CH-17 Managing Technology and Innovation – Management: Leading and Collaborating in a Competitive World : Chapter Notes

Chapter 17 Managing Technology and Innovation LEARNING OBJECTIVES 1 List the types of processes that spur development of new technologies. 2 Describe how technologies proceed through a life cycle. 3 Discuss ways to manage technology for competitive advantage. 4 Summarize how to assess technology needs. 5 Identify alternative methods of pursuing technological innovation. 6 Define key roles in managing technology. 7 Describe the characteristics of innovative organizations. 8 Describe the characteristics of successful development practices. CHAPTER OUTLINE Technology and Innovation Technology Life Cycle Diffusion of Technological Innovations Technology Leadership and Followership Technology Leadership Technology Followership Assessing Technology Needs Measuring Current Technologies Assessing External Technological Trends Making Technology Decisions Anticipated Market Receptiveness Technological Feasibility Economic Viability Anticipated Capability Development Organizational Suitability Sourcing and Acquiring New Technologies Internal Development Purchase Contracted Development Licensing Technology Trading Research Partnerships and Joint Ventures Acquiring a Technology Owner Technology and Managerial Roles Organizing for Innovation Unleashing Creativity Bureaucracy Busting Design Thinking Implementing Development Projects Technology, Job Design, and Human Resources CHAPTER RESOURCES Experiential Exercises 1. Technology Life Cycle 2. Innovation for the Future Cases Worldwide Games Social Enterprise Piramal Sarvajal Provides Clean Water via “Water ATMs” Lecturettes 1. Intuition and Innovation 2. eBay CEO Outlines Winning Strategies KEY STUDENT QUESTIONS Student questions for this chapter tend to deal with the day-to-day pragmatic issues associated with managing technology and innovation. For example: 1. “What are the advantages and disadvantages of developing new technologies within the company?” a. “What is the best way to keep up with rapid changes in the business environment?” 2. “As a manager, what can I do to develop an innovative organization?” Answers to Student Questions 1. The advantages to developing new technologies include: 1st mover advantages, little or no competition, greater efficiency, higher profit margins, the possibility of creating a sustainable advantage, gaining a reputation for innovation, establishing entry barriers that competitors will have to overcome, occupying new market niches, and creating opportunities to team with other innovators. The disadvantages include assuming greater risk, the cost of technology development, the infrastructure costs, the costs of learning and eliminating defects, and possible cannibalization of existing products. 2. The best way to keep up with rapid changes in the business environment is to dedicate resources to monitoring change on a regular basis, and then to use forecasting and innovation to try and stay ahead of the changes. In addition, companies must constantly upgrade the skills of their employees, and allow them the freedom to engage in continuous learning and improvement. At the same time, it is important to use regular monitoring in order to make sure that changes made in response to changes in the environment are working effectively. 3. As a manager, you can provide an environment conducive to innovation. The textbook cites 3M’s rules for an innovative culture, which include: setting goals for innovation; committing to research and development; inspiring intrapreneurship; facilitating, rather than obstructing, work; focusing on the customer; and tolerating failure CLASS ROADMAP POWERPOINTS Slide 1 Managing Technology and innovation Slide 2 Chapter Introduction Quote Slide 3 Learning Objectives MANAGEMENT IN ACTION Elon Musk: Innovator Extraordinaire Elon Musk’s passions are many and varied, and many people believe that’s the reason he has been such a successful innovator and entrepreneur, launching multibillion-dollar ventures in fields as different as digital payment systems and space travel. He is a co-founder of PayPal (later sold to eBay), founder and CEO of the commercial rocket company SpaceX, and chair and CEO of Tesla, the maker of electric and self-driving cars. These and other industry-changing ventures have helped make him one of the wealthiest and most influential people in the world. Tesla also recently acquired Solar City, a maker of solar panels. Meanwhile, Musk is investing in energy-efficient high-speed rail travel, with a new venture called Hyperloop, and running a nonprofit called OpenAI, founded to limit the possible ill effects of artificial intelligence. He has even thought about how to make Mars a habitable Earth-like planet, such as by warming it with nuclear fusion, and envisions a human settlement there. His goal is nothing less than to change the world. A compulsively