This article focuses on technological innovation. It provides an overview of the main types of technological innovation, including radical innovation, incremental innovation, and disruptive innovation. The history of private- and public-sector technological innovation is discussed. The process of managing technological innovation is analyzed. The issues associated with organizational barriers to technological innovation are included. A case study of information technology innovations is described.
Keywords: Disruptive Innovation; E-Commerce; Federal Government; Firm; Incremental Innovation; Information Technology; Internet; New Technology Exploitation; Organizational Barriers; Organizational Innovation; Private Sector; Public Sector; Radical Innovation; Technological Innovation; Technology Management; Cold War
Management: Technological Innovation
Technological innovation (TI) refers to the process through which industry conceives and develops new products or production processes. Technological innovation includes a broad range of activities, from the first conception of an idea to the dispersal of innovative products, processes, and services throughout the economy. Effective technological innovation includes either the diffusion process or the spread of the innovation commercially (Zairi, 1992). Technological innovation requires and is followed by new technology exploitation (NTE). New technology exploitation involves the use of advanced technology or scientific developments to create better products or manufacturing processes (Bigwood, 2004).
The Types of Technological Innovation
There are three main types of technological innovation: radical innovation, incremental innovation, and disruptive innovation.
- Radical technological innovation refers to the “first adoption of new technologies and their first introduction to market, which opens up an entirely new market structure with potential application and often initiates a process of creative destruction” (Yonghong, 2005, p.88).
- Incremental technological innovation refers to innovation that introduces “relatively minor changes to the existing product through exploiting the potential of the established design” (Yonghong, 2005, p.91).
- Disruptive technological innovation refers to innovation that exploits products or services through the “use of a new combination of existing technologies or new technologies” (Yonghong, 2005, p.91). The failure of management to recognize and manage disruptive technology innovation often results in organizational inefficiencies and frustration.
These three different types of innovation have separate development trajectories and associated management strategies.
Technological innovation is a strategic and active process. Active technological innovation may provide organizations with strategic advantages in the marketplace. There are three stages involved in the technological innovation process: the idea generation and evaluation phase; the approval and adoption phase; and the development and implementation phase. The nature of the internal organizational environment determines the range of innovative activities undertaken by the organization. Factors that influence the successful development and implementation of technological innovations include the organizational structure and business climate. Innovation producing organizations are characterized by a cooperative rather than competitive environment (Abbey, 1989). Factors influencing the success of technological innovation include organizational change, manpower, communication, and technological complexity. It may occur in areas such as products, services, processes, organizational structures, and personnel (Yonghong, 2005).
Importance of Technological Innovation to Competitive Advantage
Technological innovation is only one category of innovation. Other categories of innovation occurring in organizations include marketing innovation, organizational innovation, product innovation, service innovation, method innovation, and process innovation.
"There is an established relationship between business strategy, innovation, and organizational performance. Innovation, which refers to the use of a new product, service, or method in business practice immediately subsequent to its discovery, influences economic success and market share in increasingly competitive global markets. In response to new technology-driven global markets, companies have increased their use of advanced technologies and their innovation efforts" (Tareq, 2010).
“Technological innovation is associated with competitive advantage in both growing and mature markets. Innovation, unlike most other business practices, can change the competitive balance in mature markets. The concept and practice of technological innovation became closely associated with economic gain and competitive advantage in the 1930s. In the 1930s, economist Joseph Schumpeter (1883–1950) created a theory of economic development based on different types of economic innovation including discovery of new products, new manufacturing processes, new markets, new sources, or new organizational structures. Contemporary business theory argues that companies must compete to keep or gain market share. Technological innovation is considered to be the key to creating competitive advantage” (Tareq, 2010).
The following sections provide an overview of the history of private and public sector technological innovation. This overview serves as a foundation for discussion of strategies for managing the technological innovation process. The organizational barriers to technological innovation are analyzed. A case study of information technology innovations is described.
History of Private-
Technological innovation in the twentieth century was characterized by public- and private-sector partnerships and strategic relationships. The private and public sectors significantly influence one another's technological innovation processes. The relationship between public- and private-sector technological innovation became very close during the Cold War from the 1940s until the early 1990s. After World War II, and during the Cold War era, publicly funded science and technology research, development, and innovation grew for three main reasons.
- First, science and technology research was fueled by the belief in the need for strong national defense technologies.
- Second, science and technology research was fueled by the belief that scientific research, which had produced delivered nuclear weapons, antibiotics, and jet aircraft, would produce other innovations of national interest.
- Third, science and technology research was fueled by the belief that a large national science system was perceived by other countries to be representative of national prestige and cultural achievement.
Cold War Era
Cold War–era technological research and innovation, motivated by concerns for national defense more than economic growth, produced many university research and laboratory programs, government laboratories, and other technical institutes, including the National Science Foundation (NSF) and the National Aeronautics and Space Administration (NASA). The United States, along with countries such as Canada, Australia, the United Kingdom, France, and Switzerland, invested in significant national scientific infrastructures during the Cold War years (de la mothe & Dufour 1995). Cold War–era defense-related spending resulted in the development of such technology as semiconductors, computers, and commercial aircraft.
During the 1980s and 1990s, private-sector science and technology development and innovation grew, and defense-related military research and innovation slowed. In contrast to the pattern of the previous five decades, technological innovation and development began to flow from civilian to military applications. In 2000, the Clinton administration reduced the role of defense-related research and design funding in U.S. technology policy. Instead, the Clinton administration focused resources and policies on commercial technology research, development, innovation, procurement, and adoption (Ham, 1995). The largest high-tech private-sector innovators will remain tied to the public sector for two main reasons: first, the public sector, including the military, remains one of the main customers of high-tech innovators. Second, the public sector has the funds available for public-private partnered and cooperative research and development programs.
Managing the Technological Innovation Process
The success of a technological innovation is connected to a market forecast of customer needs and wants as well as effective management of the innovation process. The strategic management of technological innovation involves the following stages and components (Abbey, 1989):
- Establish an R & D Philosophy: Organizations establish their research and development (R & D) philosophy as part of their overall corporate strategy. The R & D philosophy will influence the organization's mission, markets, and products and services. R & D philosophies generally articulate the management's commitment to technological innovation and the allocation of resources to support...
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