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Readings Discussion MBA 651 Group 1. Presented by: Kevin Crouch Kedar Revankar Ann-Marie Vincoli. Management Criteria For Effective Innovation. George R. White. Purpose of the Article.

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Readings DiscussionMBA 651Group 1

Presented by:

Kevin Crouch

Kedar Revankar

Ann-Marie Vincoli

Purpose of the article l.jpg
Purpose of the Article

  • To “identify management criteria which effectively discriminate between profitable and unprofitable new technologies, and to prove that these criteria have utility in appraising technological innovation in a wide variety of cases.”

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Inventive Concept

  • What fundamental technical constraints limiting the prior innovation are lifted?

  • What new technical constraints are inherent in the new innovation?

  • How favorable is the relief of the former against the stringencies of the latter?

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Embodiment Merit

  • Is the end product enhanced by additional technology?

  • Is the inventive concept itself diluted or enhanced by the embodiment required?

  • Does the additional embodiment offer opportunity for further enhancement?

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Operational Practice

  • What previously emplaced business operations are displaced by the new innovation?

  • What new business operations are needed to support the new innovation?

  • How favorable is the cessation of the former practices weighed against the provision of the latter?

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Market Dynamics

  • Does the product incorporating the new technology provide enhanced effectiveness in the marketplace serving the final user?

  • Does the operation reduce the cost of delivering product or service?

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Conclusion: Forecasting future innovation

  • The viability and probable outcome of an innovation can be predicted by evaluating the criteria outlined in the reading.

  • This can be useful in indicating the likely future course of other prospective innovations.

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Patterns of Industrial Innovation

Abernathy and Utterback

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Purpose of the Article

  • To present the basic characteristics of a model “relating patterns of innovation within an organization to its competitive strategy, production capabilities, and organizational characteristics.”

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Spectrum of innovation

  • Small, entrepreneurial organizations

    • Creating new products

    • Radical changes

  • Larger, high-volume organizations

    • Refining process aimed at minimizing cost

    • Change is costly and incremental in nature

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Patterns of innovation

  • New product or system is introduced

  • Major system innovation is followed by

    • Many minor product improvements

    • Repeated system improvements

  • Significant economic gain comes from small, incremental improvements

    • Development of mass markets

    • Improvements in economies of scale and quality of production

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Major product introductions

  • Very fluid process; entrepreneurial act

  • Performance criteria may be vague

  • Cost is less of an issue for initial adopters

  • Closely tied to specific user needs

  • Often occurs in new companies rather than established companies

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Transitional phase

As product volume increases:

  • The product becomes more standardized

  • Process innovation becomes more important

  • Semiconductors:

    • 3 new entrants were responsible for half of major product innovations, but only 1 of nine process improvements

    • 3 established units made one-fourth of product innovations, but 3 of nine process innovations

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High tech markets

  • In markets where change is rapid (i.e., semiconductors and computers), process innovation is often not as great a source of competitive advantage as product innovation.

  • Caveat: Sometimes process innovation can lead to product innovation

    • Modern semiconductor product innovations are driven by process, i.e., die size and fabrication process size,

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Specific phase

  • The product is in mainstream/late mainstream part of life-cycle; becomes more commodity-like

  • Focus becomes minimizing cost through process improvements

  • Very minor improvements in product performance, quality

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Management issues

  • Managerial targets shift from vague concepts to specific goals as product moves through phases.

  • Different phases require different managerial skills

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Fluid phase

  • Management must be flexible and adaptable

  • Goals are often changing; set by users

  • High ambiguity

  • Often many projects; fewer successes

  • Often general purpose equipment

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Transitional phase

  • Managerial focus changes from product innovation to competitive environment

  • Management goals and targets become more formalized

  • Decreased ambiguity

  • Product success is established, organizational success less so.

  • Increase in specialized equipment

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Specialized phase

  • Management focus become bureaucratic, focused on efficiency and productivity

  • Low ambiguity

  • Organizational success; often oligopoly

  • Highly specialized equipment

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  • Identify the phase

  • Recognize different skill sets required for each phase

  • Recognize what phase industry is in

  • How can your company adjust focus to maximize advantage for the phase the industry is in?