MGMT
521: Strategic Management of Innovation and Technology
Instructor:
Phone: 206-369-7248
Email :emer@u.washington.edu
Class Hours: Monday and
Wednesday
Office Hours: Monday and
Wednesday
Course Objectives
Innovation and new product
development are crucial sources of competitive advantage. This is as true today
as it was when the seed drill, plow, spinning jenny and steam engine started
the industrial revolution 250 years ago. This class will examine the centrality
of technology and innovation to competitive advantage from a number of angles
and explore some interesting topics such as why:
·
Innovators may not profit from
innovation
·
Good management can be fatal; Bad
management can lead to success.
·
Winning market share can mean losing
the war
·
Failure can be an asset and success a
liability
The course will be divided
into the following sections.
- Are the dynamics of competition in technology
industries different?
- Is it possible to make big strategic bets successfully?
- What strategies should companies use to direct
innovation?
- Can large companies innovate successfully?
- What broader issues affect the success of
technology-based companies?
Teaching Method
The course is a mix of
cases, readings, lectures and a group project. Emphasis will be on case
analysis and the project. Cases are on technology companies such as Intel,
Monsanto, 3M, HP and Red Hat; the industries span the gamut from agricultural
biotechnology to semiconductors. Since case studies concentrate on large (i.e.
in this context, abstract) corporations, you will be required to work with a
local high tech company on a real problem to add some balance, as detailed
below.
Grading
Course grade will be assigned as follows:
Not-quite-midterm exam: 30%
Group project
Oral
presentation 15%
Written
report 25%
Peer
review 10%
Class participation. 20%
Project
The group paper should
research an industry and one firm which is (or hopes to be) a player in this
industry. The analysis of the firm and its market, using the concepts and
frameworks of the course should not exceed 10 pages (excluding appendices) and
consist of the following sections:
Industry analysis:
What are the key markets and technology trends that this innovation
addresses? Technologies or markets you might look at include proteomics, RFID,
the future of voice communications, WiFi, audio
electronics, space, biotechnology, semiconductors, retail, real
estate??
E.g. (Some!) Key market trends for wireless
email:
·
Growth
in the number of mobile professionals
·
Growth
in internal corporate use; displacement of wired communication
·
Wireless
email installed base and growth in availability of WiFi
·
Saturation of the PC space
driving alternative growth paths
·
Generation of wired individuals: Early adopters on 5th
or 6th device; Laggards on 1st.
Technology trends
·
Standards battles Wifi
802.11x
·
WPA-2
security standard
·
Connection speed issues and broadband
·
Etc. etc. etc.
Company profile: Pick one company, or division
within a company that you can gain access
to that competes in this space. Outline (briefly) the history of the
company, explain the technology and describe the market advantage the company
has, and its plan for disruption.
Assessment: Your assessment of the firm’s
strategy using the principles we have covered in class and recommendations for
going forward.
Required Appendix: At least one company interview in
full text: Q&A format.
Report grading: Four equally weighted criteria:
1.
Is the analysis insightful? Does it go beyond describing what happened
and speculate on why it happened
2. How well the class concepts are
integrated
3. Readability, ease of explanation of
concepts and ideas, structure and grammar.
4. Relevance and usefulness of
recommendations.
Class Schedule
Part I: Competition in technology driven industries
Monday, January 3rd
Lecture:
Innovation, competition and competitive advantage
Part II:
Strategy and Corporate Innovation: The giants of R&D
Wednesday
January 5th
Lecture:
Technology Strategy- different models for R&D
Movie: Silicon Magic
Monday, January 10th
Case: Intel Labs (A) Photolithography strategy in crisis
http://www.genus.com/investor/primer.html
Semiconductor primer
Wednesday January 12th
Case:
Monsanto’s march into biotechnology [A]
Short lecture: Biotechnology industry in 2005
Monday
January 17th
No class. Martin Luther King
Holiday
Wednesday
January 19th
Case: Intel Corp. 1968-2003
Guest: Matt Gordon, Intel Capital
Monday
January 24th
Case: Airbus A3XX: Developing the world's largest commercial
jet (A)
.
Wednesday,
January 26th
Case:
HP The flight of the Kittyhawk
Part III: Fostering Innovation in the corporation
Monday,
January 31st
Case:
Innovation at 3M Corporation (A)
Wednesday
February 2nd
Case:
Boeing and the 7E7
Guest: John Feren VP Sales, Marketing and
In-service Support, Boeing 7E7
Part IV Managing the New Product Development Process
Monday, February 7th Internal Development
Case: Linking
Strategy and Innovation: Materials Technology Corporation.
Wednesday
February 9th Distributed Development
Case:
Red Hat and the Linux Revolution
Monday,
February 14th Alliance/Partnering for development
Case:
Wednesday
February 16th Leveraging the development of
others
Case: Virgin Mobile
Monday
February 21st
Presidents
Day –
Wednesday,
February 23rd
Exam
Part V Broader issues in technology strategy
Monday
February 28th Biotechnology and bioengineered foods
Read: Pharmagedon,
Michael Specter, New Yorker, 2000
Wednesday
March 2nd Outsourcing and the future
Read: Economist special on outsourcing
Guest:
Monday
March 7th and 9th
Group
presentations
Other
important deadlines
Project
one-page proposal due Wednesday January 19th
Should include list of group members, the industry
and company to be covered, and the name of the person you want to contact in
the firm.