hard worker, Musk often puts in 85-hour weeks, although as the father of five sons (one set each of twins and triplets) he no longer spends nights sleeping at his desk as he did in his younger days. He is also a lifelong voracious reader whose interests span science fiction, philosophy, biography, product design, business, technology, and other disciplines. Musk credits his study of physics with giving him a counterintuitive way of thinking. I. TECHNOLOGY AND INNOVATION POWERPOINTS Slide 4 Technology and Innovation Slide 5 Examples of Different Types of Innovation Slide 6 Forces Driving Technological Development Slide 7 Exhibit 17.2 Technology Life Cycle Slide 8 Exhibit 17.3 Diffusion of Technological Innovations Slide 9- Diffusion of Technological Innovations Slide 10- Social Enterprise Slide 11- Social Enterprise Questions LO 1: List the types of processes that spur the development of new technologies. A. Technology is the systematic application of scientific knowledge to a new product, process, or service. Innovation is a change in technology; a positive, useful departure from previous ways of doing things. There are three types of innovation: 1. Product 2. Process 3. Business model B. The forces driving technological development and the patterns they follow: 1. There must be a need, or demand, for the technology. 2. Meeting the need must be theoretically possible, and the knowledge to do so must be available from basic science. 3. We must be able to convert the scientific knowledge into practice, in both engineering and economic terms. 4. The funding, skilled labor, time, space, and other resources needed to develop the technology must be available. 5. The entrepreneurial initiative is needed to identify and pull all the necessary elements together. Example 17.1 – Forces driving technological development: All over the world, countries are looking to create new industries to ensure they have good jobs for their people in the future. To create markets for new technologies, the European Union is setting community-wide performance standards across its 25 members, including targets for renewable energies, fuel-efficiency standards for automobiles, greenhouse-gas emission reductions, recycling and other initiatives. CONNECT Click and Drag: Busting Bureaucracy for Innovation at MTV (Keyboard navigable alternate version available.) SUMMARY The goal of this activity is to demonstrate the factors that can influence innovation in organizations. This exercise highlights how MTV has fostered a culture of innovation, an open and active environment in which new ideas are encouraged from a variety of personalities and perspectives. MTV takes the approach that if a concept holds up to quantitative and qualitative business analysis, it can spawn a new venture no matter whose idea it was. ACTIVITY The exercise presents an overview of how MTV has been successful in and by fostering innovation. The case is followed by exercise matching organizational methods with case inserts. CLASS DISCUSSION IDEAS Students might discuss any other innovative companies that they know, finding similarities with the methods used at MTV. An alternative question might be what methods MTV used in the higher-education setting. CONNECT Video Case: Managing Innovation at Cirque du Soleil SUMMARY In a marketplace where technology and rapid innovation are critical for success, managers must understand how technologies emerge, develop, and change the ways organizations compete and the ways people work. Cirque du Soleil is a Quebec-based company recognized the world over for high-quality, artistic entertainment. Since its dawn in 1984, Cirque du Soleil has constantly sought to evoke the imagination, invoke the senses, and provoke the emotions of people around the world. More than 100 million spectators have seen a Cirque du Soleil show since 1984. ACTIVITY The activity presents a 10-minute video on how Cirque du Soleil set out to reinvent the circus. Case points are reviewed in the activity’s multiple-choice questions. CLASS DISCUSSION IDEAS A class discussion could revolve around student ideas on how Cirque du Soleil has remained innovative since its founding. Is Cirque du Soleil correct when it says it can’t be copied? LO 2: Describe how technologies proceed through a life cycle. C. Technology Life Cycle 1. The technology life cycle is a predictable pattern followed by a technological innovation starting from its inception and development to market saturation and replacement. (Exhibit 17.2) D. Diffusion of technological innovationS 1. The spread in the use of a new technology over-time follows an S-shaped pattern having adopters falling into five groups: (Exhibit 17.3) a. Innovators – adventurous, but could be headstrong or even extreme. b. Early adopters – members include well-respected opinion leaders. c. Early majority – deliberate and take longer to decide to use something new. d. Late majority – skeptical