Technology sourcing

文 / 沈芯菱

Many technological developments and strategies have been discussed in this semester, however, it is necessary to carry out through the organization. Therefore, it is necessary for companies to have a proper organizational learning. Most of the organizational learning from absorption capacity, as Cohen and Levinthal (1990) defined absorption capacity as a firm's ability to recognize the value of new information, assimilate it, and apply it to commercial ends. The absorptive capacity is cumulative, while the companies invest more in R&D, it’s easier to accumulate it in the next one.

Rothaermel and Alexandre (2009) pointed out that due to rapidly changing environments, companies need to create an ambidextrous organization which is a dynamic capability combining internal and external sources of technology. Higher levels of absorptive capacity allow a firm to more fully capture the benefits resulting from ambidexterity in technology sourcing

These articles emphasize the importance of balancing internal and external technology sourcing. However, enterprise resources are limited and often facing difficulties in resource allocation, although many companies are composed of the elites, often ended in failure. The following are examples of Sony and Apple, both of them have excellent absorption and ambidextrous capacity in portable music player market, but why Apple succeeded, Sony failed? This article will explain how the organizational structure impact the technology sourcing strategy.

Sony: the phenomenon of internal competition

Sony take highly specialized division of labor, individual departments to improve earnings, as the concept of ambidextrous competence balancing the sustain and disruptive development. In the short term, Sony reached high effectiveness, and from 1993 to 1997, to profit from 153 billion yen up to 2020 billion yen. However, each department should be self-financing, so they tend to protect their own department, and see the other internal departments as opponents.

As a result, Sony launched seven Walkmans in 1999, which has duplicated functions and overlapped the target customers. They did not have consistent strategy and repeated wasting their resources. The main reason for failing was not the lack of innovation, but the defects of the organization.

Sony only have vertical command system, not the level of synergy mechanism and lack of internal communication, although there are a number of departments to establish the ambidextrous competence, no platform for dialogue with each other, resulting in decline.

Apple: the task-oriented organization

In 2011, while Sony Walkman gradually decline, in contrast, Apple launched iPod with the slogan "1,000 songs in your pocket" and swept the music market. Relative to Sony, Apple has the task-oriented organization, and is not self-financing development, but the entire company calculation of profit and loss, and it maintains in-depth cooperation and cooperative development.

The task-oriented organization can make people from different backgrounds to communicate with each other. When it comes to digital music, Sony thought about improving the functions of Walkman, but Apple figured out across different product categories of ideas.

This is the main reason why Apple succeeded in disruptive innovation. While some overlap of knowledge across individuals is necessary for internal communication, there are benefits to diversity of knowledge structures across individuals. (Cohen and Levinthal ,1990)

Implication of Sony and Apple

There are obviously different organizations between Apple (see figure1) and Sony (see figure2). Sony has traditional hierarchical organizational structure following the layout of a pyramid. Employees may narrow their field of focus and become experts in specific functions but may become competition and isolation. In contrast, Apple has flat structure which removes excess layers of managements improves the coordination and speed of communication between employees. As Apple's organization is suitable for sustaining and disruptive innovations, however, we have to be aware that because Apple has a strong leadership, but once the leader’s aura not in, or to leave the organization, a huge organization easily fall into chaos.

Rothaermel and Alexandre (2009) argued that organizational ambidexterity is not simply achieved through organizational structure, but requires a shared vision, a common set of values, and a reward system that enables managers to resolve the paradox of ambidexterity and harness its benefits. This is a very persuasive point of view for me, because there is no eternal successful business model in the world, but the value is an important driving force for the enterprise to move forward together.

As a consequence, companies should focus on keeping the team line flexible, reflecting on the pay and reward system, and paying attention to the flow of information. It is not easy to build an ambidextrous organization, but the structure itself, combining organizational separation with senior team integration, is easier to come true. Besides, it is worthwhile to research what kind of organization mode is beneficial to the organization absorption and absorptive capacity.

