Masters in Business Administration-MBA Semester IV

OM0009 – Technology Management – 2 Credits

Book ID: B0893
Assignment Set-1 (30 Marks)

Name: Mujif Rahuman M.

Register No: 520828621
1. Discuss various Technology Acquisition alternatives. List the important
points to be kept in mind while managing an acquisition of technology.
Technology Acquisition Alternatives:

1. Develop Technology in-house

The company has to estimate the financial costs of the required R&D and its opportunity cost of that
choice. Its impact on the direction of, and the commitment to, other research projects is also relevant. In
addition to this, the company has to assess the suitability of its staff and equipment for the new project.
Among the risks, it has to face are blocking patents. However, the developed technology can be
customized to its precise requirements.

2. Buy the firm that has the Technology

The investment here could be substantial and great care is needed in the evaluation of the prospective
acquisition. Also, it is important that following the purchase, that the operations can be effectively
integrated and that there is no undue loss of key staff.

3. Enter into joint ventures

The costs are shared but so are the benefits of the new technology. Where the risks are high and the costs
heavy, membership of a research consortium becomes a more attractive option. There is also the co-
development of new products or processes, such as between a key supplier and a major customer.

4. Enter into research contract

R&D contracts can be placed with research associations, universities or consultants. The company has to
consider the costs and the nature of control of the project. There is the risk of know-how loss.

5. Obtain license for use of Technology

This is essentially the purchase of access to proprietary technology. It can be anything from the right to
use a particular patent to a complete package, which includes know-how agreements, commissioning
assistance for new plant and processes and the provision of updated designs and other technical
information.

6. Education and training

Soft technologies with a strong management dimension e.g. JIT, Quality circles, or Kaizen can be
acquired through training programmes. However, the underlying experience, which makes these
techniques more effective, is often achieved through personal contacts between companies.

The following are important points to be kept in mind while managing an acquisition of
technology:

1. The role and management of technology within the company needs to be assessed, especially its
capability of managing the transfer activity.
2. The allocation of appropriate staff to the transfer and application of the technology. The project
manager must be at senior level while his colleagues need to have engineering application and change
management skills.

3. The corporate objectives, capability and the technology transfer track record of the prospective
transferor need to be considered. Effective technology acquisition is often based on a longer-term
relationship.

4. Clear technical and contract specifications are essential. Because of the nature of the technology and its
integration in intellectual property, the transfer constituents vary in type and character. Where the transfer
is from a different culture, special attention has to be given to detail and the meaning of language.

5. Contract negotiations can be onerous. They require diplomatic skills and careful record-keeping.

6. Because of the nature of its acquisition, transferred process technology needs to be handled with even
more care than indigenous technological change. It is important that all affected company staff appreciate
the nature and reasons for the acquisition.

2. What are the ten tenets? Discuss. With the help of examples, show how we
have become /are becoming servants of technology.
Ten Basic Tenets for the Management of Technology (MOT)

A tenet is a principle based on observation, intuition, experience, and in some cases, empirical analysis.
Ten tenets, proposed in available literature, are presented below as guiding principles for an enterprise to
operate within a technology cycle (TC) framework. David Sumanth in his work (1988) proposed a total
systems approach to technology management (TSTM) what he called the technology cycle. He contended
that the management of technology in enterprises is not just a one-shot deal, but a continuous process,
involving five distinctly different phases of technology, namely, awareness (of marketable inventions),
acquisition (by self-generation or transfer), adaptation (by minor modifications of acquired technology
for specific needs), advancement (innovation involving major modifications of acquired technology),
and abandonment (of obsolete technology). The tenets recognize that short-term treatments of any issue
in general, and technology management in particular, are at best sub-optimizations, and so, will not lead
to more long- Lasting solutions in adapting and advancing technology. Let us take some time now to
discuss these principles in detail.

