Management of Technological Innovation

Course Objective:

The aim of this course is to provide a solid grounding to students interested in managing various aspects of the innovation process within organizations. The course is divided into two parts. The first half of the semester focuses mainly on analytic and strategic frameworks for managing the innovation process. This segment examines patterns of technological change and their impacts, planning for technological transitions, means for capturing economic benefits from innovation, and planning of innovation projects over time. The second half of the course examines the organizational issues involved in innovating and in implementing technological innovations. These issues include management of teams and partnerships, learning within and across projects, the manager's role in funding, directing, and killing innovation projects, technological entrepreneurship, and resistance to innovation. Case studies are used extensively in the second part of the semester.

REQUIREMENTS, GRADING, AND DUE DATES

Active Class Participation. This requires careful preparation of readings and case studies, as well as close listening and a willingness to share ideas during class discussions.

In-Class Mid-Term: March 19.

Final Paper: Due May 12. This ten-page paper will analyze the development of a specific innovation or an aspect of the innovation process. Guidelines for the paper will be provided in class. A one-page outline will be due April 14.

Mini-Papers. Each student must submit four short (one-page) "mini papers" on topics of his/her choice, related to the readings or discussion for a given class.

Background Card: Due Feb. 10. Each student submits an index card with a photo and biographical information (educational background and professional background).

Grades will be determined on the basis of class participation (30%), the final paper (30%), mini papers (25%), and the midterm exam (15%).

I. INTRODUCTION AND OVERVIEW

CLASS 1. Invention, Innovation, and Competitive Success Feb. 5

Rosenbloom and Cusumano, "Technological Pioneering and CompetitiveAdvantage: The Birth of the VCR Industry," California Management Review, 1987.

This case-based introduction highlights several of the challenges which are special to the mangement of technological innovation. Please come prepared to discuss the case.

CLASS 2. The Managent of Innovation: A Case-Based Overview Feb. 10

Case: Sun Microsystems (A), HBS case 9-686-133.

Successful management of innovation requires decsionmaking skills along several different dimensions. Study the case, noting the managerial and organizational factors that appear to be important for success. What would you do if faced with this situation?

II. PATTERNS OF PRODUCT AND PROCESS CHANGE

CLASS 3. The Impact of Innovation Feb. 12

Abernathy and Clark, "Innovation: Mapping the Winds of Creative Destruction," Research Policy, 1985.

The impact of innovation can vary along several dimensions. Abernathy and Clark attempt to provide a unified framework for evaluating the impact of a given innovation. What are the mangerial implications of this framework?

CLASS 4. Incumbency and the Impact of Innovation: Feb. 18

Historical and Conceptual Frameworks NOTE TUESDAY CLASS

Abernathy and Utterback, "Patterns of Industrial Innovation," Innovation/Technology Review, 1978.

Henderson and Clark, "Architectural Innovation: The Reconfiguration of Existing Product Technologies and the Failure of Established Firms," Administrative Science Quarterly, 1990.

These readings investigate how the character of innovation and the organization of research changes as a successful enterprise matures. What are the main managerial implications of these frameworks? Do they hold different implications for managerial decisionmaking?

III. MANAGING TECHNOLOGICAL TRANSITIONS

CLASS 5 . Understanding Radical Shifts and Technological Transition Feb. 19

Foster, "Timing Technological Transitions," in Horwitch, Mel (Ed.), Technology in the Modern Corporation, a Strategic Perspective, 1986.

Rosenberg, "Neglected Uncertainties in the Economics of Technological Change"

Christensen, "The Limits of the Technology S Curve," Parts I and II. In Production and Operations Management, 1992. Read Part I, pp. 334-346 carefully. Skim rest.

What forces explain the timing of major technological transitions? Can managers predict and plan for such transitions? Should they try?

CLASS 6 . Succeeding with New Technologies Feb. 24

Bower and Christensen, "Disruptive Technologies: Catching the Wave," Harvard Business Review, 1995.

