Technological Innovation

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

Overview

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- & Public-Sector Technological Innovation

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.

1980s & 1990s

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.

Application

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 technological innovation efforts.
  • Develop an R & D strategy: The organization should develop an R & D strategy that focuses the organization's resources on activities that produce technological innovation. As part of this process, the organization will assess the external business environment and identify technological opportunities. The external business environment involves an active examination of social, political, economic, and technological events.
  • Form a technological innovation committee (TIC): The technological innovation committee is responsible for the implementation of the R & D strategy. The technological innovation committee integrates and coordinates all the activities involved in bringing a technological innovation to market. The technological innovation committee includes technology experts, marketing experts, manufacturing experts, and financial experts.
  • Generate Ideas: Idea generation is directly related to successful product innovation. Organizations tend to generate many more ideas for technological innovations than they put into practice. Organizations develop systems to generate and process technological innovation ideas from R & D personnel, customers, marketing personnel, competitors, and scientific publications.
  • Approve and Adopt Technological Innovation: Organizations involved in the strategic management of technological innovation engage in an active approval and adoption phase. The approval and adoption phase involves the evaluation of an idea and the active transition of an idea into a viable product or service concept. R & D personnel, scientists, or managers oversee the transition of an idea to a product concept.
  • Develop and Implement Technological Innovation: Organizations that successfully navigate the technological innovation process end the process by developing a product prototype and implementing a technological product innovation. The R & D personnel are traditionally responsible for producing the prototype. The prototype will be evaluated by the customer, engineers, and marketing and move on to the manufacturing division. The implementation phase involves the mass production and commercialization of the product prototype.

Conditions for Successful Technological Innovation

Ultimately, firms may or may not have to institute a formalized innovation policy and procedure to guide employees and managers. There are a set of principles that guide the innovation process across businesses and industries. The success of technological innovation is dependent on the following conditions being met: technological innovation should fulfill customer needs, satisfy shareholders, and inspire staff; technological innovation requires vision to drive the change process; technological innovation requires a risk-tolerant environment; technological innovation necessitates a continuous learning process involving all organization members; technological innovation depends on ingenious thinking in a diversified and informed organizational environment; and technological innovation needs a multifunctional systems viewpoint for analyzing the impact of change and managing implementation. Managers of the innovation process address numerous issues within the organization to ensure successful development and implementation of an innovation. The main innovation management responsibilities include minimizing risk, overseeing customer interaction, training customers, improving staff performance, motivating front-line staff, and using information technology (Riddle, 2000).

Managers of the innovation process need feedback about their management performance. While market share will eventually reflect the success of management efforts, there exists another method for management review. Innovation management can be judged and evaluated through an innovation management measurement framework. The framework of the innovation management process consists of seven categories: “Inputs management, knowledge management, innovation strategy, organizational culture and structure, portfolio management, project management and commercialization” (Adams & Bessant, 2006, abstract). Innovation management measurement is used within firms by managers and executives. The innovation management measurement framework allows managers to assess their personal innovation activities, investigate the degree to which their organization engages in innovative behavior, and target improvement areas (Adams & Bessant, 2006).

Technology Management

In the twenty-first century, technology management and innovation management are closely connected. New technologies, which change business practices and processes, require new forms and management approaches and strategies. Technology management in the knowledge-based economy is based on the principle of continuous improvement and theory of world-class manufacturing (WCM). World-class manufacturing (WCM) refers to a production philosophy based on the principle of continuous improvement. WCM organizations pursue improvement opportunities in terms of quality, cost, delivery, flexibility, and innovation. There are four dominant principles of technology management: just-in-time management (JIT), total quality control (TQC), total preventive maintenance (TPM), and computer-integrated manufacturing (CIM).

  • Just-in-time management refers to the elimination of all aspects of production other than the minimal amount required to increase the product’s value.
  • Total quality control refers to the all-organization effort to improve product quality to satisfy the needs of customers.
  • Total preventive maintenance refers to the practice of constantly maintaining equipment and machinery to avoid breakdowns or malfunctions during production.
  • Computer-integrated manufacturing refers to the total integration of a business’ manufacturing process—including design, production, distribution, and post-sale service and support operations—by utilizing computer and information technology.

Technology management, as a key feature in the management of technological innovation, requires the adaptation of management principles to the needs and protocols of particular organizations and industries (Swinehart, 2000).

Issues

Organizational Barriers to Technological Innovation

Technological innovation, which requires active learning, risk-taking, insight, and vision, does not occur in every organization. Common organizational barriers to technological innovation include a heavy reliance on market research to minimize risk when drawing up and approving plans for new products; the use of financial techniques, such as risk minimization, to assess innovation projects that are inherently risky; the tendency to invest in and rely on what has served the company well in the past rather than what may serve it better in the future; and systems of rewards and promotion that encourage a low-risk, custodial approach to management rather than a high-risk management approach (Brown, 1992).

Trajectory of Technological Innovation

Significant deviation from the usual trajectory of technological innovation may create barriers to technological innovation. The trajectory of innovation is most often conceived of as an s-shape pattern with distinct levels of diffusion and adoption of the innovation. The technological trajectory of an innovation refers to a “series of path dependent experiences that track the evolution of a technology” (Yonghong, 2005, p.85). The s-curve for technology innovation includes three main phases: pacemaker technology phase, disruptive technology phase, and key technology phase (Hacklin, 2005).

