Stevens Institute of Technology Howe School of Technology Management Syllabus MGT 671A Technology and Innovation Management Fall 2014 Thursday, 6:15 pm–8:45 pm Babbio 210 Yan Chen, Ph.D. Office: Babbio 625 Tel: 201-216-8540 Fax: 201-216-5385 yan.chen@stevens.edu Office Hours: Thursday, 4:00 pm–6:00 pm or by appointment Course & Web Address: http://www.stevens.edu/moodle Overview In many industries, technological innovation is now the single most important driver of competitive success. Many firms now rely on products developed within the prior three to five years for a large portion of their sales and profits. The subject of technology and innovation management is approached here as a strategic process. We will explore key topics in technology and innovation management such as the industry dynamics of technological innovation, the formulation of technological innovation strategy, and the implementation of technological innovation strategy. We will strive to go beyond simply learning concepts, although understanding major concepts is critically important for technology and innovation management. Throughout the course, key conceptual frameworks are linked to applications in a variety of industry and case settings. Learning Goals After completing this course, students are expected to be able to: Interpret the industry dynamics of technological innovation, including the sources of innovation, the types of innovation, standards battles, and market entry timing Understand the major issues in formulating technological innovation strategy, including the strategic direction of a firm, the selection of innovation projects, collaboration strategies, and the protection of intellectual property Understand the major factors affecting the implementation of technological innovation strategy, including organizational structure, new product development process, team structure, and deployment strategy Additional learning objectives include the development of: Written and oral communications skills: The study memos will be used to assess 1 written skills and the case presentations will be used to assess presentation skills. Team skills: The case presentation and discussion will involve student teams. Strategic thinking: An understanding of how technological innovation can support business strategy. Pedagogy The course will employ lectures, class discussion, in-class individual and team assignments, and individual and team homework and projects. Required Text Melissa Schilling (2012). Strategic Management of Technological Innovation (Fourth Edition). New York: McGraw-Hill. ISBN: 978-0078029233 Articles Brynjolfsson, E., & McAfee, A. (2012). Winning the Race with Ever-Smarter Machines. MIT Sloan Management Review, 53(2), 53-60. Huston, L., & Sakkab, N. (2006). Connect and Develop: Inside Procter & Gamble's New Model for Innovation. Harvard Business Review, 84(3), 58-66. Bower, J. L., & Christensen, C. M. (1995). Disruptive Technologies: Catching the Wave. Harvard Business Review, 73(1), 43-53. Gawer, A., & Cusumano, M. A. (2008). How Companies Become Platform Leaders. MIT Sloan Management Review, 49(2), 28-35. Suarez, F. F., Grodal, S., & Gotsopoulos, A. (2014). Perfect Timing? Dominant Category, Dominant Design, and the Window of Opportunity for Firm Entry. Strategic Management Journal. http://onlinelibrary.wiley.com/doi/10.1002/smj.2225/pdf Groenveld, P. (2007). Roadmapping Integrates Business and Technology. ResearchTechnology Management, 50(6), 49-58. Nagji, B., & Tuff, G. (2012). Managing Your Innovation Portfolio. Harvard Business Review, 90(5), 66-74. Pisano, G. P., & Verganti, R. (2008). Which Kind of Collaboration Is Right for You? Harvard Business Review, 86(12), 78-86. Rivette, K. G., & Kline, D. (2000). Discovering New Value in Intellectual Property. Harvard Business Review, 78(1), 54-66. 2 O'Reilly, C. A., & Tushman, M. L. (2004). The Ambidextrous Organization. Harvard Business Review, 82(4), 74-83. Blank, S. (2013). Why the Lean Start-Up Changes Everything. Harvard Business Review, 91(5), 63-72. Christensen, C. M., & Overdorf, M. (2000). Meeting the Challenge of Disruptive Change. Harvard Business Review, 78(2), 66-77. Gourville, J. T. (2006). Eager Sellers and Stony Buyers: Understanding the Psychology of New-Product Adoption. Harvard Business Review, 84(6), 99-106. Assignments 1. Class participation and professionalism (100 points, 20%): (1) How to participate? For each reading, I have posed several preparation questions. The best way to ensure your readiness for each class is by completing the readings and preparing answers to the preparation questions. During class discussion, I will alternate between asking for volunteers and calling on individuals. You can contribute in many ways. You may, for example, offer insights or observations, ask questions, politely disagree with me or another student (i.e., you can disagree with an idea without discrediting the speaker), help others articulate their points of view, or follow up on a fellow student’s