of technological change and approach innovation with great caution. e. Laggards – often isolated and highly conservative in their views. CONNECT Case Analysis: At What Rate Would Post-It Notes Diffuse? SUMMARY Like the technology life cycle, the adoption of new technology over time follows an S-shaped pattern. The percentage of people using the technology is small in the beginning but increases dramatically as the technology succeeds and spreads through the population. Eventually the number of users peaks and levels off when the market for the technology is saturated. This case features the 3M product Post-it Notes. The history of Post-it Notes is often used as an example of how innovation occurs. After their official launch in the late 1970s and early 1980s, Post-it Notes have changed the way we all experience our daily lives. According to the company's website, Post-it Brand boasts more than 4,000 unique products and has become one of the most well-known and beloved brands in the world. ACTIVITY Students read a brief background review then the short history of the product. A series of multiple-choice questions applies innovation terms to elements of the case. CLASS DISCUSSION IDEAS The instructor may wish to extend the conversation to discuss how the culture of 3M allowed the inventor of the adhesive product, appearing initially to be “failure,” not be sanctioned. Why does an innovative culture demand tolerance for failure? Example 17.2 – Technology life cycle: ATMs started as a simple money dispensing device. But today’s ATM’s are Windows-based computers, capable of handling a wide variety of transactions, from transferring funds between accounts to check imagining. As the technology gets more complex, banks are starting to outsource ATM operations and maintenance. Different companies focus on different aspects of ATM operations. For example, Rob Evans, a director of institutional marketing for ATM hardware and service vendor NCR says “Our sweet spot is the information processing, imaging and automation slice, and others focus more intently on other parts of the business, but the complexity of today’s ATM means that there are a lot of moving parts, and it’s more of a struggle than ever before to do it all yourself.” Multiple Generations at Work Tech-savvy Gen Z Is Entering the Workforce When it comes to work expectations, Gen Zers differ from Millennials in several ways, including: Desiring financial stability Expecting Flexible work arrangements Attracted by Cutting Edge Technology Preferring face-to-face time with managers Have entrepreneurial orientations particularly towards their careers. Example 17.3 - Cannibalization: Some have criticized Apple’s overlapping product offerings because of new products’ potential to cannibalize other offerings. However, CEO Tim Cook describes why the company is not concerned about cannibalization: “In terms of cannibalization, I see cannibalization as a huge opportunity for us. One, our base philosophy is to never fear cannibalization. If we do, someone else will cannibalize it. We know that iPhone has cannibalized some iPod business; we know iPad will cannibalize some Mac, that doesn't worry us. On iPad in particular, we have the mother of all opportunities because the Windows market is much, much larger than the Mac market. It is clear that it is already cannibalizing some. I believe the tablet market will be larger than the PC market at some point, and I still believe that.” II. TECHNOLOGY LEADERSHIP AND FOLLWERSHIP POWERPOINTS Slide 12 Advantages and Disadvantages of Technology Leadership Slide 13 Technology Followership LO 3: Discuss ways to manage technology for a competitive advantage. A. Technology leadership (Exhibit 17.4) 1. Advantages of technology leadership a. First mover advantage b. Little or no competition c. Greater efficiency d. Higher profit margins e. Sustainable advantage f. Reputation for innovation g. Establishment of entry barriers h. Occupying of best market niches i. Opportunities to learn 2. Disadvantages of technology leadership a. Greater risks b. Cost of technology development c. Costs of market development and customer education d. Infrastructure costs e. Costs of learning and eliminating defects f. Possible cannibalization of existing products CONNECT ISeeIt! Animated Video: Innovation SUMMARY The goal of this activity is to demonstrate student understanding of the role innovation plays in building a firm’s competitive advantage. The video presents how innovation is different from invention. Understanding the nature of innovation and how it impacts the managerial process is integral to a manager’s ability to successfully guide their firm. ACTIVITY The activity presents a four-minute animated lecture followed by a series of multiple-choice questions. CLASS DISCUSSION IDEAS The class discussion could spring from having students give examples of product and process innovation. B. Technology Followership 1. Technology followership depends on: a. How a company positions itself to compete. b. The benefits gained through the use of a technology. c. The characteristics of the organization. III. ASSESSING TECHNOLOGY NEEDS POWERPOINTS Slide 14 Assessing Technology Needs Slide 15 Assessing External Technological Trends LO 4: Summarize how to assess technology needs. A. Measuring Current Technologies 1. A technology audit helps to clarify the key technologies upon which an organization depends. 