L7 Technology Environments
EC10: Innovation & Commercialisation
Conducting business in the global economy
and playing to win
Marcus Thompson
[email protected]
7. Technology Environments
1
Outline to Technology
Environments
The International Business
Environment
 Organisational & Supply Chain
Development
 Drucker on Innovation
 Changing the World

7. Technology EnvironmentsL7:
Techn9ology Environments
2
1. The International Business
Environment
EC10 Innovation &
Commercialisation
7. Technology Environments
3
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:
4
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:
5
1. Information Requirement
Preliminary Screening
– Estimating Market Potential
Income Elasticity of Demand
Market Audit
Analogy
Longitudinal Analysis
Gap Analysis
These same issues
apply regardless of
whether a study is
undertaken on or offline.
– Estimating Sales Potential
Identifying Segments
Selection
– Concentration versus Diversification
7. Technology EnvironmentsL7:
Technology Environments:
6
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:
7
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:
8
2. Growth Options
EC10
Innovation &
Commercialisation
7. Technology Environments
9
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
10
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
11
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
12
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
13
The Functional Structure
Board
Production

Main features
Sales & marketing
– Organised around tasks
– Centralised



Accountancy
Limitations
Personnel
– Succession problems
– Unlikely to be entrepreneurial or
adaptive
Situations where appropriate
– Profit responsibility exclusively with
– Small companies, few plants,
CEO
limited products
– Relatively stable – repetitive tasks – Become stretched by growth
– Functional Managers may concentrate
Advantages
on short term routine activities at
– Controlled by strategic
expense of longer-term strategic
leader/CEO]
developments
– Efficient
– Problems of ensuring co-ordination
– Clearly delineated external
between functions – rivalry may
relationships
develop
– Specialist managers
– Functional specialist may seek to build
mini-empires
– Simple line of control
– Can promote competitive
14
advantage through functions
7. Technology Environments
The Entrepreneurial Structure

Main Features
– Organised around the entrepreneur
– Totally centralised; no division
responsibility

Situations where appropriate
Entrepreneurial Manager
– Simple companies in early stages of
Employee
development

Employee
Employee
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
15
3. Organisational
Development
EC10
Innovation & Commercialisation
7. Technology Environments
16
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
17
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
18
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
19
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
20
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
21
Six ‘pulls’ on organisations
To centralise
To balkanise
To professionalise
7. Technology Environments
22
Mintzberg’s six organisational
configurations
SITUATIONAL FACTORS
CONFIGURATION ENVIRONMENT
INTERNAL
DESIGN PARAMETERS
KEY PART OF
KEY COORGANISATION ORDINATING
MECHANISM
Simple structure
Simple / dynamic Small
Hostile
Young
Simple task
CEO control
Machine
bureaucracy
Simple /static
Old
Technostructure
Large
Regulated tasks
Technocrat
control
Standardisation
of work
Professional
bureaucracy
Complex / static
Simple systems
Professional
control
Standardisation
of skills
Strategic apex
Operating core
7. Technology Environments
Direct
supervision
23
Mintzberg’s six organisational
configurations
SITUATIONAL FACTORS
CONFIGURATION ENVIRONMENT
DESIGN PARAMETERS
INTERNAL
KEY PART OF
KEY COORGANISATION ORDINATING
MECHANISM
Divisionalised
Simple / static
Diversity
Old
Very large
Divisible tasks
Middle-line
control
Middle line
Standardisation
of outputs
Adhocracy
Complex /
dynamic
Often young
Complex tasks
Expert control
Operating core
Support staff
Mutual
adjustment
Missionary
Simple / static
Middle-aged
Ideology
Often ‘enclaves’
Simple systems
Ideological
control
7. Technology Environments
Standardisation
of norms
24
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 environment
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.
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
25
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 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.
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.
7. Technology Environments
26
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 environment
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.
Varies from division to division. May need
environment to be stable, but also operates in
some turbulent sectors of the economy.
7. Technology Environments
27
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 environment
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
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
28
4. Changing the
World
EC10
Innovation & Commercialisation
7. Technology Environments
29
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
30
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
31
The First Rule of
Innovation
deal with failure
7. Technology Environments
32
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
33
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
34
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 done
too 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 7.pioneer
Technology Environments
35
10 Routes to Success (1 of 5)
1. 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



Source: Business
2.0, February
2001, pp19 -35
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
7. Technology Environments
36
10 Routes To Success (2 of 5)
 Form alliances
 Choose partners strategically
 Leverage brands
 Partner for tangible benefits
Source: Business 2.0,
February 2001, pp19 -35
 Invest in Customer Care
 CRM is not rocket science
 Help customers, don’t smother them
 Past trend are not a guide to future ones.
7. Technology Environments
37
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
Source: Business 2.0,
 Learn from mistakes
February 2001, pp19 -35
 Stretch Your Business
 Explore new ways to do business
 Employ established brands
 Exploit synergies between on and off-line activity
7. Technology Environments
38
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.
Source: Business 2.0,
 Share the Power
February 2001, pp19 -35
 Centralise guiding principles & decentralise
everything else.
 Looks outside for ideas & people.
 Empower individuals to make decisions.
7. Technology Environments
39
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
40