  • Pacemaker technology phase: Emerging technology is referred to as pacemaker technology since it is newly developed and its future potential and applications are just beginning to be identified. The diffusion of the innovative technology has not yet started in this phase.
  • Disruptive technology phase: Established technology evolves into disruptive technology when it has managed to outperform competing technologies in respective mainstream markets. The diffusion of the innovative technology is occurring at a rapid pace in this phase.
  • Key technology phase: The performance of the technology becomes more efficient and the technology becomes widely adopted by customer base. The diffusion of the innovative technology is complete in this phase. The innovative technology, if successful, has saturated its market and become ubiquitous technology among its users.

Ultimately, organizational barriers to technological development will hinder the technological trajectory of innovation and may compromise the position of the organization in the marketplace.

Case Study

Networking & Information Technology Innovations

Science, government, and industry believe the field of networking and information technology to be crucial to the future of civilian and military well-being and technologies. As a result, the field of networking and information technology has large policy initiatives supporting government and private-sector research and development. The field of networking and information technology receives significant resources from the federal government. The scope of U.S. government networking and information technology policies and programs is determined by the parameters established and resources allocated in two public laws from the 1990s: the High Performance Computing Act of 1991 and the Next Generation Internet Research Act of 1998.

The High Performance Computing Act

In 1991, the High Performance Computing Act (Public Law 102-194) implemented the National High-Performance Computing Program and established an advisory committee on high-performance computing. The High Performance Computing Act requires each federal agency and department participating in the program to identify program elements in the annual budget requests. In addition, the High Performance Computing Act sets forth network requirements for the public and private sectors, including “fostering and maintaining competition and private sector investment in high-speed data networking within the telecommunications industry and promoting the development of commercial data communications and telecommunications standards” (Figliola, 2008, CRS-9).

The Next Generation Internet Research Act

The Next Generation Internet Research Act of 1998 (Public Law 105-305) accomplished two main goals.

  • First, the Next Generation Internet Research Act authorized “research programs related to high-end computing and computation, human-centered systems, high confidence systems, and education, training, and human resources” (Figliola, 2008, CRS-9).
  • Second, the Next Generation Internet Research Act provided for the “development and coordination of a comprehensive and integrated U.S. research program to focus on computer network infrastructure that would promote interoperability among advanced federal computer networks, economic high-speed data access that does not impose a ‘geographic penalty,’ and flexible and extensible networking technology” (Figliola, 2008, CRS-9).

The High Performance Computing Act of 1991 and the Next Generation Internet Research Act of 1998, which created large interagency programs and standards, have directed nearly all of the government's efforts in digital, network, and computer fields.

Technology in the Private Sector

Throughout the 1990s, the federal government actively introduced networking and information technology, created as a result of public policies and programs, into industry to promote economic growth. The technological research and innovation undertaken by the federal government has been implemented and capitalized on by the private sector. The dramatic growth in information and communication technology in the 1990s produced technology that changed business practices. Global markets, and multinational corporations, increasingly rely on and incorporate Internet and telecommunications technologies into their business practices. E-commerce refers to the practice of buying and selling products and services through electronic transactions. Online stores and marketplaces are an example of e-commerce. E-commerce has helped create low-cost and high-efficiency product and service sales. E-commerce has created new employment opportunities in information-based and value-added services (Kamel, 2001). Business models that incorporate information and communication technology innovations are called e-business. The information and networking technology innovation began by the federal government has become ubiquitous features of everyday life for many Americans as well as an engine for economic growth.

Conclusion

In the final analysis, technological innovation, accompanied by new technology exploitation, is an organizational strategy used to create competitive advantage in the marketplace. There are three main approaches to technological innovation: radical innovation, incremental innovation, and disruptive innovation.

  • Radical technological innovation refers to the first utilization and market introduction of newly developed technologies.
  • Incremental innovation refers to advancements regarding technology performance or enhancements in terms of product features.
  • Disruptive innovation, also referred to as breakthrough or discontinuous innovation, refers to innovation based on technologies new to the world.

These three types of technological innovation have separate development trajectories and associated management strategies (Hacklin, 2005). Technological innovation of all kinds creates growth for firms and national economies.

Terms & Concepts

Cold War: The time period between the mid-1940s and the early 1990s, marked by animosity, hostility, and rivalry between the United States and the Soviet Union.

E-Commerce: The practice of buying and selling products and services through electronic transactions.

Federal Government: A form of government in which a group of states recognizes the sovereignty and leadership of a central authority while retaining certain powers of government.

Firm: A business that is owned by stockholders and operated by professional managers.

Incremental Innovation: Advancements regarding technology performance or enhancements in terms of product features.

Information Technology: The development, installation, and implementation of computer systems and applications.

Internet: An interconnected system of networks and related technologies that connect computers worldwide.

New Technology Exploitation: The use of advanced technology or scientific developments to create better products or manufacturing processes.

Organizational Innovation: The process of changing the organization by introducing different methods of production or of administration.

Private Sector: All enterprises that are outside of government control, including micro, small, medium, and large enterprises.

Public Sector: The economic and administrative enterprises of a local, regional, or national government.

Technological Innovation: The process through which industry conceives and develops new products or production processes.

Technology Management: Practices and protocols used by managers in a business organization to oversee technological materials and processes. Examples include technology planning, project management, support, database services, disaster recovery, and network management.

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Suggested Reading

Belz, F. (2013). Shaping the Future: Sustainable Innovation and Entrepreneurship. Social Business, 3, 311-24. Retrieved December 4, 2014, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=94716355

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Essay by Simone I. Flynn, Ph.D.

Dr. Simone I. Flynn earned her Doctorate in cultural anthropology from Yale University, where she wrote a dissertation on Internet communities. She is a writer, researcher, and teacher in Amherst, Massachusetts.