9. 2. Growth Options EC10 Innovation & Commercialisation 7. Technology Environments

10. Strategy & Structure: Chandler’s contribution Key points from Chandler’s research: • Chandler concluded that strategy came before organisation structure • Increased decentralisation: organisations that become more diverse in their products and markets, need to reorganise and probably devolve power • Means the centre can no longer make the relevant decisions. 7. Technology Environments

11. Strategy or Structure: Williamson • Williamson explored the role of the centre as organisations became more diverse. • His observations: • The role of the a firm’s senior managers (HQ) was to allocate resources between its various divisions and then monitor and control them • The strategy of the firm needed to be resolved first, with the organisational structure to follow • According to Williamson, strategy came before structure in a firm. 7. Technology Environments

12. Fit between strategy & structure • For a firm to be economically effective, there needs to be a match between the firm’s strategy and its structure: (the concept of strategic fit and or congruency) • Firms need to adopt an internally consistent set of practices in order to undertake a proposed strategy. • Such practices go beyond organisation structure into other related areas of the business. • These areas include: the strategic planning process, recruitment and training, reward systems, knowledge, information systems and processes. 7. Technology Environments

13. Forms of Organisation • Bureaucratic, hierarchical • Flat structure, few management layers • Team-oriented structure • Matrix structure with a combination of vertical and horizontal authority • Product or service-oriented structures 7. Technology Environments

14. The Functional Structure • Main features • Organised around tasks • Centralised • Situations where appropriate • Small companies, few plants, limited products • Relatively stable – repetitive tasks • Advantages • Controlled by strategic leader/CEO] • Efficient • Clearly delineated external relationships • Specialist managers • Simple line of control • Can promote competitive advantage through functions • Limitations • Succession problems • Unlikely to be entrepreneurial or adaptive • Profit responsibility exclusively with CEO • Become stretched by growth • Functional Managers may concentrate on short term routine activities at expense of longer-term strategic developments • Problems of ensuring co-ordination between functions – rivalry may develop • Functional specialist may seek to build mini-empires 7. Technology Environments

15. The Entrepreneurial Structure • Main Features • Organised around the entrepreneur • Totally centralised; no division responsibility • Situations where appropriate • Simple companies in early stages of development • Advantages • Enables the founder, who logically understands the business to control its early growth and development. • Limitations • The founder may not have sufficient specialist knowledge • Only appropriate to a certain size 7. Technology Environments

16. 3. Organisational Development EC10 Innovation & Commercialisation 7. Technology Environments

17. The Effective Organisation • The strategic purpose of the organisation • Its mission, vision and values • Customer characterisation and requirements • The culture and environment of the organisation 7. Technology Environments

18. Strategy & Structure • The organisation's mission and strategy drive the structure • The culture and environment of the organisation plays a large role in determining structure. • Informal and formal structures need to be aligned 7. Technology Environments

19. Strategy & Structure: Chandler’s contribution Key points from Chandler’s research: • Chandler concluded that strategy came before organisation structure • Increased decentralisation: organisations that become more diverse in their products and markets, need to reorganise and probably devolve power • Means the centre can no longer make the relevant decisions. 7. Technology Environments

20. Strategy or Structure: Williamson • Williamson explored the role of the centre as organisations became more diverse. • His observations: • The role of the a firm’s senior managers (HQ) was to allocate resources between its various divisions and then monitor and control them • The strategy of the firm needed to be resolved first, with the organisational structure to follow • According to Williamson, strategy came before structure in a firm. 7. Technology Environments

21. Fit between strategy & structure • For a firm to be economically effective, there needs to be a match between the firm’s strategy and its structure: (the concept of strategic fit and or congruency) • Firms need to adopt an internally consistent set of practices in order to undertake a proposed strategy. • Such practices go beyondorganisation structure into other related areas of the business. • These areas include: the strategic planning process, recruitment and training, reward systems, knowledge, information systems and processes. 7. Technology Environments

22. Six ‘pulls’ on organisations To centralise To evangelise To collaborate To standardise To balkanise To professionalise 7. Technology Environments

23. Mintzberg’s six organisational configurations 7. Technology Environments

24. Mintzberg’s six organisational configurations 7. Technology Environments

25. The simple structure The firm Small firms run by one person often highly informal with strategy made at the top. Simple structures exist where the industry is fragmented and is comprised of small highly competitive firms. The strategy? Some form of differentiation strategy is needed for survival. A niche or marketing strategy is beneficial in targeting a market that is least competitive. The environment Simple technologies are used to produce products or deliver services Barriers to entry are low leads to market instability, cost/price squeezes and firm vulnerability. Firms often have very little bargaining power over customers 7. Technology Environments

26. The Machine Bureaucracy The firm Very rigid with co-ordination achieved via standardisation of work. Firm highly specialised as tasks are broken down. Very bureaucratic with many rules and regulations with no real power at lower levels of the firm. The strategy? Strategic options limited due to their inflexibility and gearing towards efficiency. Innovation out of the question and markets not growing much. So market differentiation and cost leadership the only two option open to such firms. The environment Such firms thrive only in stable settings Industries are often highly concentrated with most firms of a large size. Little uncertainty as competitor and customer behaviour predictable with stable demand and market share. 7. Technology Environments