1. Value diversification is a poor substitute for MOT

Value diversification refers to the improvement of stockholders' investments in a company through quick-
fix solutions on paper, such as mergers, acquisitions, and other stock-enhancing strategies. Unfortunately,
this traditional approach to value enhancement results in mostly short-term gains and long-term pains.
Every company ought to identify core technologies and core competencies, and then hone them to get the
most out of those for innovating products and/or services. When IBM acquired ROLM Corporation many
years ago, IBM was trying to complement its core technologies in mainframe computers and personal
computers with the core technology of ROLM, communication systems. Unfortunately, this did not work
out very well, and IBM eventually sold ROLM. In the early 1980s, McGraw-Hill, whose core
technologies are in publishing, books, journals, and related products, went into the personal computer
business with Odyssey with a totally different core technology that didn't work, either.
 2. Manufacturability must keep pace with inventiveness and marketability.

In industries, in general, and manufacturing companies in particular, people in manufacturing functions

often find themselves coping with increasingly aggressive marketing strategies and design strategies.
Manufacturing in the United States is being troubled by intense competition from the Pacific Rim and
European trading partners, who are developing new and better technologies and techniques to increase
their advantage in product design and manufacturing process (Gold, 1994). Yet, in today's globally
competitive marketplace, it is not only a necessity for manufacturability to be in step with marketing and
design strategies but also a luxury, serving as an important weapon to chip away the market share of the
competition.

3. Quality and total productivity are inseparable concepts in managing technology.

In the 1970s, here in the United States, productivity was of major concern, particularly after the 1973 Oil
Embargo, and the ensuing Japanese "automobile attack." In the 1980s, after the famous NBC
documentary, "If Japan Can, Why Can't We?" emphasis on quality reemerged with great ferocity and
intensity. The Total Quality Management (TQM) movement made quality a common prerequisite for
ensuring competitiveness, even in the domestic markets. With the onset of the information superhighways
in the late 1980s, and the rapidly changing global communication technology panorama, time has become
a third crucial strategic variable in a company's drive to be competitive. Quality and total productivity are
like two sides of the same coin or two rails of the same track. Companies that have excellent quality and
competitive prices still cannot do well unless they can bring products of highest value to the marketplace
in the least time possible. Information technologies have made it possible today to order products 24
hours a day from the luxury of one's home through the Home Shopping Network (HSN) and others,
where the customer expects a rapid response rate. In fact, Thurow (1992) predicts that in the twenty-first
century there will be high-tech and low-tech final products, but almost every product in every industry-
from fast food to textiles-will be produced with high-tech processes.

4. It is management's responsibility to bring about technological change and job security for
long-term competitiveness.

Often, technological improvements have been associated with such downsizing. Unfortunately, this is a
poor business strategy because it under-estimates the employees' ability to manage not only existing
technologies that their company has but also their creative capabilities to create and perfect new ones.
Employees must feel that they have job security, particularly when they are responsible for suggesting
and implementing new technologies. They feel betrayed after they spend hours of hard work designing a
technologically advanced environment for greater competitiveness, only to find themselves victims of
their own making. This need not be the case. Companies often spend millions of dollars trying to mitigate
the negative effects of low morale, job dissatisfaction, and consequent low productivity, following a
layoff or cost-cutting measure, right after a major technological change.

5. Technology must be the "servant," not the "master"; the "master" is still the human being.

Until recently, we used to be the masters of technology, our servant. We used to drive technology, but
today we have become technology's servant, and technology is driving us. We believe that we have
crossed a "technology threshold," whereby our response to technology has become one of catching up.
Many companies are unable to cope with the dramatic changes taking place in the very nature of
technologies. This, in turn, puts a company in a reactive posture, rather than a proactive one. Companies
which are learning the art of managing new technologies have a better chance at being a technology
master instead of a technology servant. The chaos that companies face today in responding to "rapid
technologies" can be harnessed as a positive strategy to create opportunities for new products and/or
services. Cable companies will soon be in the computer business; and computer companies, in the
telecommunication business. It is impossible to even conceive the extent of the technological integration
revolution we will be facing even before we enter the twenty-first century. Our wristwatches might
become microcomputer devices, working as remote-control units and information retrieval systems. We
might see a series of technology thresholds bombarding us in the years to come, and every time we cross
one of them, companies have an opportunity to convert technological chaos into economic opportunities.