Roberts and Berry, "Entering New Businesses: Selecting Strategies for Success," Sloan Management Review, 1985.

Cohen and Levinthal, "Absorptive Capacity: A New Perspective on Learning and Innovation," Administrative Science Quarterly, 1990.

These readings outline the challenge of facing and managing major technological shifts. What are the major recommenations for surmounting these barriers?

IV. PROFITING FROM TECHNOLOGICAL TRANSITIONS

CLASS 7 . Capturing the Benefit from Innovation: Feb. 26

The Role of Complementary Assets

Teece, "Profiting from Technological Innovation: Implications for Integration, Collaboration, Licensing and Public Policy," in Teece, The Competitive Challenge, 1987.

Martin, P., "Branded by Success," Financial Times, December 12, 1996. (HAND-OUT)

The economic return on innovation depends on both the underlying value of the technology as well as the organization's control of resources which ensure some degree of insulation from competition. We will discuss the importance of complementary assets - the resources and activities which allow a firm to successfully exploit a new technology.

CLASS 8. Protecting Intellectual Property: Patents and Beyond March 3

Guest speaker: Steven Bauer; Partner, Testa, Hurwitz, & Thibeault.

Reading: To be distributed

Intellectual property laws are intended to enable inventors to protect the knowledge embodied in their products. How well do they do the job? What avenues are available for protecting one's ideas? How do you choose among intellectual property instruments to protect a new invention?

CLASS 9 Standards and Network Effects March 5

McGahan and Yoffie, "Creating Value & Setting Standards: The Lessons of Consumer Electronics for Personal Digital Assistants," HBS Working Paper.

David, "Clio and the Economics of QWERTY," American Economic Review, 1985.

The imporance of standards and networks changes the nature of competition in many technologically dynamic sectors. What are the managerial dilemmas posed by standards? What strategies do McGhan, et al, recommend? Do you agree?

CLASS 10 Learning from the Market March 10

Leonard-Barton, "Learning from the Market," Wellsprings of Knowledge, Chapter 7.

von Hippel, The Sources of Innovation, Chapters 2

The Chasm Group Library (http://www.chasmgroup.com/), How to Focus on Product Offerings That Optimize Your Business; A New Style of Leadership

How can a technology-intensive organization identify and develop solutions for the unmet needs of users? How do user segments differ? What are the contributions of different user groups to the process of technological innovation?

V. PUTTING THE CONCEPTS TO WORK

CLASS 11 The Case of the HardCard March 12

Case: Plus Development (A), HBS case 9-687-001.

Reading: Garvin, "Customize Your Product Development," Harvard Business Review

This case presents a highly complex, real-world example of an innovating firm facing many of the problems and decisions common to innovators. Use the concepts learned in class to analyze Plus' situation and to recommend next steps. Attempt to identify how organizational challenges affect the importance of the various conceptual frameworks brought to bear on the case.

CLASS12 The Case of the HardCard (continued) March 17

Case: Plus Development (B), HBS case 9-688-066

CLASS 13 In-Class Midterm Exam March 19

** HAVE A GREAT SPRING BREAK! **

VI. CREATING ORGANIZATIONAL CAPABILITIES FOR INNOVATION

CLASS 14 Improving Team Processes for Innovation March 31

Case: Quantum Corporation: Business and Product Teams, HBS case 9-692-023.

If Quantum is to continue to be a successful company, it must learn how to create and manage multiple product development teams on a consistent basis. What are the pros and cons of managing technology development through teams?

CLASS 15 Innovation Across Firm Boundaries April 2

Case: "Molding the Impossible: The NYPRO/Vistakon Disposable Contact Lens Project," HBS case 694-062.

Technology development often requires substantial interaction with partners, suppliers and customers. How can Nypro and Vistakon learn to work together? What steps might reduce tension and increase productivity in this partnership?