27. The Divisionalised Structure The firm Consists of divisions that are responsible for producing and marketing a discrete product. Divisions may be driven to become bureaucratised and formalised leading to standard products. Performance controls ensure a degree of conformity although divisions autonomous. The strategy? Due to the structure will require strategies based on the context of the divisions operating in different markets. Due to the control element it precludes strategies based upon business differentiation through innovation. However, marketing differentiation and cost leadership may be useful. The environment Varies from division to division. May need environment to be stable, but also operates in some turbulent sectors of the economy. 7. Technology Environments

28. The Adhocracy The firm Performs unusual and complex tasks which can change constantly. Groups of highly trained people working together to design and produce complex and rapidly changing products. Power decentralised to those with the skills and based on expertise The strategy? Because of flexible structure and collaborative working a strategy of differentiation through innovation is beneficial. Not too broad or too narrow a focus due to the competition The environment Very complex and dynamic. Technologies change rapidly as do product design and customer needs. ‘Knowledge’ barriers to entry. Markets may be unstable as firms ‘leapfrog’ each other with new creative advances. Moderately competitive. 7. Technology Environments

29. 4. Changing the World EC10 Innovation & Commercialisation 7. Technology Environments

30. Consequences of Change • Rogers identifies three consequences or changes: • Desirable versus undesirable consequences • Direct versus indirect consequences, and • Anticipated versus unanticipated consequences. 7. Technology Environments

31. 4. Imperatives for Scotland • SMEs need to be motivated in a way that is meaningful to them to spend scarce resources on R&D activity. • Universities and Research Institutes need incentivised to spend scarce resources (people, money, and time) on creating meaningful interactions with SMEs. • Meaningful interaction between the worlds of business and academia will only grow if there are people dedicated to building the links, through actively engaging with the SME base face to face, assessing their needs, and then matching these needs to where appropriate academic expertise lies. Such interactions need to happen coherently over a lengthy period of time, probably a minimum of ten years. • 4. Ongoing growth will require links between technologically-aware local businesses and academic institutions to be nurtured, in order to develop, and to exploit commercially, “orphan” Intellectual Property (IP) • (Technology Ventures Scotland, 2005) 7. Technology Environments

32. The First Rule of Innovation deal with failure 7. Technology Environments

33. The Learning Organisation • An organisation that learns and encourages learning among its people. It promotes exchange of information between employees hence creating a more knowledgable workforce. This produces a very flexible organisation where people will accept and adapt to new ideas and changes through a shared vision. 7. Technology Environments

34. Generic Learning Organisation Strategies Accidental • Not initiated through awareness of the Learning Organisation concept. Company may already be taking steps to achieve their business goals that, in hindsight, fit the framework for implementing a Learning Organisation. Subversive • Once an organisation has discovered the Learning Organisation philosophy, they make a decision as to how to proceed. This is a choice between a subversive and a declared strategy. The subversive strategy differs from an accidental one in the level of awareness; but it is not secretive! Thus, while not openly endorsing the Learning Organisation ideal, they are able to exploit the ideas and techniques. Declared • The principles of Learning Organisations are adopted as part of the company ethos, become company "speak" and are manifest openly in all company initiatives. • Senge, 1990 Five Disciplines of Learning Organisations 7. Technology Environments

35. Risk Analysis • to be effective, the change must be drastic and not introduced slowly as time is money • not all employees want to learn and will resist the change • the openness created endangers the trust between employees • ignorance about learning; that is not following the proper learning cycle • `Over the top': too much emphasis on learning and not enough on getting the job donetoo much freedom and information can create misunderstandings • information overload, too much to absorb at once "To love knowing and not learning: shallowness" ,Confucius • the culture of the country may be a disadvantage • the perils of being a pioneer 7. Technology Environments

36. 10 Routes to Success (1 of 5) • Invest in Technology • Look inside and outside the business • Existing technologies combines are as good as new technologies • The technology has to fulfil a need. • Invest in People • People are long-term • Work culture & job content are more important than share options • Don’t employ portfolio careerist who hop from job to job Source: Business 2.0, February 2001, pp19 -35 7. Technology Environments

37. 10 Routes To Success (2 of 5) • Form alliances • Choose partners strategically • Leverage brands • Partner for tangible benefits • Invest in Customer Care • CRM is not rocket science • Help customers, don’t smother them • Past trend are not a guide to future ones. Source: Business 2.0, February 2001, pp19 -35 7. Technology Environments

38. 10 Routes to Success (3 of 5) • Be prepared to Fail • Adapting to changing conditions means reviewing business models • Lower burn rates through effective customer acquision • Learn from mistakes • Stretch Your Business • Explore new ways to do business • Employ established brands • Exploit synergies between on and off-line activity Source: Business 2.0, February 2001, pp19 -35 7. Technology Environments

39. 10 Routes to Success (4 of 5) • Talk to your Competitor • Some projects are too good to go it alone. • Alliances minimise risk. • Don’t put eggs in one basket. • Share the Power • Centralise guiding principles & decentralise everything else. • Looks outside for ideas & people. • Empower individuals to make decisions. Source: Business 2.0, February 2001, pp19 -35 7. Technology Environments

40. 10 Routes to Success (5 of 5) • Lead Your Market • Have a proposition that can be sold to investors • Map out technical difficulties • Stay focussed. • Plan for a Revolution • Take the long-term view 7. Technology Environments