Bringing Technology and Innovation into the Boardroom Strategy, Innovation and Competences for Business Value European Institute for Technology and Innovation Management Bringing Technology and Innovation into the Boardroom This page intentionally left blank Bringing Technology and Innovation into the Boardroom Strategy, Innovation and Competences for Business Value European Institute for Technology and Innovation Management Selection and editorial matter © David Probert, Ove Granstrand, Arie Nagel, Breffni Tomlin, Cornelius Herstatt, Hugo Tschirky, and Thomas Durand 2004 Foreword © Erkki Liikanen 2004 Individual chapters © contributors 2004 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London W1T 4LP. Any person who does any unauthorized act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The authors have asserted their rights to be identified as the authors of this work in accordance with the Copyright, Designs and Patents Act 1988. First published 2003 by PALGRAVE MACMILLAN Houndmills, Basingstoke, Hampshire RG21 6XS and 175 Fifth Avenue, New York, N.Y. 10010 Companies and representatives throughout the world PALGRAVE MACMILLAN is the global academic imprint of the Palgrave Macmillan division of St. Martin’s Press, LLC and of Palgrave Macmillan Ltd. Macmillan ® is a registered trademark in the United States, United Kingdom and other countries. Palgrave is a registered trademark in the European Union and other countries. ISBN 0–333–99459–0 This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. A catalogue record for this book is available from the British Library. Library of Congress Cataloging-in-Publication Data Bringing technology and innovation into the boardroom: strategy, innovation, and competences for business value / Thomas Durand [et al.]. p. cm. Includes bibliographical references and index. ISBN 0–333–99459–0 (cloth) 1. Technological innovations – European Union countries – Management. 2. Strategic planning – European Union countries. 3. Industrial management – European Union countries. 4. Organizational effectiveness. I. Durand, Thomas. HD45.B685 2003 658.4´012—dc21 2003054754 10987654321 12 11 10 09 08 07 06 05 04 03 Printed and bound in Great Britain by Antony Rowe Ltd, Chippenham and Eastbourne Contents Acknowledgements viii Foreword ix Introduction xi Notes on the Contributors xvii Part I Meeting the Challenge of Technology and Innovation Executive Summary 3 David Probert 1 Wake-up Call for General Management: It’s Technology Time 7 Hugo Tschirky 2 Bringing Technology to the Boardroom: What Does It Mean? 19 Hugo Tschirky 3 The Strategic Management of Technology and Innovation 47 Thomas Durand 4 Structuring a Systematic Approach to Technology Management: Processes and Framework 76 David Probert, Clare Farrukh and Robert Phaal Part II Strategy: Using Technology and Innovation Strategically Executive Summary 95 Thomas Durand 5 Technology in Strategy and Planning 99 Robert Phaal, Clare Farrukh and David Probert 6 Strategic Options When Facing Technological Change: Trigger or Shape, Stretch or Re-deploy? 124 Thomas Durand 7 Multi-Technology Management: The Economics and Management of Technology Diversification 133 Ove Granstrand v vi Contents Part III Competence: Building Up and Exploiting Technology Assets Executive Summary 167 Ove Granstrand and Arie Nagel 8 How to Evaluate Technology Performance: Tasks and Structure of Technology Performance Control 171 Hans-Helmuth Jung and Hugo Tschirky 9 From R&D/Technology Management to IP/IC Management 190 Ove Granstrand 10 Technology Intelligence System: Benefits and Roles of Top Management 220 Pascal Savioz and Hugo Tschirky 11 Technology Marketing: A New Core Competence of Technology-Based Enterprises 237 Jean-Philippe Escher and Hugo Tschirky 12 Changing the Rules of the Game: Strategic Alliances, the New Competitive Weapon 255 Geert Duysters, Arie Nagel and Ash Vasudevan 13 New Challenges for R&D Management 269 Jeff Butler Part IV Innovation: Fostering and Managing the Innovation Process Executive Summary 295 Cornelius Herstatt 14 Promoting Innovation in Organizations Unable to Innovate 299 Thomas Durand 15 Innovation Process Models and Their Evolution 326 Cornelius Herstatt and Birgit Verworn 16 The ‘Fuzzy Front End’ of Innovation 347 Cornelius Herstatt and Birgit Verworn Contents vii 17 Market Research for Radical Innovation 373 Cornelius Herstatt 18 Strategic Decision-Making About Technology-Based Projects: Development and Use of a Risk Reference Framework 387 Johannes I.M. Halman, Jimme A. Keizer and Michael Song Index 411 Acknowledgements This bookhas beencreated bythe combinedefforts ofall EITIMmembers. However, we shouldparticularly like to thank David Probert and Noordin Shehabuddeen at the Centre for Technology Management in the Univer- sity of Cambridge for coordinating this effort, editing the contributions and bringing the vision to reality. The editors, contributors and publishers acknowledge the followingfor permission to reproduce copyright material: Revue Française de Gestion, Cachan, France; Elsevier Ltd, Oxford, UK; Communication & Strategie, Montpellier, France; John Wiley & Sons Ltd., Chichester, UK; Research Studies Press, Baldock, UK. Every effort has been made to contact all copyright-holders, but if any have been inadvertently omitted the publishers will be pleased to make the necessar y arrangement at the earliest opportunity. viii Foreword Innovation and technology help shape a better world. They contribute to serving the needs of citizens and consumers, creating jobs in the econ- omy, while helping preserve the environment in line with a strategy of sustainable development. In this sense, technology and innovation are essential to the competi- tiveness of European firms. Recently, however, Europe has lagged behind other major world economies in the race to innovate – that is to both cre- ate and exploit the opportunities that arise from technological progress, scientific development and the flow of new ideas. This is not simply a matter of R&D, nor is it just a matter of financial resources to be poured into the European system of