comments with further insights or evidence. There are usually many valid ways of looking at any issue we study, so don’t worry about being “wrong.” You may be bringing a whole new perspective and insight into the discussion! (2) How to be professional? In this course, professionalism refers to regular class attendance, contributing positively and significantly to class discussions, and being courteous to both your fellow classmates and the instructor. Negative in-class behavior (e.g., lateness, chatting, leaving class, texting, inappropriate use of electronic device, etc.) will have a negative impact on your grade. Also, please note that personal computers are allowed in class with the understanding that they are used for class productivity only (e.g., note taking, fact checking, and concept clarification). All other electronic devices are to be turned off (or at least muted) during class. 2. Case presentation and discussion: (1) Case presentation (50 points, 10%): Our textbook includes 12 opening cases. Each team will present one of the opening cases. Each Team can consist of 1 to 3 students. The case presentation should cover basic company background, answer each preparation question (see the detailed schedule below), provide updates on the company, and reply to questions and comments from other students. Please send your slides to me by email before the class. Please use the following email subject line: Week #_Case Presentation (e.g., Week 2_Case Presentation); attach your slides to the email using the same name. Please also make sure to put the names of all team members on the first slide. 3 (2) Case discussion (50 points, 10%): Each team will respond to the presentation of another team. The discussion can take the form of questions and comments concerning the specific details of the analysis and recommendations. In addition to asking oral questions during class, each discussion team will submit a typed list of four questions along with tentative answers to those questions. Each answer should be three to four sentences in length. Submit your questions and answers to me by email before the beginning of the next class. Please use the following email subject line: Week #_Case Discussion (e.g., Week 2_Case Discussion); attach your file to the email using the same name. Please also make sure to put the names of all team members on the top of the file. 3. Two study memos (50 points × 2, 20%): (1) Pick any 2 classes to write a memo. The study memos should answer the preparation questions for the textbook chapter (normally 3 questions) and those for the article (another 3 questions). You should also discuss the link between the book chapter and the assigned article. (2) Once you pick a specific class to write a memo, you should submit a brief one-page or two-page memo before the class begins. Send your memo to my email with the following email subject line: Your Name_Study Memo_Class Topic (e.g., Yan Chen_Study Memo_Sources of Innovation); attach your memo to the email using the same name. Please also make sure to put your name on the top of the memo. 4. Midterm exam (100 points, 20%): (1) The midterm exam covers textbook Chapters 1–7. It includes 25 multiple choice questions and 5 short essay questions. (2) Each multiple choice question has one correct answer and is worth 2 points. (3) All essay questions are selected from the preparation questions for textbook chapters. Each essay question is worth 10 points. (4) It is a closed-book exam. However, students are allowed to bring a note card, which can be two-sided and can be as large as a standard 8.5"×11" letter size paper. (5) Review questions for the exam will be posted on the course website about one week before the exam. 5. Final exam (100 points, 20%): (1) The final exam covers textbook Chapters 8–13. It includes 25 multiple choice questions and 5 short essay questions. (2) Each multiple choice question has one correct answer and is worth 2 points. (3) All essay questions are selected from the preparation questions for textbook chapters. Each essay question is worth 10 points. (4) It is a closed-book exam. However, students are allowed to bring a note card, which can be two-sided and can be as large as a standard 8.5"×11" letter size paper. (5) Review questions for the exam will be posted on the course website about one week before the exam. 6. Extra credits (up to 50 points) 4 You can earn extra credits if you write more than two study memos. Each additional study memo can earn up to 25 extra points; students can earn up to 50 points. Each assignment’s weight in the final grade is as follows: Class participation and professionalism One case presentation and one case discussion Two study memos Midterm exam Final exam Total Extra credits 100 100 100 100 100 500 50 20% 20% 20% 20% 20% 100% Grading scale: Grade A AB+ B BC+ C CD+ D DF Percentage 93–100% 90–92% 88–89% 83–87% 80–82% 78–79% 73–77% 70–72% 68–69% 63–67% 60–62% 0–59% Points 465–500 450–464 440–449 415–439 400–414 390–399 365–389 350–364 340–349 315–339 300–314 0–299 Ethical Conduct The following statement is printed in the Stevens Graduate Catalog and applies to all students taking Stevens courses, on and off campus. “Cheating during in-class tests or take-home examinations or homework is, of course, illegal and immoral. A Graduate Academic Evaluation Board exists to investigate academic improprieties, conduct hearings, and determine any necessary actions. The term ‘academic impropriety’ is meant to include, but is not limited to, cheating on homework, during in-class or take home examinations and plagiarism.