CLASS 16 Creating Organizational Capabilities for Innovation April 7

Speaker: To be Announced

VII. MANAGING INNOVATION OVER MULTIPLE PROJECTS

CLASS 17 Building Technology Platforms April 9

Wheelwright and Clark, "Creating Project Plans to Focus Product Development," Harvard Business Review, 1992.

Wheelwright and Clark present a systematic framework for managing the development of a project portfolio and the resource allocation process for a given portfolio. What are the key management challenges associated with implementing their proposed process?

CLASS 18 Allocating Resources to Development Projects April 14

Case: Corning Glass Works: Tom MacAvoy, HBS case 179-074.

Allocating scarce development resources among many projects is made substantially more difficult by organizational, political, and emotional factors. What approach for making these decisions do you support in the Corning case? How shold Corning's resource allocation be modified? Does Corning's management problem usefully fit within the Wheelwright and Clark framework?

** HAND IN ONE-PAGE DESCRIPTION OF FINAL PAPER TOPIC **

CLASS 19 Responding to Market Opportunities April 16

Case: Materials Technology Corporation, HBS case 9-694-075.

MTC is a new and innovative firm in the ceramics business. How should the firm choose among different technologies and markets in order to grow?

CLASS 20 The Evolving Firm April 23

Burgelman, "Fading Memories: A Process Theory of Strategic Business Exit in Dynamic Environments," Administrative Science Quarterly, 1994.

Intel's exit from the DRAM market presents several different management challenges. How can the firm avoid delegating the firm's technical direction to powerful project mana gers? Is delegation good or bad? How can top management make internal battles over strategic direction responsive to market signals? What are the pros and cons of insulating the internal debate from market pressures?

CLASS 21 Selecting and Funding Projects April 28

Nichols, "Scientific Management at Merck: An Interview with CFO Judy Lewent," Harvard Business Review, 1994.

VIII. IMPLEMENTATION, USE, AND ADAPTATION OF NEW TECHNOLOGIES

CLASS 22 Resistance to Innovation April 30

Case: Solagen: Process Improvement in the Manufacture of Gelatin,

HBS case 9-687-020.

Bohn, "Measuring and Managing Technological Knowledge", Sloan Management Review, 1994.

There are a number of reasons why Kodak is encountering considerable difficulty in introducing the Solagen technology. The Bohn reading highlights in particular problems related to the nature of knowledge about technology and how to apply it. Are these problems tractable? What should be done next with Solagen?

CLASS 23 Implementation and the Role of Problem Solving May 5

Cases:

Owens-Illinois: 10 Quad, HBS case 9-688-108.

Owens-Illinois: Atlanta 10 Quad, HBS case 9-688-109.

Owens-Illinois: Streator 10 Quad, HBS case 9-688-110.

Readings: "Building a Learning Organization," Harvard Business Review

Different organizations often achieve radically different results from introducing a given innovation. Attempt to determine why one plant is able to push the new technology further than a sister plant can do. What lessons does this hold for managers and R&D personnel? To users?

CLASS 24 Creating Opportunities for Ongoing Improvement May 7

Tyre and Orlikowski, "Exploiting Opportunities for Technological Improvement," Sloan Management Review, 1993.

Research shows that the economic benefits of a new technology often depends more on small improvements over time than on the initial innovation. But we do not pay much attention to the management of such small improvements. This paper focuses on this issue. Do you agree with its conclusions? What are the implications for other aspects of technology management?

IX. COURSE WRAP-UP

CLASS 25 Wrap-Up Case May 12

Case: (to be distributed)

** PAPERS ARE DUE TODAY, MAY 12! **

CLASS 26 Summary and Conclusions May 14

Review your notes and your thoughts. What are the most important management lessons which you will bring from the course? Please submit a brief list, outline, or note (ungraded but for future course development).
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Introduction to Technological Innovation Management, MIT Sloan School, Scott Stern, Spring 1997.