Strategic Management of Technological Innovation 5th Edition Schilling Solutions Manual
Strategic Management of Technological Innovation 5th Edition Schilling Solutions Manual
Strategic Management of Technological Innovation 5th Edition Schilling Solutions Manual
eu/Strategic-Management-of-Technological-Innovation-5th-Edition-Schilling-Solutions-Manual
Instructor’s Manual
Instructor’s Manual
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Instructor’s Manual
CHAPTER 1
SYNOPSIS OF CHAPTER
The purpose of this chapter is to set the stage for the course by establishing the importance of
First the chapter overviews the importance of technological innovation for a firm’s competitive
success and the advancement of society in general. The chapter points out that 1) many firms are
relying on products developed in the previous three to five years for large portions of their sales
and profits; 2) globalization has increased competition putting more pressure on firms to
compete through innovation; 3) advances in information technology have enabled both process
improvements and the efficient generation of product variants which facilitates the execution of a
differentiation strategy at a reasonable cost; and that 3) the residual growth in the GDP can be
attributed to technological change. Both the positive and negative effects of technological
innovation are described. Advances in food production are an example of the first and pollution
is an example of the latter. Next the innovation funnel is introduced to show students that on
average 3,000 raw ideas must enter the funnel in order to arrive at 1 successful new product
launch.
Second, the chapter discusses the risks and cost of innovation. On average, many more
innovation projects fail than succeed. Firms are much more likely to be successful if they have a
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Instructor’s Manual
well-crafted strategy for technological innovation. The book is organized to follow the
strategy, leading the students through each of the primary aspects that should be considered. The
final section of the chapter outlines the layout of the book, reviewing the contribution each
TEACHING OBJECTIVES
1. Introduce students to the role technological innovation plays in the competitive dynamics
of industries and how technological innovation affects society both positively and
negatively.
LECTURE OUTLINE
I) Overview
a) In many industries technological innovation is now the single most important driver of
competitive success and because the pace of innovation has increased many firms now rely
on products developed within the prior five years for a large portion of their sales and
profits. This period is reduced to three years for firms in fast-paced industries such as
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producing goods and bringing them to market; firms that do not constantly innovate to make
their development, production, and distribution processes more effective and efficient are
c) The globalization of markets has played a significant role in increasing the importance
d) Advances in information technology have also played a role in driving up the pace of
innovation. These technologies also help firms to develop and produce more product variants
i) For example, Toyota produces 21 different passenger vehicle lines, each with
government funding has been increasing but governments do play a significant role in the
innovation process.
society, and the efficiency of providing them. For example, innovation has increased the
Average world GDP per capita has risen steadily since 1971 and cannot be attributed
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b. The story is not all positive, however. Sometimes technological innovation results in
unanticipated consequences.
processes that result in a greater percentage of successful products and shorter development
cycles.
b. How Long Does New Product Development Take? Cycle time varies with the
“innovativeness” of the project. Incremental improvements take less time than next
c. The Innovation Funnel depicts the new product development process as beginning with
many new product ideas going in the wide end and ending with very few projects making it
a. A firm’s innovation projects should align with its resources and objectives,
leverage its core competencies and should help the firm achieve its strategic intent.
generation and efficient implementation of innovative ideas and a firm’s new product
development processes should maximize the technical and commercial success of each
project.
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V) Course Overview
a. Part I focuses on how and why innovation occurs in an industry and why some
Where do great ideas come from? How can firms harness the power of individual
ii. Chapter 3 considers the types and patterns of innovation. The questions
addressed include: Why are some innovations much harder to create and implement
than others? Why do innovations often diffuse slowly even when they appear to
offer a great advantage? What factors influence the rate at which a technology tends
standard rather than enabling multiple standards to coexist? What makes one
technological innovation rise to dominate all others, even when other seemingly
superior technologies are on offer? How can a firm avoid being locked out? Is there
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anything a firm can do to influence the likelihood of having its technology chosen
iv. Chapter 5 highlights the importance of entry timing. The questions addressed
include: What are the advantages and disadvantages of being first to market, early-
but-not-first, and late? What determines the optimal timing of entry for a new
innovation?