“ Consequences of academic impropriety are severe, ranging from receiving an “F” in a course, to a warning from the Dean of the Graduate School, which becomes a part of the permanent student record, to expulsion. 5 Reference: The Graduate Student Handbook, Academic Year 2003-2004 Stevens Institute of Technology, page 10. Consistent with the above statements, all homework exercises, tests and exams that are designated as individual assignments MUST contain the following signed statement before they can be accepted for grading. ____________________________________________________________________ I pledge on my honor that I have not given or received any unauthorized assistance on this assignment/examination. I further pledge that I have not copied any material from a book, article, the Internet or any other source except where I have expressly cited the source. Signature _________________________ Date: _____________ Please note that assignments in this class may be submitted to www.turnitin.com, a web-based anti-plagiarism system, for an evaluation of their originality. Course/Teacher Evaluation Continuous improvement can only occur with feedback based on comprehensive and appropriate surveys. Your feedback is an important contributor to decisions to modify course content and pedagogy. All course teacher evaluations are conducted on-line. You will receive an email one week prior to the end of the course informing you that the survey site (https://www.stevens.edu/assess) is open along with instructions for accessing the site. Login using your campus username and password. All responses are strictly anonymous. We especially encourage you to clarify your position on any of the questions and give explicit feedbacks on your overall evaluations in the section at the end of the formal survey which allows for written comments. We ask that you submit your survey prior to the close of the examination period. Course Schedule 1. Introduction Thursday, August 28, 2014 Readings: 1. Textbook Chapter 1 Introduction 2. Brynjolfsson, E., & McAfee, A. (2012). Winning the Race with Ever-Smarter Machines. MIT Sloan Management Review, 53(2), 53-60. Preparation questions For the textbook chapter: 1. Why is innovation important for firms? 2. What are some advantages of technological innovation? Disadvantages? 3. Why do you think so many innovation projects fail to generate an economic return? 6 For the article: 1. What is exponential growth, and what are its strategic implications? 2. What is digitalization, and what are its strategic implications? 3. What is combinatorial innovation, and what are its strategic implications? 2. Sources of Innovation Thursday, September 4, 2014 Readings: 1. Textbook Chapter 2 Sources of Innovation 2. Huston, L., & Sakkab, N. (2006). Connect and Develop: Inside Procter & Gamble's New Model for Innovation. Harvard Business Review, 84(3), 58-66. Preparation questions: For the opening case: 1. What factors do you think enable Iddan, an engineer with no medical background, to pioneer the development of wireless endoscopy? 2. To what degree would you characterize Given's development of the camera pill as "science-push" versus "demand-pull"? 3. What were the advantages and disadvantages of Iddan and Meron collaborating with Dr. Swain's team? For the textbook chapter: 1. What are some of the advantages and disadvantages of (a) individuals as innovators, (b) firms as innovators, (c) universities as innovators, (d) government institutions as innovators, (e) nonprofit organizations as innovators? 2. To what degree do you think the creativity of a firm is a function of the creativity of individuals, versus the structure, routines, incentives, and culture of the firm? Provide an example of a firm that does a particularly good job at nurturing and leveraging the creativity of its individuals. 3. The use of collaborative research agreements is increasing around the world. What are some reasons collaborative research is becoming more prevalent? For the article: 1. What is the "connect and develop" (C&D) method? What are C&D's advantages and disadvantages? 2. Why does P&G use both proprietary network and open network to seek out new ideas? 