Reference:

Cohen, Wesley M., and Daniel A. Levinthal. "Absorptive capacity: A new perspective on learning and innovation." Administrative science quarterly (1990): 128-152.

Rothaermel, Frank T., and Maria Tereza Alexandre. "Ambidexterity in technology sourcing: The moderating role of absorptive capacity." Organization science 20.4 (2009): 759-780.

Lane, Peter J., and Michael Lubatkin. "Relative absorptive capacity and interorganizational learning." Strategic management journal 19.5 (1998): 461-477.

Raisch, Sebastian, et al. "Organizational ambidexterity: Balancing exploitation and exploration for sustained performance." Organization science 20.4 (2009): 685-695.

本文僅供非商業用途，轉載請註明出處作者：沈芯菱│台灣6.0希望工程www.twhope.orgNote: Only non-commercial use, reproduce, please indicate the source.Photo source: Google photo

Technology Evolution

文 / 沈芯菱

Modern technology continues to evolve rapidly, when the first computer invented, the size was as large as a room. Now, that is ten thousand times more useful, but the volume can be accommodated in the palm. Understanding technology innovation is essential for enterprises. In this article, we will discuss the evolution of technology from three aspects. The first is to introduce the process of technology innovation, and then discuss the innovation model, as well as explain the organizational elements of innovation, and finally put forward the view of innovation in the Internet era.

How technology evolves?

The technology life-cycle is composed of four phases: The research and development phase, the ascent phase, the maturity phase, and the decline phase. It is generally believed that when the S-Curve is considered only when the industry develops to the highest point, then it will be threatened by the next technologies. However, Christensen (1992a) argued that a shape of S-curve, where the path of technological evolution does not resemble an S-curve, but follows a series of irregular step functions. The multiple S-curves is better approximated with than a single S-curve.

Moreover, the Y axis of the traditional S-Curve is ‘product performance’, but Christensen (1992b) pointed out that there is another Y axis of ‘performance as defined in application’. So this is not merely to understand the progress of product performance, but also to the needs of users of the application.

For example, in 2007, when most of the mobile phone manufacturers focus on improving screen size, camera pixel, shape designing, Apple Inc. has innovated the iPhone, one of the first smartphones to use a multi-touch interface.

The Four Types of Innovation

From 1st S-Curve to 2nd S-Curve, jumping the S-Curve will be an essential issue, that’s a chance to break out of a routine, as well as explore and build for the evolution of technology. Enterprises must continue to innovate, but how to start at the first step? First of all, we must understand what kind of innovation the company is suitable for? Rebecca & Clark (1990) listed four types: radical, architectural, modular and incremental. The difference between those types is whether there are new business model or technical competences.

The radical innovation is a whole new design, using new components configured in a new way, and it establishes a new dominant design. The invention of the telephone is an example of a new way of mass communication. Radical innovations are comparatively rare. Rothwell and Gardner (1989) estimated that at the most about 10% of innovations are radical.

The incremental innovation is the most common type of innovation. It improves the existing technology, for example, the phone manufacturers enhancing the features, design changes, etc. within the existing market.

However, Rebecca & Clark (1990) argued that the architectural innovation which involves the using of existing technologies for developing the innovations by reconfiguring of the components can carry a great economic potential for the firms.

Each kind of innovation mode has its own characteristics, and they are complementary to each other. No matter what kind of innovation mode, the company should be familiar with the capital and the ability of their own, and determine how to allocate resources.

The importance of value work on innovation

As Albert Einstein said: "The significant problems we face cannot be solved at the same level of thinking with which we created them." When companies realize the importance of innovation, how to start? The key is the organization, after all, it is difficult to use the original organization mode to solve new problems.

Rebecca & Clark (1990) explained a product development requires component and architectural knowledge. When the dominant design built up, the organizations also build knowledge and capability around the recurrent tasks.