2. The technique for measuring competitive value categorizes technologies as emerging, pacing, key, and base. a. Emerging – technologies that are still under development and thus are unproven b. Pacing – Have yet to prove their full value but have the potential to alter the rules of competition by providing a significant advantage. c. Key – Have proved effective, but provide a strategic advantage because not everyone uses them d. Base – those that are commonplace in the industry; everyone must have them to be able to operate B. Assessing External Technological Trends 1. Benchmarking is the process of comparing the organization’s practices and technologies with those of other companies. 2. Scanning focuses on what can be done and what is being developed. Example 17.4 – Benchmarking & scanning: The Internet has made staying abreast of technology trends and benchmarking other companies infinitely easier. For example, ZDnet.com has a blog website that included over 5,000 articles on tablets, nearly 3,000 featuring Amazon, and over 15,000 related to Apple in December 2013. IV. MAKING TECHNOLOGY DECISIONS POWERPOINTS Slide 16 Framing Decisions about Technological Innovation LO 5: Identify alternative methods of pursuing technological innovation. A. Anticipated Market Receptiveness – the first consideration that needs to be addressed when developing a strategy around technological innovations is market potential. B. Technological Feasibility – visions can stay unrealized for a long time – technical obstacles may represent barriers to progress. C. Economic Viability – executives must consider whether there is a good financial incentive for doing so. D. Anticipated Competency Development – organizations should (and do) build their strategies based on core competencies. E. Organizational Suitability – culture of the organization, interests of managers, and the expectations of stakeholders. Example 17.5 – Pursuing new technology: New technologies can be acquired or developed. NEC Corporation chose to acquire 51% of the shares in Chinese IT total solution provider Beijing Chang Yi Information Technologies Co., Ltd. This acquisition was done in order to expand in the Chinese information systems market. Management in Action – Progress Report The Challenging Road for Tesla Motors For Tesla to continue leading in what founder and CEO Elon Musk sees as the future of driving, it must sell enough electric vehicles at a sufficient profit. The federal government is helping with a tax credit of $7,500 on the purchase of an electric vehicle (it also loaned Tesla $465 million). And, with the help of a new Nevada factory and a partnership with Panasonic, the company will hugely increase its output of lithium-ion cells and battery packs. Rather than using a dealership system, the company opened stores in upscale shopping centers. Telsa has also built a network of Supercharger stations, where 30 minutes of charging provides up to 170 miles of rage.• What are the advantages and disadvantages to Tesla Motors in being a technology leader? Like other technology leaders, Tesla has the potential to earn high profits on its early luxury brands. If its leadership increases its efficiency over competitors, it also can enjoy high profits at the beginning, which it can invest in growth, or it can lower prices to carve out a large market share. The reputation as an innovator with an eco-friendly product also can create a sustainable advantage by giving Tesla a strong reputation. As a first mover, Tesla may be able to occupy the best market niches and enjoy a significant learning advantage. Disadvantages include the high risk of entering a new market with a relatively unfamiliar product. There are high costs in introducing vehicles that need charging stations, rather than being able to use the existing network of gasoline pumps. Tesla also must spend money to educate consumers about its product category as well as the brand. Innovation as a marketer also places Tesla in the difficult situation of trying to operate stores that compete with established auto dealerships. • How has Tesla Motors addressed market receptiveness, technological feasibility, and economic viability? It addressed market receptiveness by designing a vehicle that is a pleasure to drive and addressing a key concern about electric cars by engineering a battery that can last 240 miles. It addressed technological feasibility with an all-out effort to design a superior car and battery. It addressed economic viability by catering first to the luxury segment of the market with plans to move to lower-priced segments as the technology matures. A federal tax credit for the purchase of electric vehicles also has helped with economic viability. V. SOURCING AND ACQUITING NEW TECHNOLOGIES POWERPOINTS Slide 17 Sourcing and Acquiring New Technologies Slide 18 Exhibit 17.6 Technology Acquisition Options A. Make-or-buy decision is the question an organization asks itself about whether to acquire new technology from an outside source or develop it itself. 