i. Chapter 6 reviews the basics of how a firm can assess its current position
and define its strategic direction. The questions addressed include: What are the
chain do its strengths and weaknesses lie? What are the firm’s core competencies,
and how should it leverage and build upon them? What is the firm’s strategic intent
iii. Chapter 8 focuses on the important role collaboration can play in the
Should the firm partner on a particular project or go solo? How does the firm
arrangements? If the firm chooses to work with a partner, how should the
partnership be structured? How does the firm choose and monitor partners?
iv. Chapter 9 provides an overview of the options a firm has for appropriating
the returns to its innovation efforts. The questions addressed include: Are there
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ever times when it would benefit the firm to not protect its technological
wholly open, or partially open strategy for protecting its innovation? When will
its overall rate of innovativeness. The questions addressed include: Do bigger firms
to achieve creativity and flexibility at the same time as efficiency and reliability?
ii. Chapter 11 highlights a series of “best practices” that have been identified
parallel? What are the advantages and disadvantages of using project champions?
What are the benefits and risks of involving customers and/or suppliers in the
development process? What tools can the firm use to improve the effectiveness and
efficiency of its new product development processes? How does the firm assess
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addressed include: How big should teams be? What are the advantages and
collocated? When should teams be full-time and/or permanent? What type of team
strategies can the firm use to encourage distributors and complementary goods
-introduce more product and service variations, enabling better market segmentation and
penetration;
-improve existing products and services so that they provide better utility to customers;
-improve production processes so that products and services can be delivered faster and at
better prices.
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Increasing globalization has both expanded the potential markets for many firms while
simultaneously exposing them to greater competition; this has resulted in firms putting more
technology has enabled such process innovations as CAD/CAM, rapid prototyping, and
flexible manufacturing, enabling firms to produce more product variants faster and cheaper.
This is a double edged sword: it has enabled product lifecycles to shorten (making rapid
innovation more imperative) while simultaneously improving a firm’s options for innovation.
Technological innovation increases knowledge, and makes more options available. On the
whole, evidence suggests that technological innovation has increased GDP and standards of
living worldwide. Technological innovation also, however, poses some risk of negative
externalities, e.g.,
-pollution;
-agricultural and fishing technologies can result in the erosion, elimination of natural habitats,
strains of bacteria and viruses, or moral dilemmas regarding the use of genetic modification such
as externalities.
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Students may also suggest that technological innovation may (or has) lead to the loss of diversity
in culture and traditions. The instructor may wish to encourage them to debate such risks of
innovation versus the ways that innovation has enhanced our lives.
3. Why do you think so many innovation projects fail to generate an economic return?
Innovation is an inherently risky undertaking. Most innovation projects are characterized by both
technical uncertainty (will the project result in a technically feasible product or service?) and
market uncertainty (what features will customer prefer and what will they be willing to pay for
them?) In their eagerness to innovate, firms are at risk of undertaking too many projects,
overestimating their potential returns and underestimating their uncertainty. This is compounded
by the fact that many people mistakenly believe that creativity can only be tapped through an
unstructured process, when in fact innovation is most powerful and has a greater likelihood of
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CHAPTER 2
Sources of Innovation
SYNOPSIS OF CHAPTER
In this chapter we discuss the role of creativity as the underlying process for the generation of
novel and useful ideas. Individual creativity is considered to a function of intellectual abilities,
knowledge, thinking styles, personality traits, intrinsic motivation and environment. Firm
creativity is more than the sum of member creativity. Firm creativity is also a function of the
The chapter moves on to explore how creativity is transformed into innovative outcomes by the
separate components of the innovation system (e.g., individuals, firms, etc) and the linkages
The last part of the chapter focuses on the role of innovation networks in new product/process
development. Firms are most likely to collaborate with customers, suppliers, and universities,
though they also may collaborate with competitors, producers of complements, government
developing an understanding of technological clusters including how they are formed and the
benefits associated with them. The role of knowledge transfer in the creation of clusters is
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TEACHING OBJECTIVES
LECTURE OUTLINE
VI) Overview
a. Innovation can arise from many different sources including individuals, firms,
b. Firms are well suited to innovation activities because they are highly motivated by the
need to remain competitive and because have the management systems needed to organize
c. An even more important source of innovation is the networks that link innovators
together. These networks leverage a broader range of knowledge and resources than an
VII) Creativity
a. Creativity is defined as the ability to produce work that is useful and novel (i.e. different
and surprising when compared to prior work). The most creative works are novel at the
individual producer level, the local audience level, and the broader societal level. When a
product is novel to its creator but know to everyone else it is referred to as a reinvention.