3. What are the roles of research and development (R&D) in P&G's C&D? 3. Types and Patterns of Innovation Thursday, September 11, 2014 Readings: 1. Textbook Chapter 3 Types and Patterns of Innovation 7 2. Bower, J. L., & Christensen, C. M. (1995). Disruptive Technologies: Catching the Wave. Harvard Business Review, 73(1), 43-53. Preparation questions For the opening case: 1. Is the Tata Nano a radical innovation or an incremental innovation? Competence enhancing or destroying innovation? Is it a component or an architectural innovation? 2. What factors do you think influence the rate at which consumers adopt the Tata Nano? 3. Do you think that the Tata Nano will be successful? For the textbook chapter: 1. What are some reasons that established firms might resist adopting a new technology? 2. What are some reasons that both technology improvement and technology diffusion exhibit s-shape curves? 3. What factors might influence the length of technology cycles in an industry? In what industries would you expect to see particularly short technology cycles? In what industries would you expect to see particularly long technology cycles? For the article: 1. Why did disruption happen so repeatedly in the disk drive industry? Why weren’t subsequent companies able to learn the important historical lessons about the threat of disruptive technologies? 2. Where do you see disruptive technologies threatening successful, established companies today? 3. If you were running the leading company in one of the industries you identified in answering #2 above, what strategy would you use to counter the disruptive threat? If you wanted to enter the industry, what strategy does this research imply you should use? 4. Standards Battles and Design Dominance Thursday, September 18, 2014 Readings: 1. Textbook Chapter 4 Standards Battles and Design Dominance 2. Gawer, A., & Cusumano, M. A. (2008). How Companies Become Platform Leaders. MIT Sloan Management Review, 49(2), 28-35. Preparation questions For the opening case: 1. What factors do you think influenced whether (1) consumers, (2) retailers, or (3) movie producers supported Blu-ray versus HD-DVD? 2. Why do you think Toshiba and Sony would not cooperate to produce a common standard? 3. Does having a single video format standard benefit or hurt consumers? Does it benefit or hurt consumer electronics producers? Does it benefit or hurt movie producers? 8 For the textbook chapter: 1. What are some of the sources of increasing returns to adoption? 2. What are some of the ways a firm can try to increase the overall value of its technology and its likelihood of becoming the dominant design? 3. Are dominant designs good for consumers? Competitors? Complementers? Suppliers? For the article: 1. What are the differences between a product and an industry platform? 2. What is coring, and how can it be successful? 3. What is tipping, and how can it be successful? 5. Timing of Entry Thursday, September 25, 2014 Readings: 1. Textbook Chapter 5 Timing of Entry 2. Suarez, F. F., Grodal, S., & Gotsopoulos, A. (2014). Perfect Timing? Dominant Category, Dominant Design, and the Window of Opportunity for Firm Entry. Strategic Management Journal. http://onlinelibrary.wiley.com/doi/10.1002/smj.2225/pdf Preparation questions For the opening case: 1. Why did the first social networking sites fail? Is there anything they could have done to survive? 2. Are there significant switching costs that lock users into a particular social networking site? 3. Do you think Google+ can overtake Facebook? Why or why not? For the textbook chapter: 1. What are some advantages of entering a market early? Are there any advantages of entering a market late? 2. What factors might make some industries harder to pioneer than others? 3. Are there industries in which there is no penalty for late entry? For the article: 1. What is a product category? How does the number of product categories evolve in an industry life cycle? 2. What is a dominant category? What are the major roles of a dominant category in an emerging industry? 3. When does a window of opportunity for market entry open? When does it close? When is the best timing for market entry? 6. Defining the Organization's Strategic Direction Thursday, October 2, 2014 9 Readings: 1. Textbook Chapter 6 Defining the Organization's Strategic Direction 2. Groenveld, P. (2007). Roadmapping Integrates Business and Technology. ResearchTechnology Management, 50(6), 49-58. Preparation questions For the opening case: 1. How does Genzyme's focus on orphan drugs affect the degree of competition it faces? How does it affect the bargaining power of customers? 2. How does focusing on orphan drugs affect the types of resources and capabilities a biotech firm needs to be successful? 3. What recommendations would you offer Genzyme for the future? For the textbook chapter: 1. What is the difference between a strength, a competitive advantage, and a sustainable competitive advantage? 2. Why is it necessary to perform an external and internal analysis before the firm can identify its true core competencies? 3. How is the idea of "strategic intent" different from models of strategy that emphasize achieving a fit between the firm's strategies and its current strengths, weakness, opportunities, and threats (SWOT)? For the article: 1. What is roadmapping? 