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MANAGING STRATEGIC INNOVATION AND CHANGE 274 Incumbent strategy AN EVOLUTIONARY PROCESS PERSPECTIVE Paul Adler Chapter I in this volume provides an overview of the growing literature on technology strategy and suggests the need for developing conceptual frameworks that would allow for cumulative knowledge to be generated An evolutionary perspective of technology strategy sees technology management as emphasizing a process perspective in an evolutionary manner The latter emphasizes the adaptation to changing environmental forces and organizational learning as has been organized as follows The next section discusses an evolutionary process framework for discussing technology as a functional capability and develops the general manager responsible for the overall strategy Technology perspective is that of the research and development can the refusal The manager may help the fundamental technology manager think about his or her approach to the job The framework focuses on the overall business strategy It emphasizes making the firm from an evolutionary perspective a arms control or contract manufacturing strategy The chapter learning about the distinctive preferences on which flow of business success is based Scheinck 1975 Burgelman 1988b McKelvey and Aldticb 1983 view distinctive competence corps as the combined workplace competence technological and organizational knowledge that is embodied in most salient an output mining the ability of the organization to survive eg 112 Nelson and Winter 1982 in a similar vein use the concept of routines which they consider to play a key similar to that of genes in biological evolution The technology strategic competence capabilities raises the issue of where strategic change and technical capabilities remandly occur in firms relative to expert that hit corps as routines has have evolved in the course of evolving organizational survival MANAGING STRATEGIC INNOVATION AND CHANGE 276 1 INTERNAL FORCES 1 INTERNAL FORCES Generative mechanisms strategic behavior Strategymaking with respect to technology is a subset of broader strategymaking of the firm From an evolutionary perspective there are a firms a concentrator of the evolutionary process learning about the distinctive preferences on which flow of business success is based Schenick 1975 Burgelman 1988b McKelvey and Aldrich 1983 view distinctive competence corps as the combined workplace competence technological and organizational knowledge that is embodied in most salient an output skills 1 that rochet the most salient an output mining the ability of the organization to survive eg 112 Nelson and Winter 1982 in a similar vein use the concept of routines which they consider to play a key similar to that of genes in biological evolution The technology strategic competence capabilities raises the issue of where strategic change and technical capabilities remandly occur in firms relative to expert that hit corps as routines has have evolved in the course of evolving organizational survival Generative mechanisms Industry context Industry context is the one important aspect of industry context as is the competitive market place Competitive strategy and the quest for competitive advantage for into account five major forces Porter 1980 1 rivalry among existing firms 2 Bargaining power of buyers 3 Bargaining power of suppliers 4 new entrants and 5 threat of substitute products or services As implicitly or explicitly for forces as expected to determine the appropriate context of product development process has been driven by manufacturing eg Japanese firms whether the product development process has been driven by 1 INTRODUCTION This chapter concerns itself with the strategic management of technology In our view technology is a key organizational resource that is prevalently important in the organization as far as managerial and human resources Its management is a basic business function Viewing technology as a functional capability implies the need to develop a technology strategy analogous to financial and human resource strategies For technology such a strategy is defined by a set of interrelated decisions on encompassing among others technology choice level of technology competence level of funding for technology development timing of technology introduction to new productsservices and organization for technology application and development EG Maidique and Patch 1978 Technology strategy development is consistent with Lamaris 1987 discussion of the accumulation of invisible assets as a key form of organizations development It is also consistent with Maidique and Ziegler 1985 study of the product planning level that ides that untaming is an important aspect of organizational learning Miall Noraha and Tackeath 1983 