6. The consequences of technology selection can be more serious than expected because of
systemic effects.

This principle has major impact on the economic viability of the twenty-first-century organization,
because we will be selecting multiple technologies with a rapidity that is hard to comprehend at this time.
Product technologies will become obsolete in such short periods of time that they will resemble the toy
industry, where the average shelf life of a product may be only one season or sometimes only a month.
We are already beginning to see personal computers fall into this category. In the early 1980s, when the
personal computer was something new to all of us, the average shelf life was approximately 4 to 5 years
for a model to become obsolete. Today, just 13 years later, the average shelf life has been whittled down
to less than 1 year. By the time a company decides to update its PC technology to state of the art and
acquire it, that technology would just become obsolete. In anticipation of even greater obsolescences,
companies will usually wait for newer models in both hardware and software. The rapid turnover in both
of these categories of technologies makes it even more difficult to implement newer ones.

7. Continuous education and training in a constantly changing workplace is a necessity, not a

luxury.

Companies have traditionally slashed the education and training budgets during times of economic
downturn. Today, this would be a foolish strategy, because most employees know how to use process and
information technologies to the fullest extent. Having spent millions, and sometimes billions of dollars in
such technologies, it would be most uneconomical not to get the most out of these expensive
technologies.

Sometimes, a million-dollar piece of equipment has a 20 percent downtime, costing hundreds of

thousands of dollars in lost revenues, simply because operators and engineers have not been trained in all
aspects of its operation. The more the education and training for managing technologies, the greater the
utilization rates would be, and hence, the greater the economic leverage. For example, in a multinational
bank, such as Citibank, the technology group strives hard for customers to do worldwide banking in
anyone of 14 languages. The company spends much time and energy educating and training the personal
bankers, the customer service representatives, and others, in an effort to offer their clients the ever-
increasing portfolio of products and services in a competitive manner.

8. Technology gradient is a dynamic component of the technology management process, to be

monitored for strategic advantage.

The term technology gradient refers to the technical advantage an enterprise enjoys with respect to its
licensees and its competitors. Normally, most sensible multinationals maintain a sufficiently high
technology gradient with respect to their licensees, particularly if the latter are even remotely associated
with a product line that competes anywhere in the world. This is particularly true when the technologies
are radically new, for example, biotechnology, global networking technology, etc. Technology gradient,
which is the subject of another chapter in this handbook, is a powerful concept for managing the
technological advantage that the company enjoys with respect to its competition worldwide. Briefly, a
company monitoring its technology gradient can be in one of four postures: technology leader, technology
follower, technology yielder, or technology loser. Depending on the technology advantage a company
wishes to enjoy, it must consciously position itself as one of these.

9. The RTC factor must be carefully analyzed and meticulously monitored for gaining the
most out of any technology, particularly a new one.

The RTC factor refers to the magnitude and nature of resistance to change. Unfortunately, very little is
known about the process of the RTC factor, and the rational means to minimize it. At the same time,
however, we now know that a high RTC factor can lead to work slowdowns, poor employee morale, high
maintenance costs, and even serious sabotages. Management has to recognize that a creative, lively
workforce is better than stagnant, high-priced technology. Research shows that when new technologies
are implemented, "total productivity" at first drops because of the natural response of employees-
resistance to accept the new technologies as viable means-before it picks up again.
The competitive threat of a new technology-based business paradigm (and its early implementation
success) does often, unfortunately, prolong the last gasps of life in the old technology because it
temporarily forces a really serious competitive pressure on the old technology. Under this real threat, it is
amazing how much excess effort, costs, and inefficiencies can be wrung out of the last defense stand of
the "old guard." It is usually a wasted effort, which delays the acceleration of the inevitable new "S" curve
and prolongs the agony of the old.

