Why Innovate?
Why Innovate, Management of
Technological Innovation
1
Management of
Technological Innovation
Lesson 2
Why Innovate?
• Changes in World Industry
• Why Innovate?
Why Innovate, Management of
Technological Innovation
2
World
Region
You as
Innovator
and
Technical
Manager
HKSAR
Dragons
Why Innovate, Management of
Technological Innovation
3
Factors of Production and Economic Growth
•
•
•
•
•
Capital (Now, reasonable in HK)
Raw materials (Nil in HK)
Land (Very little in HK)
Labor (Limited in HK)
Technology or Technovation
(Some technology transfer in the past but very little
technovation in HK)
Technology and its development need to be managed
effectively for the generation of wealth and resources.
Why Innovate, Management of
Technological Innovation
4
Change is the only thing constant
these days.
Much of this change is due to growth in
technology.
Growth in technology takes place through
continual innovations.
Why Innovate, Management of
Technological Innovation
5
Changes in world industry
•
•
•
•
•
Shorter product life cycles
Shorter product changeover cycles
Higher rate of new product development
Shorter production runs
Quality, and productivity-quality integration
(ISO 9000, zero defects)
• Company-wide total quality management (TQM)
• Equipment and process technology as a strategic
resource
• Flexible manufacturing systems (FMS)
Why Innovate, Management of
Technological Innovation
6
• Emphasis on flexibility and innovativeness
beyond efficiency and productivity
• Emphasis on customer responsiveness, agility and
speed to market
• Worker training and worker participation
• Extensive use of CAD, CAM, rapid prototyping
• Increasing use of decision support systems (DSS),
expert systems, simulation, etc.
• Increasing use of information technology
Why Innovate, Management of
Technological Innovation
7
Dominant Trends
• Localization
• Automation
• Knowledge-intensive nature of production
and service related activities
• Faster metabolism through IT and Internet
• Transnational strategic alliances between
firms, organization networks and interorganizational structures.
Why Innovate, Management of
Technological Innovation
8
Value of Life: What is important
(Japan) [M. Takahashi, 1999]
60
50
40
Material
Abundance
Psychological
Abundance
% 30
20
10
89
19
87
19
85
19
83
19
81
19
79
19
77
19
19
75
0
Why Innovate, Management of
Technological Innovation
9
Relationship between human beings and
nature (Japan) [M. Takahashi, 1999]
50
40
30
%
20
10
0
19
53
19
58
19
63
19
68
19
73
19
78
19
83
19
88
19
93
Use it
Follow it
Conquer it
Why Innovate, Management of
Technological Innovation
10
Common problems in industry
• Over-capacity of production facilities
• Increasing market segmentation and saturation
• Changing customer values and more exacting user
requirements of cost, quality and performance
• Emergence of unexpected competitors across the
world
• Unsteady currencies, exchange rates, and markets
Why Innovate, Management of
Technological Innovation
11
Toyota’s approach to car manufacturing :
‘It’s a wrong notion to believe that mass production
will guarantee you less cost. That was true in the
1960s,in those days, where there was a high
demand. But the notion has become a myth that no
longer applies in the 1980s and beyond. Now
production capacity exceeds demand. For some
reason many people in the world still believe in
this myth and they still take for granted that if they
increase mass production they can reduce costs.’
Why Innovate, Management of
Technological Innovation
12
Innovation
Industrial
Progress
Quality
Productivity
Why Innovate, Management of
Technological Innovation
13
Innovation is not easy
Although innovation is increasingly seen as a
powerful way of obtaining competitive advantage
and more secure approach to defending strategic
positions, success is not guaranteed. After all,
innovation is by its nature a risky business. And
we need to remember that there is a great deal of
uncertainty in innovation, made up of technical,
market, social, political and other factors.
Why Innovate, Management of
Technological Innovation
14
Innovation is essential
Because the innovation process is so
uncertain, it sounds that it is forgivable for
many organizations to decide not to
innovate. But, the approach of doing
nothing is rarely an option, especially in the
rapid change of the technology and the
economics.