Levitt and March 1988 Within this performance is viewed as means of experience with actuality performing the different tasks involved in carrying out various functions actually come about A view of performance is akin to the use of team in craftsmanship arts and sports studying the details of actually performing a startegy may shed light on exactly how skills are acquired and how organizational learning and unlearning in their various forms come about A CaphabilitiesBased Perspective Embedded in the cultural evolutionary perspective is a view of strategymaking as a social learning process In this view strategy is inherently a function of the quantity and quality of organizational capabilities which are organizational applications of opportunities which are discovered selected and refined in the strategymaking process Experience with performing a startegy is expected to have feedback effects on its set of capabilitiesbased perspective Burgelman 1984 1988a as presented in Figure 181 It is useful to identify key ideas underlying this framework one is that successful firms develop distinctive strategies in the course of their panel control of the complex and determined at the outset A second key idea is that increasing firms capabilities is fundamental for maintaining strategic development This is consistent with Lamaris 1987 discussion of the accumulation of invisible assets as a key form of organizations development It is also consistent with Maidigue and Ziegler 1985 study of the product planning level that ideas that untimeing is an important aspect of organizational learning Miall Noraha and Tackelith 1983 Levitt and March 1988 Within this performance is viewed as means of experience with actuality performing the different tasks involved in carrying out 273 Reprinted from Research on Technological Innovation Management and Policy 6 Rosembloom R and R Burgelman Vol 4 1989 by permission of JAI Press MANAGING STRATEGIC INNOVATION AND CHANGE 284 MODES OF EXPLORATORY TECHNOLOGY SOURCING INVENTIVE ACTIVITY PRODUCT DESIGN DEVELOPMENT PROCESS SUPPORT TECHNICAL DEVELOPMENT SERVICE VALUE CHAIN STANCE SCOPE DEPTH Fig 183 Technology Strategy Competitiveness and integration Jomaine contributes cumulatively to capabilities convey and influence new strategy A second central feature of this paper is that the gobetweens of continuous businessstrategyexperience occur within a matrix that overlay formal and nonformal mechanisms that shape strategy Both interpretive mechanisms that make sense of business strategy and its specific content may facilitate or impede the transfer development of technological or business capabilities and skills The relationships between organizations and skills the relationships between or within national innovation systems and firmlevel technology strategies often at questions about how or integration builds a business strategy on its evolving capabilities and of their technological programs adjustments and spinoffs or venues are discussed through internal networks and how these are enhanced augmented or developed technological capabilities based on an effective internal organizational technology base and new or novel could shed light on the behavioral demands of how The framework developed here helps identify the factors that determine who wins and loses nononon The firm that is first to market follower that fins or firms that have related capabilities that he innovator needs The follower firms may or may not be imitators in the narrow sense of the term although they sometimes are The framework helps to explain the share of the profits from innovation occurring to the innovating firms and nations compared to its followers and suppliers THE PHENOMENON A classic example of the phenomenon considered in this chapter is the computerized axial to Reprinted with permission from Technology and Global Industry Copyright 1987 by the National Academy of Sciences Courtesy of the National Academy Press Washington DC 287 Why and what circumstances is the recognized technological inventiveness of a nation or sufficient to capture the benefits stemming from its capabilities in science and technology This chap er examines why technological inventions can lose ground in the commercialization of advanced technologies at a time when they are the principal sources of major technological innovations or industrial singu larity the capacity to accelerate the technoin first innovation may be the last rather than its first advantage that a mature economy loses as it enters its declining phase The framework developed here helps identify views of the human body the greatest advance in radiology since the discovery of x rays in 1895 Although EMI was initially successful with its CAT scanner within 6 years of its introduction into the United States in 1973 the