2. What are the benefits of roadmapping? 3. Do you think roadmapping helps firms close their resource and capability gaps and realize their strategic intents? 7. Choosing Innovation Projects Thursday, October 9, 2014 Readings: 1. Textbook Chapter 7 Choosing Innovation Projects 2. Nagji, B., & Tuff, G. (2012). Managing Your Innovation Portfolio. Harvard Business Review, 90(5), 66-74. Preparation questions For the opening case: 1. Why is it difficult for Bug Labs to use NPV or IRR in its development project decisions? What are the advantages and disadvantages of Bug Labs' use of qualitative screening questions to make project decisions? 2. What are the advantages and disadvantages of focusing on the demands of current customers? 3. How are Bug Labs' project selection choices influenced by its strategy of focusing on the "long tail"? 10 For the textbook chapter: 1. What are the advantages and disadvantages of discounted case flow methods such as NPV and IRR? 2. Why might a firm use both qualitative and quantitative assessments of a project? 3. Will different methods of evaluating a project typically yield the same conclusions about whether to fund its development? Why or why not? For the article: 1. What is an innovation portfolio? How to allocate resources to different innovation activities in an innovation portfolio? 2. Is there a golden ratio? Does the golden ratio vary across firms and industries? 3. How to manage transformational innovation? 8. Midterm Exam Thursday, October 16, 2014, 6:15pm–8:45pm 9. Collaboration Strategies Thursday, October 23, 2014 Readings: 1. Textbook Chapter 8 Collaboration Strategies 2. Pisano, G. P., & Verganti, R. (2008). Which Kind of Collaboration Is Right for You? Harvard Business Review, 86(12), 78-86. Preparation questions For the opening case: 1. What were the advantages and disadvantages of Dyesol's venture with Tata Steel and with Pilkington? 2. Should Dyesol form licensing agreements (or other types of alliances) with other firms? 3. What mechanisms do you believe should be in place to help ensure that Dyesol's objectives (and those of its partners) are met in its collaborative relationships? For the textbook chapter: 1. What are some advantages and disadvantages of collaborating on a development project? 2. How does the mode of collaborating (e.g., strategic alliance, joint venture, licensing, outsourcing, collaborative research organization) influence the success of a collaboration? 3. If a firm decides it is in its best interest to collaborate on a development project, how would you recommend the firm to choose a partner, a collaboration mode, and governance structure for the relationship? For the article: 11 1. What are the two basic issues that executives should consider when deciding how to collaborate on a given innovation project 2. When will closed network be effective? When will open network be effective? 3. When will hierarchical governance be desirable? When will flat structure be desirable? 10. Protecting Innovation Thursday, October 30, 2014 Readings: 1. Textbook Chapter 9 Protecting Innovation 2. Rivette, K. G., & Kline, D. (2000). Discovering New Value in Intellectual Property. Harvard Business Review, 78(1), 54-66. Preparation questions For the opening case: 1. What industry conditions led to the revolution in music distribution described above? Which stakeholders stand to benefit most (or least) from this revolution? 2. What are the reasons that make iTunes successful? What will determine how long the success of iTunes endures? 3. Will music streaming disrupt music sales? For the textbook chapter: 1. What are the differences between patents, copyrights, and trademarks? 2. What factors should a firm that considers marketing its innovation in multiple countries use in formulating its protection strategy? 3. Identify a situation in which none of the legal protection mechanisms discussed (patents, copyrights, trademarks, trade secrets) will prove useful. For the article: 1. How do patents enable a firm to establish a proprietary market advantage? 2. How do patents improve financial performance? 3. How do patents enhance competitiveness? 11. Organizing for Innovation Thursday, November 6, 2014 Readings: 1. Textbook Chapter 10 Organizing for Innovation 2. O'Reilly, C. A., & Tushman, M. L. (2004). The Ambidextrous Organization. Harvard Business Review, 82(4), 74-83. Preparation questions For the opening case: 12 1. What are the advantages and disadvantages of the creative side of Google being run as a flexible and flat "technocracy"? 2. What do you believe the challenges are in having very different structure and controls for Google's creative side versus the other parts of the company? 