1. Internal Development – keeping technology proprietary (exclusive to the organization). 2. Purchase – simplest, easiest, and most cost-effective way to acquire new technology. 3. Contracted Development – contract the development from outside sources. 4. Licensing – technologies can be licensed for a fee. 5. Technology Trading – sometimes used between rival companies. 6. Research Partnerships and Joint Ventures – arrangements designed to jointly pursue specific new-technology development. 7. Acquiring a Technology Owner – one option is to purchase the company that owns the technology. VI. TECHNOLOGY AND MANGERIAL ROLES POWERPOINTS Slide 19 Technology and Managerial Roles Slide 20 Key Technology Roles LO 6: Define key roles in managing technology. A. Chief information officer (CIO) – executive in charge of technology strategy and development; also often called the chief technology officer (CTO). B. Technical innovator – a person who develops a new technology or has the key skills to install and operate the technology. C. Product champion – a person who promotes a new technology throughout the organization in an effort to obtain acceptance of and support for it. D. Executive champion – an executive who supports a new technology and protects the product champion of the innovation. Example 17.6 – Executive champions: Executive champions must know how to nurture creative employees, and it’s not always easy. But according to managers from a design firm, a branding consultancy, and a team of computer programmers, you can get high performance by following eight simple rules: 1. Recruit for diversity, hire for philosophy. Seeing things differently is important in maintaining a creative environment, but you also need to be sure that all of your employees are driven by the same basic vision or goal. 2. Rehab the neighborhood. It’s hard to be creative when you’re stuck in a boring cubicle. 3. Within limits, let them make the rules. People need time and space to be creative and creative people know how much time and space they need. But ultimately, creative people have to deliver, and the manager’s job is to let them set the schedule, then hold them to it. 4. Keep their eyes on the prize. Creative people get bored easily — find ways to make sure products don’t just get dreamed up, but actually, get completed. 5. Feed their heads. Creativity flourishes when people get more ideas — both in their own field and outside of it. 6. Teach them a new language. Communication skills can make or break a design presentation. 7. Allow time for blue-sky thinking. At New Integration Technology, Fridays are “non-directional, ” and programmers get to work on projects that aren’t part of their jobs. 8. Protect your team from creativity killers. Creative people are personally connected with their work, and when they receive criticism, they take it personally and stop working. Don’t reject a project — just be very specific about the objectives of the project. 9. Add a liberal dose of fun. Being creative is hard work, and pizza and Nerf football help! VII. ORGANIZING FOR INNOVATION POWERPOINTS Slide 21 Exhibit 17.7 Requirements for Innovation Slide 22 Organizing for Innovation Slide 23 Elements Essential to Innovation Slide 24 Technology and Human Resources Slide 25 Management in Action Slide 26 Management in Action Questions Slide 27 In Review LO 7: Define the elements of an innovative organization. A. Organizations can exploit for innovation (e.g., increase production speed) or can explore new knowledge (develop new products) (Exhibit 17.6) B. Unleashing Creativity (Exhibit 17.7) 1. Intrapreneurship is important for organizational innovation 2. Celebrating failure is also important for innovation 3. Example of 3M C. Bureaucracy Busting 1. Bureaucracy busting fosters innovation, but pure organic structures can have efficiency costs. 