company had lost market leadership and by the eighth year had dropped out of the CAT scanner business Other companies successfully dominated the market though they were late entrants and are still profit ting in the business today A further example is that of the Royal Crown Companies Inc a small beverage company that was the first to introduce cola in a can and the first considered the United Kingdoms first air solidstate compo ents in 1952 In the late 1960s the pattern recognition re search of Godfrey N Hounsfield an EMI senior researcher emeritus resulted in the single most dis play a scan of a pigs brain Subsequent clinical work established had computerized tomography was valuable for generating crosssectional views of the human body Advance in radiology since the discovery of x rays in 1895 compared to 7 2 7 10 weeks and increasing technologies in Technologies Technology in Society in a and 1 1 2 1 and 4 j 23 197121 Hannon 1 and 4 Peramani 1984 Structural Imedia and Organizational Change American Sociological Review 74 19416 Kim J Nonaka and Y Takeuchi 1985 Managing the New Product Development Process How Japanese Learn and Use of Totak R Clark R H Hayes and C Lorenz The Unas Alliance Managing the ProductiveTechnology Dyrman Boston MA Harvard Business School Press Linn Research Paper Series 2861 Graduate School of Business Stanford University Cambridge MA Harvard Business Press Kelly D and 4 Karmzberg 1978 Technology Introduction A Critical Review of Current Knowledge San Francisco Press Levin B and J Marill 1988 Organizational Learning Annual Review of Sociology 14 Little D D 1987 Total Strategic Management of Technology European Management Forum Maladie MA and J Patch 1978 Corporate Strategy and Technological Policy Harvard Business School 68683 Graduate School Business Management Press of Corporation Institution New York 71308 Licensed under public policy Research Policy 15 7ussian 1986 Technological and Administrative Valations for Integration Nicholson JR and WASCoess Popularion Harley D 74 1975 17 Tye Hyndon Texas Findings from Technological Innovation AA Monitaa Higginon Sensere Dali and R PetchTechnology of work 755 Vol 3 1 Industry California Management Review XXIX 4 Summer 5776 Kmberge Daivld 1986 Technology Working Paper Queens University Sloth 1957 Leadership in Administration Stockholm The 1935s course of Innovation New York Oxford University Press Wcfk H 1979 The Social Psychology of Organization Brusent MA AddisonWesley Reading A Mac 101102 Leaming Cycle Research Policy December 140 McKelly B and E Aldrich 1983 Populations Organizations and Applied Organizational 1978 Allen J Technological Innovation in Rosendom RS 1987 Technological Innovation and University Press Rosselibons R 1982 Inside the Black Box Cambridge Basic Books Petrovlc V D 1988 Trading Places New York Porter M E 1985 Competitive Strategy New York Porter M E 1988 Competitive Strategy The Free Press Dotel M E 1987 Technological Dimensions of Competitive Strategy In R S Rosenthom ed Research at Technology Ism Boom ed Technological Dimension of the Paper 286 Capturing Value from Technological Innovation Integration Strategic Partnering and Licensing Decisions DAVID TEECE 19 TECHNOLOGY AND BUSINESS STRATEGY 1 The Division of Research of the Harvard Business School REFERENCES Abell D 1980 Defining the Business Englewood cliffs NI PrenticeHall Abernathy W J 1978 The Productivity Dilemma Roadblocks to Innovation in the Automobile Industry Johns Hopkins University Press Abernathy W J and A M Kanlove 1983 Industrial Renaissance New York Basic Books Aldrich HE 1979 Organizations and Environments Englewood cliffs NJ PrenticeHall Amschot H and L Stewart 1977 Strategies for a TechnologyBased business Harvard business Review NovemberDecember Astley W G 1985 The Two Ecologies Population and Community Perspectives on Organizational Evolution Organ MA Graduate School of Business Administration Harvard University Boyd F and k Erickson 1985 Culture and the Evolutlonary Process Univeisage University of Chicago press Doepsks J 1975 The Biological Evolution of ManMonk Reading MA AddisonWesley Burgman R A 1983 Corporate Entrepreneurship and Strategic Management Insights from a Process study Management Science 29 13491364 Burgman R A 1986 StrategyMaking and Evolutionary Theory Towards a CapabilitiesBased Perspective In Tushya M ed Technological Innovation and Business Strategies Tokyo Nippon Keizai Shimbunsha Burgman R A 1988 StrategyMaking as a Social Learning Process The Case of Internal Corporate Venturing Interfaces 13 7485 Burgman R A 1988a Integrational Ecology of StrategyMaking and Organizational Adaptation Research Paper Graduate School of Business Stanford CA and L Sayles 1986 Inside Corporation Structure New York The Free Press Dusselman R A R T Kosnik and M Van den Poel
