AP/ADMS 4940
Technology Management
Session 1
Today’s Agenda
Administrative issues
Course outline review
Course expectation
Overview of technological innovation
Administrative Issues
Contact Info:
You-Ta Chuang, ychuang@yorku.ca
Office: RM233, Atkinson Building
Course materials:
All materials are available on e-Resources
Cases can be purchased through Ivey School of Business
Course Outline Review
Learning Objectives
To develop an awareness of the range, scope, and
complexity of the phenomena, issues, and problems
related to managing technological change.
To develop understanding of "state of the art" concepts
for managing technological change and the
relationship between technological change and strategy.
To develop a conceptual framework for assessing and
auditing the technological capabilities
Evaluation
Midterm exam 30%
Oct 22, in class, close book
Coverage – readings from Sessions 1-6, excluding cases
Final exam 20%
Date: TBA
Coverage – readings from Session 8 – 11, including group
projects; excluding cases
Participation 15%
Your performance relative to class average; York’s 9-point scale
Group work 35%
Group work
Session summary (5%)
Lead discussion (5%)
Group project (25%)
Three progress reports (5%)
Group presentation (20%)
Overview
Technology:
This refers to the theoretical and practical knowledge, skills
and artifacts that can be used to develop products and
services as well as their production and delivery systems.
Technology can be embodied in people, materials, cognitive
and physical processes, plant, equipment and tools
Technological Innovation:
This can be technology-based or facilitated by technology.
We define successful technological innovation as that
which returns the original investment plus some
additional returns
Technological innovation is now the single
most important driver of competitive success in
many industries
Many firms earn over one-third of sales on products
developed within last five years
Product innovations help firms protect margins by
offering new, differentiated features.
Process innovations help make manufacturing
more efficient.
BUT…..
Technological innovation can lead to
Shorter product lifecycles (more rapid
product obsolescence)
More rapid new product introductions
Greater market segmentation
And…return on investment???
Biopharmaceutical Companies’ Investment in
R&D
Total Biopharmaceutical Company R&D and
PhRMA Member R&D: 1995–20091
$60
$51.80
$47.60
$47.9 $47.4
$50
$40
$29.8 $31.0
$30
$20
“
$65.3
$63.2 $63.7
$56.1
$15.2
$16.9
$19.0
$21.0
$22.7
$34.5
$37.0
$39.9
$43.4
$45.8
$26.0
“
Expenditures (Billions of Dollars)
$70
The pharmaceutical
industry is one of the most
research-intensive
industries in the United
States. Pharmaceutical
firms invest as much as
five times more in
research and
development, relative to
their sales, than the
average U.S.
manufacturing firm.2
$10
$0
1995
1996
1997
1998
Entire Pharma Sector
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
(est)
PhRMA Member Companies' R&D Expenditures
Sources: 1Burrill & Company, analysis for PhRMA, 2005–2010 (Includes PhRMA research associates and nonmembers) in
PhRMA, “Profile 2010, Pharmaceutical Industry;” PhRMA, “PhRMA Annual Membership Survey,” 1996-2010; 2CBO,
Research and Development in the Pharmaceutical Industry, 2006.
— Congressional
Budget Office
The Cost of Developing a New Drug
Has Greatly Increased
Cost to Develop One New Drug1
$1.4
Billions (Constant Dollars, Year 2000)
$1.3B
$1.2
$1.0
$0.8
$800M
$0.6
$0.4
$300M
$0.2
$100M
$0.0
1979
1991
2000
Sources: 1J. DiMasi and H. Grabowski, "The Cost of Biopharmaceutical R&D: Is Biotech Different?," Managerial and
Decision Economics, 2007; J. DiMasi et al., “The Price of Innovation: New Estimates of Drug Development Costs,” Journal
of Health Economics, 2003.
2005
Probability of Success for Investigational
Drugs Is Small
Approximately 20% of self-originated new drugs that enter clinical testing will
receive U.S. marketing approval.1
Clinical Approval Success Rates by Therapeutic Class1
Source: 1Tufts Center for the Study of Drug Development, “New drugs entering clinical testing in top 10 firms jumped 52%
in 2003-05,” Impact Report, 2006.
Roadmap of topics
What is innovation
Source of innovation/Types of innovation
How to measure innovation performance
Strategy and competition
Choosing innovation projects
Collaboration strategies
How to protect innovation
Organizing for innovation
What’s on next week
Topics: Nature and Importance of Innovation; Sources of Innovation
Readings:
The Council of Canadian Academies, 2009. Innovation and
Business Strategy: Why Canada Falls Short: Chapter 2
Birkinshaw, J., Bouquet, C., & Barsoux, J. (2011). The 5 myths of
innovation. MIT Sloan Management Review, 52(2), 43-50.
Davenport, T. H., Prusak, L., & Wilson, H. J. (2003), Who's
bringing you hot ideas and how are you responding? Harvard
Business Review, 81(2), 58-64