Lots of business organizations are more suitable for the innovation of the component level, because the organization was organized by the team responsible for the product component. As long as the basic structure of the product remains unchanged, the organization system can work well. But when technological change occurs, such organizations are not good at the radical and architectural innovation.

Christensen (1993) defined the situation as organizational of value network, which is an ecosystem of interrelationships between products and complementary services on different hierarchical levels, managing, organizing, and responding to the technological changes.

This also explains why the mainstream established firms failed, and the rise of the startup firms. The advantage of new enterprise is not the difference between technology and organization ability, but they have different value network positioning. With value network of relatively flexible innovation strategy and cost structure, it is easier to find and develop potential markets.

Rethinking the meaning of innovation

These article introduce the innovation process, mode and organization of value network, but it is necessary to pay attention to, the above point of views were based on ‘manufacturing technologies innovation’. However, in the Internet era, some important innovations may have little connection with new technology. There are plenty of start-up companies (Facebook, Netflix, Amazon, LinkedIn, Uber, etc.) bring business model innovation.

The classification criteria for Rebecca & Clark (1990) are core concepts and components Linkage as a classification standard, which are based on core technologies. Abernathy & Clark (1985) from the marketing point of view of innovation type to whether the existing market, and whether the existing manufacturing technology to classify. Nooteboom (1999) is a classification for the degree of innovation and product process. There are a number of classification standards, summarized as: technology development, customer market and business model. It is worth discussing that there are no other classified items, especially in the Internet Era?

Although innovation is extremely important, executives must pay attention to the innovation doesn't guarantee success, it does not mean that innovation process may be failed, but even if you have a great innovation, but may be limited for a variety of factors which lead to failure.

Taking WiMAX for example, WiMAX is a kind of wireless communications standards, led by Intel Corporation. Taiwan government has also vigorously investment, Taiwan manufacturers also developed more quickly speed transmission rate, and farer distance. Unfortunately, WiMAX is not the last choice to be adopted by the telecommunications leader.

There is no one system that fits all companies under all circumstances. Enterprises need to rethink what time and how to innovate, and how to allocate resources. Managers are often caught in a dilemma, then the innovation strategy is very important, and it must be closely linked with the company's business strategy, the core competence, to create value for customers.

Reference

Christensen, Clayton M. (1992a). Exploring the Limits of the Technology S-curve, Part 1: Component Technologies. Production and Operations Management 1: 334–357.

Christensen, C. M. (1992b). Exploring the Limits of the Technology S-curve, Part 2: Architectural Technologies. Production and Operations Management 1: 358–66.

Henderson, Rebecca M., and Kim B. Clark (1990). Architectural Innovation: The Reconfiguration of Existing Product Technologies and The Failure of Established Firms. Administrative Science Quarterly 35, no. 1: 9–30.

C. Christensen and R. Rosenbloom (1995). Explaining the attacker‘s advantage: technological paradigms, organizational dynamics, and the value network. Research Policy, vol. 24, pp.233-257.

W. J. Abernathy and J. M. Utterback (1978). Patterns of industrial innovation. Technology Review, pages 40–47.

Nooteboom, B.,( 1999). Innovation and Inter-firm Linkages: New Implications for Policy, Research Policy, 28: 793-805.

本文僅供非商業用途，轉載請註明出處作者：沈芯菱│台灣6.0希望工程www.twhope.orgNote: Only non-commercial use, reproduce, please indicate the source.Photo source: Google photo

The review of Emergence and development of the National Innovation Systems concept.

Sharif, N. (2006). Emergence and development of the National Innovation Systems concept. Research policy, 35(5), 745-766.

Abstract:Adopting a science and technology studies (S&TS) perspective and organized around eight major themes, this paper analyzes the development of the National Innovation Systems (NIS) concept, examining how the formal body of codified NIS knowledge was produced, developed and spread, and how it is used. In order to trace its history, I interviewed major advocates of the NIS concept to understand how and why it has become so widespread in academic and policymaking circles. The eight themes serve as ‘missing pieces’ to explain the early history of the NIS concept.

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