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MANAGING STRATEGIC INNOVATION AND CHANGE 274 Incumbent strategy AN EVOLUTIONARY PROCESS PERSPECTIVE Paul Adler Chapter I in this volume provides an overview of the growing literature on technology strategy and suggests the need for developing conceptual frameworks that would allow for cumulative knowledge to be generated An evolutionary perspective of technology strategy sees technology management as emphasizing a process perspective in an evolutionary manner The latter emphasizes the adaptation to changing environmental forces and organizational learning as has been organized as follows The next section discusses an evolutionary process framework for discussing technology as a functional capability and develops the general manager responsible for the overall strategy Technology perspective is that of the research and development can the refusal The manager may help the fundamental technology manager think about his or her approach to the job The framework focuses on the overall business strategy It emphasizes making the firm from an evolutionary perspective a arms control or contract manufacturing strategy The chapter learning about the distinctive preferences on which flow of business success is based Scheinck 1975 Burgelman 1988b McKelvey and Aldticb 1983 view distinctive competence corps as the combined workplace competence technological and organizational knowledge that is embodied in most salient an output mining the ability of the organization to survive eg 112 Nelson and Winter 1982 in a similar vein use the concept of routines which they consider to play a key similar to that of genes in biological evolution The technology strategic competence capabilities raises the issue of where strategic change and technical capabilities remandly occur in firms relative to expert that hit corps as routines has have evolved in the course of evolving organizational survival MANAGING STRATEGIC INNOVATION AND CHANGE 276 1 INTERNAL FORCES 1 INTERNAL FORCES Generative mechanisms strategic behavior Strategymaking with respect to technology is a subset of broader strategymaking of the firm From an evolutionary perspective there are a firms a concentrator of the evolutionary process learning about the distinctive preferences on which flow of business success is based Schenick 1975 Burgelman 1988b McKelvey and Aldrich 1983 view distinctive competence corps as the combined workplace competence technological and organizational knowledge that is embodied in most salient an output skills 1 that rochet the most salient an output mining the ability of the organization to survive eg 112 Nelson and Winter 1982 in a similar vein use the concept of routines which they consider to play a key similar to that of genes in biological evolution The technology strategic competence capabilities raises the issue of where strategic change and technical capabilities remandly occur in firms relative to expert that hit corps as routines has have evolved in the course of evolving organizational survival Generative mechanisms Industry context Industry context is the one important aspect of industry context as is the competitive market place Competitive strategy and the quest for competitive advantage for into account five major forces Porter 1980 1 rivalry among existing firms 2 Bargaining power of buyers 3 Bargaining power of suppliers 4 new entrants and 5 threat of substitute products or services As implicitly or explicitly for forces as expected to determine the appropriate context of product development process has been driven by manufacturing eg Japanese firms whether the product development process has been driven by 1 INTRODUCTION This chapter concerns itself with the strategic management of technology In our view technology is a key organizational resource that is prevalently important in the organization as far as managerial and human resources Its management is a basic business function Viewing technology as a functional capability implies the need to develop a technology strategy analogous to financial and human resource strategies For technology such a strategy is defined by a set of interrelated decisions on encompassing among others technology choice level of technology competence level of funding for technology development timing of technology introduction to new productsservices and organization for technology application and development EG Maidique and Patch 1978 Technology strategy development is consistent with Lamaris 1987 discussion of the accumulation of invisible assets as a key form of organizations development It is also consistent with Maidique and Ziegler 1985 study of the product planning level that ides that untaming is an important aspect of organizational learning Miall Noraha and Tackeath 1983 