2. Companies create special units to operate organically, called skunkworks, greenhouses, reserves. Example 17.7 – Bureaucracy busting: In October 2007, The Economist had a special report on innovation which started with a description of a meeting at Googleplex, Google’s headquarters in California. Larry Page, one of the founders of Google, was talking with Vinod Khosla, one of the founders of Sun Microsystems. These two industry tycoons want nothing less than to overthrow the traditional U.S. auto manufacturing process, creating a car with sophisticated computerized systems, low emissions, and high mileage. As the author of the article points out, “…clean cars, using advanced biofuels or other alternatives, will come about only through radical innovation of the sort that Big Oil and Big Autos avoid.” LO 8: List characteristics of successful development projects. D. Design thinking is a human-centered approach to innovation that integrates customer needs, the potential technology, and requirements for business success. E. Implementing Development Projects 1. Development project is a focused organizational effort to create a new product or process via technological advances. 2. Development projects typically feature a special cross-sectional team that works together on an overall concept or idea. F. Technology, Job Design, and Human Resources 1. Sociotechnical systems are an approach to job design that attempts to redesign tasks to optimize the operation of new technology while preserving employees’ interpersonal relationships and other human aspects of the work. 2. This approach redesigns tasks in a manner that jointly optimizes the social and technical efficiency of work. Management in Action – Onward Elon Musk’s SpaceX Is Headed to Mars Elon Musk founded SpaceX to design, manufacture, and launch rockets and spacecraft. Its mission is simple: to allow humans to live on other planets. Despite some initial failures, SpaceX has won NASA’s applause and praise for undertaking the $10 billion effort to support “a sustainable human presence on Mars.” SpaceX, a private company, currently carries people and supplies to the International Space Station and launches satellites into Earth’s orbit, earning revenue from NASA that Musk hopes will help pay for the Mars missions. The U.S. Air Force has also contributed about $34 million to the development of the rocket. •Is SpaceX a prospector, a defender, or an analyzer firm? Why? SpaceX’s focus on innovation and developing of a market that currently does not exist will lead most students to argue that it is a prospector. Some students may argue for analyzer as Musk is looking for opportunities to exploit its ability his organization’s develop and deploy technology. •How well is Elon Musk managing the technological and economic viability of SpaceX’s Mars mission? While answers will vary, the use of government-funded space station support missions to develop technology and fund further research are arguments for SpaceX’s economic viability. BOTTOM LINE Why does innovation matter for a service business? Innovation is more than designing and selling the latest gadget (an invention). A service company can innovate to improve the way it communicates, identifies market needs, prepares the service it will deliver, sets up its facilities, and much more. This question invites students to begin thinking about the scope of innovation in organizations. How can innovation support a low-cost strategy? Possibilities include improving the efficiency of operations and/or the supply chain, locating the best prices on materials and supplies, and helping the company develop lower-cost product designs. How can being a follower help reduce costs? The follower can learn from the leader’s experience, avoiding the costs and risks of developing something new. For example, Microsoft didn’t have to spend advertising dollars to convince people of the benefits of doing word processing on a personal computer; leaders in the industry were already doing that. What are some limits on benchmarking as a source of technology ideas? Companies in the same industry will tend to be reluctant about sharing details of their technology. Also, as noted in Chapter 4’s description of benchmarking, the practice only helps organizations do as well as the companies they benchmark. Companies should try to excel, not just match the competition. These are reasons why benchmarking success stories often involve studying organizations in different industries than one’s own. Say an innovation is exciting but unprofitable. What are the risks of pursuing it anyway? The basic risk is that the organization will lose money because it pursued an unprofitable idea. It might be tempting to pursue the idea anyway, say, as a means of gaining prestige or name recognition. But at worst, this kind of decision can drive an organization out of business—and perhaps a competitor will then step up to exploit the idea successfully, building on the lessons learned from the failed attempt. A wiser course might be to explore whether there is a different way to pursue the innovation or a way to modify the innovation so that it becomes economically viable. What is the main downside of this way to acquire technology? Purchasing technology gives the organization technology that is available to others, so the purchase does not, in itself, deliver any competitive advantage. At best, it lets the buyer keep up with the