innovation. It is also a matter of awareness in companies at top management level, adequate organization within and between firms and other institutions, management practices and an understanding of the right market opportunities. This is a major challenge for all of us. The European Commission has the role to promote initiatives which contribute to facing this challenge. The aim of our policy is to reinforce the actions of the Member States, leveraging the transnational dimen- sion to bring a global scope to firms while helping them develop and grow in their specific local contexts. We work at the three levels of aware- ness raising, inter-organizational networking, and dissemination of good management practices. More specifically, the initiatives of the Commis- sion deal with the creation of networks involving the main actors of the innovation system, support to incubators and start-up firms, transna- tional learning anddissemination of goodpractices, support via financial instruments to help fund innovative projects, and more generally the overall promotion of a culture of innovation. In this context, this book is a unique contribution from a group of seven European professors working on technology and innovation management in seven leading scientific and engineering universities in Europe (Cambridge, Centrale Paris, Chalmers, Eindhoven, ETH Zurich, Hambourg-Harburg and UC Dublin). They share the same interest in the theme of innovation and technology management. They joined forces and set up an academic network in their field of work. This book comes as a call which they direct to all of us. They express concerns about the adequacy of boardroom decision-making in ix [...]... volume They will benefit from the four parts of the book: Part I setting the stage (‘Meeting the challenge of technology and innovation ) while each of the subsequent three parts raises a different set of issues around a key dimension (‘Strategy: using technology, and innovation strategically’; ‘Competence: building up and exploiting technology assets’; (and Innovation: fostering and managing the innovation. .. findings and thinking, presented in a way that addresses top management requirements The goal is to secure the economic future of the firm, in the context of a sustainable industry and society Using the ideas and methods in this book, the Board can assess and improve its own ability to deal with the challenge of technology and innovation The key issues in technology management and innovation In raising these...x Foreword addressing innovation- related issues Their call comes at a time when the role and activities of corporate governance are under serious scrutiny They rightly advocate bringing technology and innovation into the boardroom They claim that its absence is not unavoidable – the means exist to provide the board with the necessary support They explain and discuss how In this sense, this... Dublin, Ireland Hugo Tschirky, Swiss Federal Institute of Technology, Zurich Notes on the Contributors Volume editors Thomas Durand is Professor of Business Strategy at Ecole Centrale Paris where he heads the ‘Strategy and Technology research unit and the Technology and Management’ master program (www.ecp.fr) He works in the field of strategic management and the management of technology and innovation. .. provided to assist the implementation of these ideas, and comparisons made with the technology management systems of two company examples Collectively, these four chapters present a comprehensive and coherent view of the issues fundamental to technology and innovation management The importance to the economic success of technologyintensive enterprise is clear, and the means to deal with many of these issues... and exploiting technology assets Fostering and managing the innovation process Figure I.1 EITIM model – bringing technology and innovation into the boardroom to addressing technology management within the firm As Figure I.1 shows, the chapters within each part are written by experts in particular aspects of these issues, thus providing a range of perspectives Each part concludes with the 10 key diagnostic... change in the development of industry and society The challenge this poses for Europe in particular, in contrast with superior performance in the US and other parts of the world, is discussed in the context of the need to integrate technological considerations into top management thinking The role and contribution of technology management in bridging this gap is explained, together with the major potential... this field, and many other examples are also given later in the book Chapter 3 The Strategic Management of Technology and Innovation explores these ideas from a historic review of technology management, and the need to manage the evolution and lifecycle of technologies The relevance of practical links to operations and project management is demonstrated, including such recent organizational innovations... valuable part of the innovation process with tools and techniques to enhance creativity and at the same time make sure the best ideas come through to realisation Other key aspects of a healthy innovation process are an ability to assess and deal with risk, an awareness of the impact of cultural differences on innovation, and balancing radical and incremental innovation Even radical innovation, the most challenging... economics and management of technology and innovation In particular, he has studied innovation, corporate strategy and diversification in multi -technology corporations in Europe, Japan and the USA, as well as various issues related to R&D, intellectual property and intellectual capital more generally He has authored and edited several books and articles on these topics, a recent one being The Economics and . Management Bringing Technology and Innovation into the Boardroom This page intentionally left blank Bringing Technology and Innovation into the Boardroom Strategy,. Bringing Technology and Innovation into the Boardroom Strategy, Innovation and Competences for Business Value European Institute for Technology and Innovation