10. Information linkage must keep pace with technology growth.

As pointed out during previous discussion, information networks are evolving so rapidly that unless
companies take advantage of linking up to such networks, they lose opportunities for new revenue
streams. For example, companies that quickly capitalized on the accessibility to the Internet increased
their market share through an exposure of their products and/or services to millions of people around the
world. We barely understand the potential of the Internet through the World Wide Web (WWW).
1. Within a company, it has become an absolute necessity to keep all the employees informed of the latest
technological developments within their own company so that unnecessary duplication of costly effort is
avoided, and product changes and client updates are offered on an on-line basis so that customer
responsiveness can be in real time. Time lags can cause serious miscommunications, particularly with
multinationals. For example, if a component is eliminated in a product and this information is not
communicated to the company's worldwide spare-parts inventory system, retail clerks somewhere in
Indonesia or Taiwan may still be carrying the part on shelves unnecessarily, increasing their inventory
carrying costs. Companies like Caterpillar and International Harvester maintain global inventory
management systems so efficiently that within 24 hours they can have a part made available to any
retailer around the world. In such situations, this tenet has even greater relevance and respect.

3. Explain the five stages of innovation process which is based on the

pioneering work of Edward B. Roberts. What are the steps involved in
measuring innovative performance?

Stage 1: Recognition of Opportunity. In most cases, the innovative process is prompted by an opportunity
to fill a market need (market-pull) and/or exploit a technology (technology-push). These opportunities
could be for new or improved products, processes, or services. The potential customer could be internal or
external to the organization.
Stage 2: Idea Generation, Evaluation, and Selection. This stage is dominated by the search for ideas to
capture the opportunity identified in stage I. This might include formal RD&E processes or informal
thinking. Results may vary from an orally communicated idea to formal concept papers, designs,
prototypes, and feasibility studies. Further, the idea generation process may vary, depending on company
culture and management philosophy. They range from incremental to breakthrough innovation and from
top-down direction to bottom-up innovative efforts, typical for continuous productivity improvements.

Stage 3: Product Development. This stage involves transfer of the new concept to the market. It is a
problem-solving stage which takes the advanced concepts and ideas generated in stage 2 and develops
them into a working prototype or pilot production run. Strong cross-functional linkages must be
established and maintained among all functions engaged in this stage 3 technology transfer which usually
involves highly co-ordinate efforts among R&D, product development and engineering, prototyping,
manufacturing, marketing, and a host of support functions such as finance, product assurance, field
services, and subcontractors.

Stage 4: Full-Scale Development, Volume Production, and Commercialization. This stage takes a proven
concept from stage 3 and transforms it into a final product according to predefined specifications,
reliability, cost, production volume, and schedules. Well-established organizational linkages are crucial to
transferring technology into the market and to leveraging an organization's production capabilities, as
well as to integrating all company resources into the total innovation process, throughout its five stages.

Stage 5: Technology Utilization and Diffusion into the Marketplace. This stage involves the
manufacturing, market promotion, distribution, and technical support of the new product or service. This
stage usually requires the largest investment of resources, often far exceeding the combined cost of stages
1 through 4. It is also associated with a large risk factor, as demonstrated by the statistical realities that,
on average, only one-third of products entering this state ever achieve a break-even return on their
investment. Successful companies recognize the complexity and multi-functionality of the underlying
process. Successful companies also understand that such complex business processes do not perform well
by themselves, but must be managed carefully. This includes the continuous study of these processes,
defining measurements, documentation, comparison, standardization, and control toward continuous
improvement.

Measuring Innovative Performance:

Innovative performance involves complex sets of interrelated variables, which fluctuate with the cultural
and philosophical differences among departments and companies. Most managers agree, however, that
certain metrics, such as (1) the number of innovative ideas, (2) the number of new product concepts
implemented, (3) cost and performance improvements, and (4) patent disclosures, are important factors in
contributing to a company's innovative performance. Yet, the individual measurement of quality and
effectiveness of such innovative contribution is very fuzzy and often impossible to obtain with any degree
of confidence. These measurements of innovative performance are even more difficult in non-engineering
areas, such as manufacturing, marketing, and product assurance. In these areas innovation and creativity
are often critical to meeting customer expectations or delivering results according to plan. However,
traditional measures of innovative performance seldom apply. In many cases, outcomes are part of
collaborative efforts among many departments and individuals without any useful metrics for measuring
important contributions such as agility, change orientation, multifunctional cooperation, and customer
satisfaction. Therefore, it is not surprising that managers in technology based companies, for most
functions, including R&D and engineering, use overall judgment as the only principal measure of
innovative performance. However, in support of such an overall judgment, specific subsets of parameters,
some of them quantifiable, can be developed and used to (1) articulate desired innovative behaviour and
characteristics to members of the work team; (2) benchmark innovative performance, especially on the
organization or team level; (3) engage in focus-group discussions toward organizational improvement of
innovative performance; and finally (4) support managerial judgment of overall innovative performance
and salary reviews.
Masters in Business Administration-MBA Semester IV
OM0009 – Technology Management – 2 Credits
Book ID: B0893
Assignment Set-2 (30 Marks)

