Why
Strategic Technology Management
Matters?
Rev: Sep, 2012
Euiho (David) Suh, Ph.D.
POSTECH Strategic Management of Information and Technology Laboratory
(POSMIT: http://posmit.postech.ac.kr)
Dept. of Industrial & Management Engineering
POSTECH
Importance of Technological
Innovation
• Technological innovation 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.
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Product Development Life Cycle
Life-Cycle Phases
Full-Scale
Production
Raw Idea
Conceptualization
(Scientific Approach)
R&D
Production
Pilot
Logistics
Delivery to Customers
A Traditional View of Product Cycle
1-3
Importance of Technological
Innovation
• Advances in information technology have
enabled faster innovation
• CAD/CAM systems enable rapid design and shorter
production runs
• Importance of innovation and advances in
information technology have lead to:
• Shorter product lifecycles (more rapid product
obsolescence)
• More rapid new product introductions
• Greater market segmentation
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Impact on Society
• Innovation enables a wider range of goods
and services to be delivered to people
worldwide
• More efficient food production, improved
medical technologies, better transportation, etc.
• Increases Gross Domestic Product by making
labor and capital more effective and efficient
• However, may result in negative externalities,
• E.g., pollution, erosion, antibiotic-resistant bacteria
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Impact on Society
• Timeline of some of the most important
technological innovations in the last 200 years
Year
Technological innovations
1800 - 1820
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Electric battery
Steam locomotive
Internal combustion engine
Telegraph
Bicycle
1821 - 1840
•
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Dynamo
Braille writing system
Hot blast furnace
Electric generator
Five-shot revolver
1841 - 1860
•
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Bunsen battery (voltaic cell)
Sulfuric ether-based anesthesia
Hydraulic crane
Petroleum refining
Aniline dyes
1861 – 1880
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Gatling gun
Typewriter
Telephone
Phonograph
Incandescent light bulb
1881 - 1900
•
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Light steel skyscrapers
Internal combustion automobile
Pneumatic tire
Electric stove
X-ray machine
Year
Technological innovations
1901 - 1920
•
•
•
•
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Air conditioner (electric)
Wright biplane
Electric vacuum cleaner
Electric washing machine
Rocket
1921 - 1940
•
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Insulin (extracted)
Television
Penicillin
First programmable computer
Atom fission
1941 – 1960
•
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Aqua lung
Computer
Nuclear reactor
Transistor
Satellite
Integrated circuit
1961 – 1980
•
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Portable hadheld calculator
ARPANET (precursor to Internet)
Microprocessor
Mobile (portable cellular) phone
Supercomputer
1981 - 2000
•
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Space shuttle (reusable)
Disposable contact lenses
High-definition television
World Wide Web protocol
Wireless Internet
2001 - 2020
•
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Map of human genome
Smart phone / Tablet PC
Electric car
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Impact on Society
• GDP per Capita for the world, US, etc. from 1970 to
2008
GDP (Gross domestic Product)
: The total annual output of
an economy as measured by
its final purchase price
• The average of GDP per capita has risen steadily
 Because of Technological Innovation
(By Economist Robert Merton Solow)
※ GDP converted into U.S. dollars and adjusted for inflation
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Innovation by Industry:
The Importance of Strategy
• Successful innovation requires carefully crafted
strategies and implementation processes.
• Innovation funnel
• Most innovative ideas do not become successful new
products.
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Research Brief
How long does new product development
take?
• Study administered by the Product Development and
Management Association found:
• Length of development cycle varies with
innovativeness of project
• Incremental projects took 6.5 months from concept to
market introduction
• “More innovative” projects took just over 14 months.
• New-to-the-world products took 24 months.
• On average, firms reported 12% to 40% shorter cycle
times than they reported in 1995.
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INNOVATION + STRATEGY
■ Old:
■ New:
– God helps those who help themselves!
– God helps those who have strategies!
– INNOVATION alone works???
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The VCR Battle (Betamax vs. VHS)
SONY: Betamax, 1974
JVC: VHS, 1976
≪
95% of the VCR market, 1988
SONY: The biggest loser of standards war?
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PC - Apple vs. IBM
VS.
Closed Platform
Open Platform
■ Apple had better quality with a higher level of technology
 Due to its closed platform, less technical supports were provided
■ IBM made bigger profits than Apple, relying on the compatibilities with other software
and hardware providers (e.g. Microsoft Windows)
 Even though Apple’s technology was better than IBM’s,
IBM beat Apple because of their high compatibilities
12
Game - Atari vs. Nintendo
High quality games
Low quality games
VS.
■ Atari released the first successful video game console
using plug-in cartridges, instead of having built-in games
 Because Atari accepted both low-quality games and high-quality games,
the Atari’s customers who played low-quality games were unsatisfied
with their products
■ Nintendo controlled video game manufacturers and constructed library containing
only qualified games
 This strategy insured that Nintendo remained profitable and achieved remarkable
success in video game market
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Game Console - Playstation vs. Wii
VS.
■ Playstation 3 has more excellent graphics and outstanding processing power over
Nintendo Wii
■ The advantages (e.g. gesture based control, availability to everyone, lower price,
family-friendly image) of Wii lead itself to a big success in the game market
14
MP3 player - Zune vs. Ipod
VS.
■ Zune and iPod provide their own music management software;
Zune: Zune player, iPod: iTunes
■ Zune player only supports the songs purchased in Zune market
while iTunes supports any songs
 Even though Zune’s spec is better than iPod’s, iPod have more compatibility
and convenience
 iPod got an overwhelming victory over Zune
15
Spreadsheet - Lotus 1-2-3 vs. Excel
VS.
■ Lotus 1-2-3 (1983) and Microsoft Excel (1985) have similar functions in both quality
and efficiency perspectives
■ Lotus only focused on OS/2 while MS Excel could be compatible with Window
 As Window had became more and more popular,
MS Excel beat Lotus 1-2-3, even though they have no big differences.
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Beverage - Pepsi vs. Coca-Cola
VS.
■ Pepsi Cola is a much sweeter beverage than Coca cola
■ The popularity of Coke's brand image misleads people to think Coca-Cola itself tastes
better, even though it really doesn't taste very different from Pepsi
 First-mover Advantage
VS.
 815 Cola (Released in 1998)
– Customers didn’t tell 815 Cola from Coca-Cola in blind test
– At first, it was successful, occupying 13.7% of market share
– However, 815 Cola went bankrupt in 2007
because of major cola companies’ product flooding
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VESS Cola vs. Coca-Cola
VS.
■ E-Mart developed VESS Cola with Cott, a beverage company in U.S. (OEM)*
– Lower price than cola from major companies
(66% lower than convenience store price, 37% lower than supermarket price)
■ In domestic cola market, Coca-Cola occupies 75-80% of market share
and Pepsi cola occupies the remaining market share
– Some brands have developed cola products but they failed due to the reputation of Coca-Cola
■ VESS Cola is developed through about 40 times of blind tests
 What would be the result?
* OEM: Original Equipment manufacturer
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