3. Some analysts have argued that Google's free-form structure and the 20 percent time to work on personal projects is only possible because Google's prior success has created financial slack in the company. Do you agree with this? Would Google be able to continue this management style if it had closer competitors? For the textbook chapter: 1. What are some advantages and disadvantages of having formalized procedures for improving the effectiveness and efficiency of innovation? 2. What factors should a firm consider when deciding how centralized its R&D activities should be? Should firms employ both centralized and decentralized R&D activities? 3. What are some of the advantages and disadvantages of the transnational approach advocated by Barlett and Ghoshal? For the article: 1. Why once successful company may have difficulties in exploring the future and creating discontinuous innovations? 2. What is an ambidextrous organization? How does it help firms balance the tension between exploitation and exploration? 3. Why should emerging business be managed differently from existing business? 12. Managing the New Product Development Process Thursday, November 13, 2014 Readings: 1. Textbook Chapter 11 Managing the New Product Development Process 2. Blank, S. (2013). Why the Lean Start-Up Changes Everything. Harvard Business Review, 91(5), 63-72. Preparation questions For the opening case: 1. How do frog's activities affect its ability to (a) maximize the fit with customer needs, (b) minimize development cycle time, and (c) control development costs? 2. What are the advantages and disadvantages of involving customers fairly early in the design process? 3. Would frog's approach be more suitable for some kinds of development projects than others? If so, what kinds would it be appropriate or inappropriate for? For the textbook chapter: 1. What are some of the advantages and disadvantages of a parallel development process? What obstacles might a firm face in attempting to adopt a parallel process? 2. What kinds of people make good project champions? How can a firm ensure that it gets the benefits of championing while minimizing the risks? 13 3. What are the benefits and costs of involving customers and suppliers in the development process? For the article: 1. What are the reasons that the process of innovation may differ from the process of execution? 2. What are the three key principles of the lean method? Why does the lean method differ from traditional method? 3. Do you think that large corporations can use the lean method to manage innovation? Why or why not? 13. Managing New Product Development Teams Thursday, November 20, 2014 Readings: 1. Textbook Chapter 12 Managing New Product Development Teams 2. Christensen, C. M., & Overdorf, M. (2000). Meeting the Challenge of Disruptive Change. Harvard Business Review, 78(2), 66-77. Preparation questions For the opening case: 1. How would you characterize Skullcandy's new product development team structure? 2. What are the advantages and disadvantages of having Skullcandy’s employees serve on several project teams simultaneously? 3. If you were advising the top management of Skullcandy about new product development processes, what recommendations would you make? For the textbook chapter: 1. What are the tradeoffs in choosing a team's size and level of diversity? 2. How can managers ensure that a team reaps the advantages of diversity while overcoming the challenges that team diversity raises? 3. What are some advantages and disadvantages of collocation? For what types of projects are virtual teams inappropriate? For the article: 1. Where do capabilities reside? How do capabilities migrate as organizations evolve? 2. What are the possible ways for organizations to create new capabilities? 3. How to fit team structures to innovation tasks? 14. Thanksgiving Recess, No Class Wednesday, November 26, 2014 – Sunday, November 30, 2014 14 15. Crafting a Deployment Strategy Thursday, December 4, 2014 Readings: 1. Textbook Chapter 13 Crafting a Deployment Strategy 2. Gourville, J. T. (2006). Eager Sellers and Stony Buyers: Understanding the Psychology of New-Product Adoption. Harvard Business Review, 84(6), 99-106. Preparation questions For the opening case: 1. Why did Nintendo choose not to make its early video game consoles backward compatible? What were the advantages and disadvantages of this strategy? 2. What strengths and weaknesses did Sony have when it entered the video game market in 1995? What strengths and weaknesses did Microsoft have when it entered the video game market in 2001? 3. In what ways did Nintendo's Wii break with the norms of competition in the video game industry? How defensible was its position? For the textbook chapter: 1. Identify one or more circumstances when a company might wish to delay introducing its product. 2. What factors will (or should) influence a firm's pricing strategy? 3. How can firms tailor their marketing plans to different adopter categories? For the article: 1. Why does the "9x effect" exist? 2. What are the reasons that customers may resist innovations that involve behavioral changes? 3. What are the possible strategies for facilitating adoption? 16. Final Exam Thursday, December 11, 2014, 6:15pm–8:45pm 15