competition. Name one way to “bust bureaucracy.” The ideas mentioned in the text are to establish temporary project structures operating under their own rules, give employees time to work on their own ideas, conduct programs such as Intuit’s “idea jams,” and design work to foster collaboration (for example, flat structures and cross-functional teams). Students may have other ideas as well. SOCIAL ENTERPRISES Piramal Sarvajal Provides Clean Water via “Water ATMs” Piramal Sarvajal is a social enterprise dedicated to leveraging technology to help remedy this urgent health problem. Founded by Anand Shah in 2008, the organization currently serves 320,000 consumers every day via nearly 600 innovative “water ATMs” installed in 14 of India’s 29 states. Centralized water treatment plants are expensive, and pipelines can bring water only so far, meaning the country’s more remote populations would still face the problem of carrying heavy containers over long distances to their homes. This time-consuming daily chore often falls to women and girls. The Sarvajal solution was to build local water-treatment plants and then distribute the clean water through solar-powered vending machines available 24 hours a day. Customers use their mobile phones to buy prepaid, refillable cards that allow them to purchase a specific amount of water and collect it in their own containers for the relatively short trip home. 1. How would you classify Sarvajal’s water ATMs? Does it represent a process or product innovation (or both)? Student answers will vary, but the process, product or both make sense in this scenario. There is an overall process in water security, starting with the low-cost product that Sarvajal has developed. The product is just one part of an overall process of assisting those in low-income areas avoid health issues. 2. Would you expect the technology that powers water ATMs to follow the typical S-shaped pattern of diffusion? Why or why not? Student answers will vary. Students may say yes explaining that the technology will expand through India and other non-water secure areas until the needs are met by other means. Students may also say no as there is a limited and defined market, the water ATM may be the dominant technology already and the utility of the product will fall to near zero once large-scale water projects are completed. LECTURETTES LECTURETTE 17.1: Intuition and Innovation INTUITION DEFINED Intuition may be defined as a way of knowing, a way of perceiving alternatives, the ability to see the big picture, the ability to have a sense of what is going to happen and the ability to react accordingly. Intuitive people react especially well in crises or new situations that demand innovative and creative approaches. The intuitive manager is seen to (1) foresee the future; (2) perceive possibilities in all situations; (3) provide new ideas; (4) deal successfully with complexity and with insufficient or incomplete information; (5) supply ingenuity; and (6) motivate people to do what may have been perceived to be impossible. INTUITION AND DECISION-MAKING 1. Confronted by a world of accelerating change, corporate America is finding that old techniques and old processes simply will not meet the test of competition. The conditions and players in the marketplace change so rapidly that time-consuming analytical decision-making procedures often leave a company behind its competitors. In order to meet the challenges of complexity and timeliness, managers must learn to react intuitively to the major environmental trends. 2. Until recently, managers formulated future actions based on left-brain, analytical techniques such as PERT, MBO, and rational decision-making models. However, such methods are proving to be insufficient in situations where decisions are forced by rapid change and crises. In such situations, successful managers are turning to intuition. 3. Intuition is a brain skill that is especially appropriate for decision-making when (I) there are limited facts; (2) the facts themselves do not provide directional answers; (3) there are a number of plausible alternatives; (4) variables are not scientifically predictable; (5) time is limited; (6) there are few, if any, precedents; (7) there is a high degree of uncertainty; and (8) there is pressure to be right. 4. Management education and training have historically been based on the teaching of deductive, analytical, linear "left brain" skills, with little, if any, attention devoted to the teaching of inductive, relational, and nonlinear skills, such as intuition. Therefore, today's manager is not well trained to meet the decision-making challenges that must be faced every day. Thus, American b-schools must restructure their curricula in order to train managers in left-brain, right brain, and integrative decision-making techniques (the interchangeable use of left-brain and right-brain skills). LEFT AND RIGHT BRAIN SKILLS 1. The left hemisphere of the brain is responsible for verbalizing—for providing an organized approach to thinking through the application of symbols, numbers, and logically ordered processes. The left brain is adept at the rational, deliberate, step-by-step linkage that represents logical thinking. 