Draft
for review due Wednesday February 16th.
Should be a draft that outlines all the sections you
hope to cover and the text of the interview with your company contact.
Case preparation questions
Monday January 10th
Case: Intel Labs (A)
Photolithography strategy in crisis
1.
Is Intel’s photolithography strategy in crisis?
2.
How would you compare Intel’s and IBM’s R&D
organization and spending? How would you characterize the success of each?
3.
What are the limits to a distributed research model?
4.
What are the pros and cons of each of
Wednesday January 12th
Case: Monsanto’s march
into biotechnology [A]
1.
How is technology policy formulated at Monsanto?
What are the advantages and disadvantages of that approach?
2.
What does it mean to become a “World force in
biotechnology?” What capabilities will Monsanto need?
3.
What direction should Monsanto biotechnology
research take? What areas of opportunity should it emphasize?
4.
How should Monsanto organize research? By function
or market?
5.
What are the likely outcomes of Monsanto’s bet?
Wednesday January 19th
Case: Intel Corp. 1968-2003
- How well is Intel positioned today?
- What challenges internal and external is Intel facing?
- What would you propose to the board? Please explain the rationale of any strategic moves.
Monday January 24th
Case: Airbus A3XX:
Developing the world's largest commercial jet (A)
1. Why is Airbus building the A380?
What are its objectives?
2. How many aircraft does Airbus need
to sell to break even on the investment? Is this more or less that the
projected number of VLAs estimated for the next 20
years?
I will
email a spreadsheet for you to work though your assumptions on this. To
calculate the breakeven number: Calculate the present value of the required
investment. Then calculate the present value of the cash flows from their
projections of aircraft sales. Assume a risk premium of 6% .
3. As Boeing, how do you respond to this?
4. Is Airbus making the right decision?
Wednesday, January 26th
Case: HP The flight of
the Kittyhawk
1. How would you rate the strengths and
weaknesses of the way HP structured and supported the Kittyhawk
development team?
2. What do you think of the way the team
set out to find a market for the Kittyhawk? What did
they do right or wrong?
3. What do you think are the root
causes of failure of the Kittyhawk program? Is there
any way HP could have avoided those failures by addressing the root causes?
Monday, January 31st
Case: Innovation at 3M
Corporation (A)
1. How has 3M’s innovation process
evolved since the company was founded? Why, if at all, does 3M, known as a
“hothouse of innovation” need to regain its historic closeness to the customer?
2. How does the lead-user-research
method differ from, and complement other traditional market research methods?
3. Has the surgical-medical team
applied the lead-user research process successfully? Why or why not?
4. What should the team recommend to
Dunlop? What are the risks: To the team and to the lead-user research process?
Wednesday February 2nd
Case: Boeing and the
7E7
1. What market is Boeing addressing?
2. What are the key features of the
7E7?
3. How does Boeing plan to bring the
7E7 to market?
4. How will the 7E7 affect Boeing’s
future?
Monday February 7th Internal Development
Case: Linking Strategy
and Innovation: Materials Technology Corporation.
1.
How would you characterize the various projects MTC
has undertaken, in the framework proposed by Wheelwright and Clark?
2.
Is this the right set of projects for MTC?
3.
How many projects does MTC have the capacity to have
underway at any point in time?
4.
If you were advising Spencer Quinn on how to build
MTC into a successful company, what would you tell him?
Wednesday February 9th Distributed Development
Case: Red Hat and the
Linux Revolution
1. Why has open source software been so
successful? What do you think the limits are to its application?
2. How can Red Hat best exploit the
opportunity created by open source going forward?
3. What should Young do? Specifically
should he fund the development of Linux applications?
Monday, February 14th Alliance/Partnering for
development
Case:
1.
How has the drug discovery
and the biotechnology industry changed over the last few years? How has Cambridge
Laboratories competed since it was founded? How has it managed its growth?
2.
As Paul Henderson what questions do you want
answered before you invest/ What’s your due diligence
list?
3.
How do the business models of the two firms
compare/contrast?
4.
How do the two cultures compare/contrast?
5.
Should Cambridge Labs invest in Cantebury
Proteomics? Why or why not?
Wednesday February 16th
Case: Virgin Mobile
1.
What is Virgin Mobile’s target market? How should
this influence its market entry strategy? Which pricing
option would you choose and why?
2.
The cellular industry is notorious for churn. What
is the source of this customer dissatisfaction? How have the various variable
pricing variables (contracts, pricing buckets, hidden fees, off-peak etc ) affected the customer experience?
3.
How do the major carriers make money in this
industry? Is there a financial logic underlying the pricing approach?
4.
What do you think of Virgin Mobile’s value
proposition, channel and merchandising strategy?
5.
What do you think of Virgin’s market segments
selection? Why do they see a gap here?