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personality, motivation, and environment. Researchers have argued that the most
i. Too much knowledge can result in an inability to think beyond the existing logic
and paradigms of a field while too little knowledge can lead to trivial contributions
ii. The most creative individuals can distinguish important problems from
unimportant ones.
and take reasonable risks are the personality traits most important for creativity.
iv. Intrinsic motivation has also been shown to be very important for creativity.
organization and a variety of social processes and contextual factors that shape the way
Honda, BankOne).
d. Idea collection systems such as suggestion boxes, or idea management systems are only a
first step. Managers can be trained to signal (through verbal and nonverbal cues) that each
employees thinking and autonomy is respected. Employees can also be trained to use
creativity tools such as using analogies or developing alternative scenarios. You may want
to discuss the various ways that Google inspires creativity as described in the Theory in
Action box.
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a. Innovation occurs when new ideas are implemented into some useful form (e.g. new
product or process).
b. The Inventor has been the focus of much study and there is significant disagreement
over whether inventors are born or made. It is also important to note that the qualities that
i. Inventors are often portrayed as eccentric and doggedly persistent scientists. One
1. Have mastered the basic tools and operations of the field in which they
4. Often have the sense that all knowledge is unified. They will seek global
You may want to raise the example of Dean Kamen (from the Theory in
c. Users are another important source of innovation. Users are keenly aware of their unmet
needs and have the greatest motivation to find ways to meet those needs. You may want to
bring up how doctors started using Superglue to repair skin in emergency situations as
discussed in text. Innovation by users can blossom into wholly new industries, as demonstrated
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Chapter 2
Sources of Innovation
2-4
2-5
2-6
2-7
2-8
Dean Kamen
The Segway HT: A self-balancing, two-wheeled
scooter.
Invented by Dean Kamen
Described as tireless and eclectic
Kamen held more than 150 U.S. and foreign patents
Has received numerous awards and honorary degrees
Never graduated from college
To Kamen, the solution was not to come up with a new
answer to a known problem, but to instead reformulate the
problem
2-10
Innovation by Users
Users have a deep understanding of their own
needs, and motivation to fulfill them.
While manufacturers typically create innovations to
profit from their sale, user innovators often initially
create innovations purely for their own use.
E.g., Laser sailboat developed by Olympic sailors;
Indermil tissue adhesive based on Superglue; early
snowboards
2-11
2-12
2-13
2-14
2-15
2-16
2-17
2-18
2-19
R&D performance
United States (2011)a 429.1 68.5 12.7 14.6 4.3
China (2011) 208.2 75.7 16.3 7.9 0.0
Japan (2011) 146.5 77.0 8.4 13.2 1.5
Germany (2011) 93.1 67.3 14.7 18.0 **
South Korea (2011) 59.9 76.5 11.7 10.1 1.6
France (2011) 51.9 63.4 14.1 21.2 1.2
United Kingdom (2011) 39.6 61.5 9.3 26.9 2.4
R&D funding sources
United States (2011)a, b 429.1 58.6 31.2 6.4 3.8
China (2011) 208.2 73.9 21.7 NA 1.3
Japan (2011) 146.5 76.5 16.4 6.6 0.5
Germany (2010) 93.1 65.6 30.3 0.2 3.9
South Korea (2011) 59.9 73.7 24.9 1.2 0.2
France (2010) 51.9 53.5 37.0 1.8 7.6
United Kingdom (2011) 39.6 44.6 32.2 6.2 17.0
1995 2000
StressgenBiotechnologiesCorp
Seven-ElevenJapanCoLtd
ElanCorpPLC
IBMCorp
BayerAG
MatsushitaElectricIndustrial
HitachiLtd SunMicrosystemsInc
MotorolaInc
Hewlett-PackardCo MicrosoftCorp
MonsantoCo
CSIRO
MagazineHouseCoLtd
QUALCOMMInc
T oyotaMotorCorp
2-21
2-22
2-23
2-24
Knowledge Brokers
Hargadon and Sutton point out that some firms (or individuals)
play a pivotal role in the innovation network – that of
knowledge brokers.
Knowledge brokers are individuals or firms that transfer
information from one domain to another in which it can be
usefully applied. Thomas Edison is a good example.
By serving as a bridge between two separate groups of firms,
brokers can find unique combinations of knowledge possessed
by the two groups.
2-25