Building Capabilities for

MTI Success
 Capabilities
Successful management of technology and innovation
competitive advantage
1. Success depends on a clear strategic logic for
processing information and sharing knowledge.
2. The appropriate structures and processes must be in
place for both technical and nontechnical activities.
3. Employees must be motivated to develop and take
advantage of capabilities.
4. Organizational fit must allow resources to be
captured by the right people at the right place at the
right time to make a competitive difference.
The strategic capabilities the firm
needs include the following:
Leadership
Culture for support for innovation
Structure
Skills
COMPETITIVE ADVANTAGE
A competitive advantage is something that the firm
does better than any other firm.
To illustrate the need for a competitive advantage, a firm
may develop a new accounting software program for
small businesses. This firm needs to ask itself:
Why would a business switch from the program it
currently uses to the new software program?
SUSTAINABLE ADVANTAGE
The firm must also consider whether its competitive
advantage can be maintained over time or whether
another firm can match that competitive advantage.
The characteristics of industries
experiencing hyper competition are:

Flexible, aggressive, innovative competitors

moving into established markets

Constant disequilibrium and change

Increased uncertainty, dynamism, and

heterogeneity of players

Hostility
STRATEGIC DECISIONS AND
COMPETITIVE ADVANTAGE
the organization can create a competitive advantage
based on its capabilities at the levels of both corporate
and business strategy.
Corporate-level strategy includes choices made by the
organization about the portfolio of businesses in
which it will be active and compete.
A small business typically competes in only one
business area. Larger organizations, however, can
choose to compete in a wide variety of businesses.
How a firm develops a Sustainable
Competitive Advantage
 Where is the value-adding potential, and how should
the potential be weighted?

What is most critical for long-term and short-term

success?

What methods will we use to make the determination

of the value and criticality?
 The first step recognizes that capabilities are the
foundation on which value creation occurs.
- For technology-oriented firms, it is important for
managers to understand that value must be customer driven.

- for internal innovation, the organization needs to ensure

that the right people are in the organization

The second item in the value creation process is the

recognition that new products and new applications of
existing products

The last point in the value creation process is that the firm
must ensure that once it starts the process, it acts to continue
the process.
BUILDING CAPABILITIES FROM THE
START
Entrepreneurial resources
Human resources
External network resources
Economic resource
Establishment of Industry
Standards
A particularly important issue facing firms as they seek
to establish their capabilities from the beginning is the
establishment of industry standards.
- One way in which standards can be set is by industry-
related professional or official groups.

- A second means for setting industry standards is in the

marketplace.
Venture Capital
A key domain in which building capabilities early
affects a new technology venture is in the ability to
obtain financing for the venture.