Name: Mujif Rahuman M.

Register No: 520828621
1. What is Technology Strategy and what is its importance at the corporate
level? What are the steps involved in planning Technology Strategies?

Technology Strategy:

Whether or not an organization would generate or develop its own technology and with what intensity it
would pursue the efforts in this respect would depend upon technology strategy it has formulated or
adopted. Let us, therefore, first see what a technology strategy is, what could be the different types of
technology strategies, why is it important to have a technology strategy, and how could we link it with the
overall business of an organisation. Though the term 'strategy' is commonly used as an antonym of
'tactics', it actually implies long-term, purposeful and interconnected efforts, while tactics imply action to
deal with immediate specific problems. 'Technology Strategy" may accordingly be defined as a strategy
to deal with the technology and related issues at macro and micro levels, with respect to set objectives.

Importance of Technology Strategy:

Mark Dodgson has identified the following five issues which bear on the importance of corporate strategy
for technology:

i) The need to cope with technological uncertainty;

ii) Complexity and discontinuous nature of technological development;
iii) The need for technology to be viewed in a global context;
iv) The need to attain complementarities, and
v) The relationship between corporate strategy technology and public technology policies.

In planning technology strategy for competitive advantage, the following steps have been suggested:

1. Identify all the distinct technologies and sub-technologies in the value chain.
2. Identify potentially relevant technologies in other industries or those under scientific development.
3. Determine the likely path of change of key technologies.
4. Determine which technologies and potential technological changes are most significant for competitive
advantage and industry structure.
5. Assess a firm's relative capabilities in important technological aspects and the cost of making
improvements.
6. Select a technology strategy, encompassing all important technologies, that reinforces the firm's overall
competitive strategy.
7. Reinforce business unit technology strategy at the corporate level.

2. What is Technology Forecasting? Explain its role at national and enterprise

level. What purpose does a technology forecast serve?
Technological forecast is a prediction of the future characteristics of useful machines, products,
processes, procedures or techniques. There are two important points implied in this statement, viz.:
a) A technological forecast deals with certain characteristics such as levels of technical performance (e.g.,
technical specifications including energy efficiency, emission levels, speed, power, safety, temperature,
etc.), rate of technological advances (introduction of paperless office, picture phone, new materials, costs,
etc.).

b) Technological forecasting also deals with useful machines, procedures, or techniques. In particular, this
is intended to exclude from the domain of technological forecasting those items intended for pleasure or
amusement since they depend more on personal fads, foibles or tastes rather than on technological
capability.

Necessity for Technology Forecasting:

Historically, the U.S. Navy was one of the major institutions which started formal technological
forecasting to support the preparation of a fifteen year plan to identify the likely opportunities and threats,
and to develop a technological setting for the future. Technology forecasting has now assumed
importance in India due to the structural reforms introduced in our economic system with a view to create
a market-driven economy. Essentially, technology forecasting is used for the purpose of:

a) Scanning the technological environment;

b) Anticipating emerging technological changes;
c) Identifying suitable technologies by evaluating various alternatives;
d) Planning for technologies for future needs.

