Technology can have a substantial impact on an industry's performance. Consider the effect of genetic engineering on pharmaceuticals, of transistors on telecommunications and of plastics on metals. Identification of the commercial potential of technological developments has dramatically accelerated world-wide, and the lag between ideas, invention and commercialization has decreased.
In the past ten to 12 years, an amazing number of new technologies have brought forth such products as video recorders, compact discs, ever more powerful and ever smaller computers, mobile phones, fax machines, new lightweight materials and highly effective genetically engineered drugs.
Technological progress over the next 10 years is predicted to be several times that experienced during the past ten years; much of it will be spurred by the need to find solutions to our environmental problems. Major technological innovations can be expected in a variety of fields, especially inelectronics/telecommunications.
A modern advocate of the importance of innovation is D'Aveni who argues that due to technological progress and information technology the sources of competitive advantage are being eroded at an increasing rate. The answer is to disrupt existing sources of advantage in the industry and create new ones. In the context of 'hyper-competition' the best the firm can do is seek to achieve a sequence of temporary advantages that keep it ahead of the rest of the industry.
If this is true then an awareness of research and innovation is central to companies' success. As it is with the private sector, so it is with nations!
Choosing the right technology
All companies and governments are faced with a dilemma when attempting to decide how much to spend on research. It is well established that the returns on research expenditure are potentially high in many industries. A large scale research project carried out in the US back- tracked innovations, and found that the rate of return on research expenditure was of the order of 30 per cent. However, this rate of return related only to those inventions which reached the marketing stage, and did not take into account failures.
The research also demonstrated that the rate of return on successful research is high, but left open the issue of the return on total research expenditure by companies, given that a proportion of research does not lead to marketable products.There are in fact two stages to the problem of allocating resources to research and development (R & D): how much to spend, and what criteria to use in order to identify potentially profitable products from the possibilities produced by research, since a company may not have sufficient resources to exploit all potential products.
In the past ten to 12 years, an amazing number of new technologies have brought forth such products as video recorders, compact discs, ever more powerful and ever smaller computers, mobile phones, fax machines, new lightweight materials and highly effective genetically engineered drugs.
Technological progress over the next 10 years is predicted to be several times that experienced during the past ten years; much of it will be spurred by the need to find solutions to our environmental problems. Major technological innovations can be expected in a variety of fields, especially inelectronics/telecommunications.
A modern advocate of the importance of innovation is D'Aveni who argues that due to technological progress and information technology the sources of competitive advantage are being eroded at an increasing rate. The answer is to disrupt existing sources of advantage in the industry and create new ones. In the context of 'hyper-competition' the best the firm can do is seek to achieve a sequence of temporary advantages that keep it ahead of the rest of the industry.
If this is true then an awareness of research and innovation is central to companies' success. As it is with the private sector, so it is with nations!
Choosing the right technology
All companies and governments are faced with a dilemma when attempting to decide how much to spend on research. It is well established that the returns on research expenditure are potentially high in many industries. A large scale research project carried out in the US back- tracked innovations, and found that the rate of return on research expenditure was of the order of 30 per cent. However, this rate of return related only to those inventions which reached the marketing stage, and did not take into account failures.
The research also demonstrated that the rate of return on successful research is high, but left open the issue of the return on total research expenditure by companies, given that a proportion of research does not lead to marketable products.There are in fact two stages to the problem of allocating resources to research and development (R & D): how much to spend, and what criteria to use in order to identify potentially profitable products from the possibilities produced by research, since a company may not have sufficient resources to exploit all potential products.
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