Levitt and March 1988 Within this performance is viewed as means of experience with actuality performing the different tasks involved in carrying out various functions actually come about A view of performance is akin to the use of team in craftsmanship arts and sports studying the details of actually performing a startegy may shed light on exactly how skills are acquired and how organizational learning and unlearning in their various forms come about A CaphabilitiesBased Perspective Embedded in the cultural evolutionary perspective is a view of strategymaking as a social learning process In this view strategy is inherently a function of the quantity and quality of organizational capabilities which are organizational applications of opportunities which are discovered selected and refined in the strategymaking process Experience with performing a startegy is expected to have feedback effects on its set of capabilitiesbased perspective Burgelman 1984 1988a as presented in Figure 181 It is useful to identify key ideas underlying this framework one is that successful firms develop distinctive strategies in the course of their panel control of the complex and determined at the outset A second key idea is that increasing firms capabilities is fundamental for maintaining strategic development This is consistent with Lamaris 1987 discussion of the accumulation of invisible assets as a key form of organizations development It is also consistent with Maidigue and Ziegler 1985 study of the product planning level that ideas that untimeing is an important aspect of organizational learning Miall Noraha and Tackelith 1983 Levitt and March 1988 Within this performance is viewed as means of experience with actuality performing the different tasks involved in carrying out 273 Reprinted from Research on Technological Innovation Management and Policy 6 Rosembloom R and R Burgelman Vol 4 1989 by permission of JAI Press MANAGING STRATEGIC INNOVATION AND CHANGE 284 MODES OF EXPLORATORY TECHNOLOGY SOURCING INVENTIVE ACTIVITY PRODUCT DESIGN DEVELOPMENT PROCESS SUPPORT TECHNICAL DEVELOPMENT SERVICE VALUE CHAIN STANCE SCOPE DEPTH Fig 183 Technology Strategy Competitiveness and integration Jomaine contributes cumulatively to capabilities convey and influence new strategy A second central feature of this paper is that the gobetweens of continuous businessstrategyexperience occur within a matrix that overlay formal and nonformal mechanisms that shape strategy Both interpretive mechanisms that make sense of business strategy and its specific content may facilitate or impede the transfer development of technological or business capabilities and skills The relationships between organizations and skills the relationships between or within national innovation systems and firmlevel technology strategies often at questions about how or integration builds a business strategy on its evolving capabilities and of their technological programs adjustments and spinoffs or venues are discussed through internal networks and how these are enhanced augmented or developed technological capabilities based on an effective internal organizational technology base and new or novel could shed light on the behavioral demands of how The framework developed here helps identify the factors that determine who wins and loses nononon The firm that is first to market follower that fins or firms that have related capabilities that he innovator needs The follower firms may or may not be imitators in the narrow sense of the term although they sometimes are The framework helps to explain the share of the profits from innovation occurring to the innovating firms and nations compared to its followers and suppliers THE PHENOMENON A classic example of the phenomenon considered in this chapter is the computerized axial to Reprinted with permission from Technology and Global Industry Copyright 1987 by the National Academy of Sciences Courtesy of the National Academy Press Washington DC 287 Why and what circumstances is the recognized technological inventiveness of a nation or sufficient to capture the benefits stemming from its capabilities in science and technology This chap er examines why technological inventions can lose ground in the commercialization of advanced technologies at a time when they are the principal sources of major technological innovations or industrial singu larity the capacity to accelerate the technoin first innovation may be the last rather than its first advantage that a mature economy loses as it enters its declining phase The framework developed here helps identify views of the human body the greatest advance in radiology since the discovery of x rays in 1895 Although EMI was initially successful with its CAT scanner within 6 years of its introduction into the United States in 1973 the