Why Innovate, Management of
Technological Innovation
15
We have no option but to learn to
manage innovation
So the question is not one of whether or not to
innovate but rather of how to do so
successfully. What lessons can we learn
from research and experience, and is there
any pattern to these which might be used to
guide actions? (Visit the case Study on the
“Decline of Wang” here)
Why Innovate, Management of
Technological Innovation
16
Per Capita GDP Ranking, 1997
1. Luxembourg
2. USA
3. Switzerland
4. Kuwait
5. Hong Kong (US$26,400)
Ref: 1st Report of Chief Executive’s Commission on Innovation and
Technology, September 1998.
Why Innovate, Management of
Technological Innovation
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% Share of Mfg in HK GDP
30
25
20
15
10
5
0
1975
1980
1985
Why Innovate, Management of
Technological Innovation
1990
1995
2000
18
% Share of Mfg in HK
Employment
60
50
40
30
20
10
0
1955
1960
1965
1970
1975
1980
Why Innovate, Management of
Technological Innovation
1985
1990
1995
19
2000
Gross Output of HK Mfg Sector
HK$ Billion
350
300
250
200
150
100
50
0
1978
1980
1982
1984
1986
1988
Why Innovate, Management of
Technological Innovation
1990
1992
1994
1996
20
Value Added Per Person (HK$)
700000
600000
MFG
500000
Fin. & Real Estate
400000
Poly. (Fin. & Real
Estate)
Poly. (MFG)
300000
200000
100000
0
1982 1984 1986 1988 1990 1992 1994 1996
Why Innovate, Management of
Technological Innovation
21
Is manufacturing hollowing out
in Hong Kong?
Or,
Is there an industrial
transformation?
Why Innovate, Management of
Technological Innovation
22
Transformation: Mfg Moves to
the Mainland To Lower Costs
• Over 4M workers in the mainland
• 1995: HK exports to mainland up by 20%
• 1995: 71% of domestic exports and 40% of
re-exports attributed to outward processing
activities in the mainland
• 1995: 74% of imports and 82% re-exports
of mainland origin
Why Innovate, Management of
Technological Innovation
23
A quote from the second report (1999) of
HKSAR Chief Executive’s Commission on
Innovation and Technology
“There is strong competition [to HKSAR] from
neighboring economies for Hong Kong’s regional
role in trade, finance, transportation and
communications. With respect to manufacturing,
Hong Kong must strive to support and further
develop high-value activities. Hong Kong is also
facing stiff competition from low-cost economies.
A fundamental challenge is how Hong Kong
should position itself in the knowledge-based,
global economy of the 21st century.”
Why Innovate, Management of
Technological Innovation
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Maslow’s Theory of Human Needs
SelfActualization
Needs
Esteem Needs
Belonging and Love Needs
Safety Needs
Physiological Needs
Why Innovate, Management of
Technological Innovation
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Human Needs: Maslow’s Theory
• Physiological needs, Safety needs, Belonging and
love needs, Esteem needs, and Needs for selfactualization.
• Esteem needs prompt users to move to new
products quickly - you buy a new shirt you like
even if you already have too many shirts.
• Modern customers are demanding more product
variety and more innovative products.
Why Innovate, Management of
Technological Innovation
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Free
Missionary
you work enthusiastically towards
your own vision of the organization
Self-fulfilling
(and) you identify your own values
and goals, and work towards them.
Proactive
(and) you identify with the goals
you have been set, and actively
work towards them.
Reactive
(and) you understand and work
towards the goals you have been set,
responding to constraints and limitations
Sluggish
(and) you do what you are told
(when the boss is looking)
Intrinsically motivated
• you respond to
your own vision
• you are creative
with high motivation
Extrinsically motivated
• you respond to the
expectations of others
• you are less creative
with low motivation
Controlled
Why Innovate, Management of
Technological Innovation
[Petty 1997]
27
Self-belief
I trust my abilities
my taste, and
my judgement
Courage
I am prepared to
• take risks
• be original
• persevere in the
face of difficulties
Success
So I create original
and workable ideas
Why Innovate, Management of
Technological Innovation
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Controlling Management Style
It is necessary
to control you
You feel powerless,
unappreciated, and
perhaps resentful
You do poor work.
Your self-esteem
and motivation
fail
Why Innovate, Management of
Technological Innovation
29
Trusting Management Style
You are trusted
You feel valued,
respected and
responsible
You do better work.
Your self-esteem
and motivation
rises
Why Innovate, Management of
Technological Innovation
30