We can identify four elements of a forecast which can be specified and/or estimated. These are (a) the
time period, (b) the nature of technology, (c) .the characteristics to be exhibited by the technology, and (d)
the probability associated with the characteristics. The time period may be stated generally, or it may be
given precisely. The technology being forecast may be narrowly defined, or it may encompass a very
broad range. The characteristics may be stated only in general terms, or may be given precise quantitative
values. Martino has shown that there is really no alternative to forecasting. He considered various
possible alternative scenarios like (a) regimes of no forecast (tacitly assuming there would be no change
in the environs in future), (b) future is a total gamble and it could be met without any anticipation, (c)
resting on laurels of the glorious past presuming that it would bring a glorious future, (d) dependence on
limited forecasting, without taking into consideration all round changes in the environs, and (e) taking
crisis action to meet the situation. All of these, he showed, may spell disaster for a firm or an
organization.

All these discussions basically highlight one very important aspect that we are dealing with a probabilistic
situation and we should gear ourselves to meet it with a certain degree of confidence and with all
elements of surprise anticipated. A logical question that follows is: How good is the forecast? Will it
come true? To answer these questions, let us classify situations according to the degree of control the
decision maker can exercise. There may be three types of situations:
a) Absolutely no control, b) Partial control, and c) Full control

It is essential to recognize that a forecast does not put anything into the future. Instead, it tells only of the
implications of available information about the past. These implications are connected with the future
through a logical framework. Hence, the utility of a forecast for decision making purposes depends on the
validity of the logical framework it uses and the extent to which it extracts all the implications which are
contained in the body of available information. This ability to evaluate the utility of rational and explicit
forecasts is, of course, one more reason to prefer this type of forecast. However, it may be emphasised
that following a certain procedure may not guarantee the forecaster against error; it may only reduce the
likelihood of error. Hence, the forecaster is never absolutely certain that he has prepared the most useful
possible forecast with the available data he has and the resources he has employed.

The forecast serves as an input to the process of making plans and decisions. Martino has described the
role of the forecast in planning as follows:

a) The forecast identifies limits beyond which it is not possible to go.

b) It establishes feasible rates of progress, so that the plan can be made to take full advantage of such
rates; conversely, it does not demand an impossible rate of progress.
c) It describes the alternatives which are open and can be chosen from.
d) It indicates possibilities which might be achieved, if desired.
e) It provides a reference standard for the plan. The plan can thus be compared with the forecast at any
point in time, to determine whether it can still be fulfilled, or whether, because of changes in the forecast,
it has to be changed, and

f) It furnishes warning signals, which can alert the decision maker that it will not be possible to continue
present activities.

If the forecast makes a decision maker aware of alternatives which he might not have discovered
otherwise, it has increased his degree of freedom. The important point is that the purpose of the forecast is
to improve the quality of his decisions and not to force him to accept a particular decision.

3. How does technology affect business plan of an organization? Explain with

examples. Do you agree that technology and technology management are part
of the total business activity or business plan of an enterprise?
Role and Importance of Technology Management

Technology and management of technology are critical for an enterprise for its successful operation on
long-term basis. Technology management is, however, a part of the total management system. There are
three basic considerations for starting any new firm based on technological innovation.

1. The idea for a technological innovation;

2. A potential market;
3. Team work in both technological and business expertise.

The above points underline the need for interweaving the technology framework with other areas of
business in an enterprise. The idea of a technological innovation should be based or linked with the
potential market and the technology team should closely interact with the rest of the divisions of the
enterprise leading to successful logical conclusions in terms of products/ processes to be developed as per
the objectives set in the beginning. This strategy is best reflected in the form of a “Business Plan” of an
enterprise which needs to be prepared and approved before starting the new business.

The Business Plan: It is a strategic summary of a new venture. Its purposes are:
1. To ensure, by clear focus in strategy, that important points necessary to the success of any business
venture have been considered; and
2. To persuade financial investors to invest in the new venture. A new venture business plan could include
the following:

It is thus clear from the above that technology and technology management are only a part of the total
business activity or business plan of an enterprise.

Managing technology means using new technology to create competitive advantages which is quite a
difficult job, partly due to differing cultures in a company. Technology is often thought to be solely the
domain of the scientific and engineering personnel of an organization. Yet, successful business use of
technology requires strategic decisions about technology by personnel in other functional areas, such as
production, marketing, sales, finance, and so on. Thus, the two cultures – technical and functional – need
to be bridged, and management should integrate technology strategy with business strategy. This is the
essence of technology management.