2. On the other hand, the right brain has poor verbalizing skills, so is more prone to freely analyze many alternatives at the same time and with no concern for sequence, which allows for the holistic ability to see the total integrated picture as opposed to a sequence of elements. 3. The ideal decision-maker has the ability to move back and forth from the left brain to the right brain as necessary, to maximize the unique advantages of each. THE INTUITIVE MANAGER 1. Experience suggests that the following characteristics are typical of the intuitive manager: (1) positive self-image; (2) curiosity; (3) independence; (4) inner-directed personality; (5) risk-taker; (6) preference for informality; (7) preference for action; (8) solution-oriented; and (9) does not try to be all things to all people. 2. Intuition is found to be most effective in situations where: (I) the manager needs an innovative course of action; (2) the manager has a large bank of previous experience and information that needs integration; (3) the manager has a high degree of self-awareness; (4) the manager faces a situation that is difficult to explain in language form; (5) the manager faces a situation that does not lend itself to sequential steps; and (6) the manager has just made a critical decision and must now be alert for errors in implementation. DEVELOPMENT INTUITIVE SKILLS 1. Intuitive managers suggest that subordinates can learn to be more intuitive by following a five-step decision-making process: STEP I Learn to recognize the intuitive experience. STEP 2 Become aware of the soft facts (feelings and impressions) as well as the hard facts (data). STEP 3 Use intuition to make choices—even simple choices to gain practice and experience. STEP 4 Observe how intuition is expressed (images, voices, muscle changes, etc.). STEP 5 Become aware of and reduce those things that disrupt intuitive thinking. 2. Intuitive managers usually employ a variety of techniques designed to further develop their intuitive senses. Such techniques include: 1. Playing freely with ideas without a specific goal in mind. 2. Practicing guided imagery. 3. Practicing the toleration of ambiguity and accepting lack of control. 4. Practicing flexibility and openness to the unknown as they appear. 5. Practicing concentration. 6. Thinking of unique solutions. 7. Following up on points that have no factual justification. 3. Analytical exercises designed to improve intuitive thinking include: (1) discussing issues with those with different perspectives; (2) concentrating on listening to not just what is said but how it's said; (3) totally immersing oneself in an issue; (4) identifying pros and cons and feelings about both; (5) dealing with problems only when most alert; (6) tuning-in to reactions to external stimuli; (7) analyzing dreams; (8) insisting on a "creative pause" before making a final decision; and (9) asking "What do I want to do?" and "What is the right thing to do?" LECTURETTE 17.2: eBay CEO Outlines Winning Strategies MEG WHITMAN REVEALS KEYS TO AUCTION GIANT’S CONTINUED SUCCESS 1. eBay’s growing customer base, category and geographic expansion and a stronger emphasis on fixed-price purchases as areas of focus for the successful Internet marketplace. SUCCESS MODELS FOR THE FUTURE OF E-COMMERCE 1. Two winning e-business models for the future: “Clicks and bricks” – brands such as Sears expand marketing and order/delivery services to the Internet. “Pure play” – business that could not and would not exist without the Internet. 2. eBay has introduced efficiency by bringing unlikely buyers and sellers together. 3. Business models have been adaptable, resilient, and able to operate with little capital expense from the start. EXPANSION IN COMPUTERS AND ELECTRONICS 1. eBay’s expansion of its computers and electronics categories. 2. New sellers on the site include IBM, Palm, Dell, and Sun Microsystems: WHITMAN TALKS TO TECH TV 1. IT portion of eBay’s business would be a very important part of eBay’s future growth strategy. 2. eBay will continue its geographic expansion, focusing on developing its existing international sites. 3. The company expects to see major growth in the area of fixed price buying, which it offers in addition to its auctions. 4. eBay will continue to grow in the United States, expanding existing categories such as computer and tickets, and adding new categories in areas like autos and real estate. Weiss, Laralynn. “eBay CEO Outlines Winning Strategies.” TechTV 14 Nov. 2001. Instructor Manual for Management: Leading and Collaborating in a Competitive World Thomas S. Bateman, Scott A. Snell, Robert Konopaske 9781259927645, 9781259546945