company had lost market leadership and by the eighth year had dropped out of the CAT scanner business Other companies successfully dominated the market though they were late entrants and are still profit ting in the business today A further example is that of the Royal Crown Companies Inc a small beverage company that was the first to introduce cola in a can and the first considered the United Kingdoms first air solidstate compo ents in 1952 In the late 1960s the pattern recognition re search of Godfrey N Hounsfield an EMI senior researcher emeritus resulted in the single most dis play a scan of a pigs brain Subsequent clinical work established had computerized tomography was valuable for generating crosssectional views of the human body Advance in radiology since the discovery of x rays in 1895 compared to 7 2 7 10 weeks and increasing technologies in Technologies Technology in Society in a and 1 1 2 1 and 4 j 23 197121 Hannon 1 and 4 Peramani 1984 Structural Imedia and Organizational Change American Sociological Review 74 19416 Kim J Nonaka and Y Takeuchi 1985 Managing the New Product Development Process How Japanese Learn and Use of Totak R Clark R H Hayes and C Lorenz The Unas Alliance Managing the ProductiveTechnology Dyrman Boston MA Harvard Business School Press Linn Research Paper Series 2861 Graduate School of Business Stanford University Cambridge MA Harvard Business Press Kelly D and 4 Karmzberg 1978 Technology Introduction A Critical Review of Current Knowledge San Francisco Press Levin B and J Marill 1988 Organizational Learning Annual Review of Sociology 14 Little D D 1987 Total Strategic Management of Technology European Management Forum Maladie MA and J Patch 1978 Corporate Strategy and Technological Policy Harvard Business School 68683 Graduate School Business Management Press of Corporation Institution New York 71308 Licensed under public policy Research Policy 15 7ussian 1986 Technological and Administrative Valations for Integration Nicholson JR and WASCoess Popularion Harley D 74 1975 17 Tye Hyndon Texas Findings from Technological Innovation AA Monitaa Higginon Sensere Dali and R PetchTechnology of work 755 Vol 3 1 Industry California Management Review XXIX 4 Summer 5776 Kmberge Daivld 1986 Technology Working Paper Queens University Sloth 1957 Leadership in Administration Stockholm The 1935s course of Innovation New York Oxford University Press Wcfk H 1979 The Social Psychology of Organization Brusent MA AddisonWesley Reading A Mac 101102 Leaming Cycle Research Policy December 140 McKelly B and E Aldrich 1983 Populations Organizations and Applied Organizational 1978 Allen J Technological Innovation in Rosendom RS 1987 Technological Innovation and University Press Rosselibons R 1982 Inside the Black Box Cambridge Basic Books Petrovlc V D 1988 Trading Places New York Porter M E 1985 Competitive Strategy New York Porter M E 1988 Competitive Strategy The Free Press Dotel M E 1987 Technological Dimensions of Competitive Strategy In R S Rosenthom ed Research at Technology Ism Boom ed Technological Dimension of the Paper 286 Capturing Value from Technological Innovation Integration Strategic Partnering and Licensing Decisions DAVID TEECE 19 TECHNOLOGY AND BUSINESS STRATEGY 1 The Division of Research of the Harvard Business School REFERENCES Abell D 1980 Defining the Business Englewood cliffs NI PrenticeHall Abernathy W J 1978 The Productivity Dilemma Roadblocks to Innovation in the Automobile Industry Johns Hopkins University Press Abernathy W J and A M Kanlove 1983 Industrial Renaissance New York Basic Books Aldrich HE 1979 Organizations and Environments Englewood cliffs NJ PrenticeHall Amschot H and L Stewart 1977 Strategies for a TechnologyBased business Harvard business Review NovemberDecember Astley W G 1985 The Two Ecologies Population and Community Perspectives on Organizational Evolution Organ MA Graduate School of Business Administration Harvard University Boyd F and k Erickson 1985 Culture and the Evolutlonary Process Univeisage University of Chicago press Doepsks J 1975 The Biological Evolution of ManMonk Reading MA AddisonWesley Burgman R A 1983 Corporate Entrepreneurship and Strategic Management Insights from a Process study Management Science 29 13491364 Burgman R A 1986 StrategyMaking and Evolutionary Theory Towards a CapabilitiesBased Perspective In Tushya M ed Technological Innovation and Business Strategies Tokyo Nippon Keizai Shimbunsha Burgman R A 1988 StrategyMaking as a Social Learning Process The Case of Internal Corporate Venturing Interfaces 13 7485 Burgman R A 1988a Integrational Ecology of StrategyMaking and Organizational Adaptation Research Paper Graduate School of Business Stanford CA and L Sayles 1986 Inside Corporation Structure New York The Free Press Dusselman R A R T Kosnik and M Van den Poel