INDIAN INSTITUTE OF MANAGEMENT KOZHIKODE

Post Graduate Programme Detailed Outline of the Course (Pages: 1-10)

Course Title Strategic Management of Innovation Instructor Dr. Suram Balasubrahmanyam

Contact Details Email: bala@iimk.ac.in; Phone: +91-495-2809120

Course credit 3.0 (30 Hours of Teaching)

Total No. of Sessions 15

Session Duration 2 Hours

Term IV (June-August, 2015)

Year PGP-II (Term-4) 2015-16

Max. No. of Students 120

Course Description

To develop an awareness of the range, scope, and complexity of the issues and problems related to the strategic management of technology and innovation.

To develop an understanding of the "state of the art" of the strategic management of technology and innovation.

To develop a conceptual framework for assessing and auditing the innovative capabilities of a business organization.

Innovation is the lifeblood of winning organizations. As Indian technology firms move towards positions of global market leadership, it becomes increasingly important for them to create sustainable competitive advantage based on the creativity of their employees. They need to ensure that there is structure in house that encourages a continuous process of intellectual property rights generation. It is often said that Indian technology firms need to migrate up the value chain. The relatively low-end services model offered by IT service firms will need to be supplemented by products. In terms of diversifying their portfolios, Indian firms will need to consider new product development activity including intellectual property rights creation as part of their operational strategies.

One of Indias core competencies is the development of intellectual property. Historically, India has been the source of many revolutionary ideas and concepts. It is also universally acknowledged that Indian technical and managerial brainpower is among the best in the world. However, innovation and IPR generation have not been recognized as important elements in company strategy in the recent past. This course considers a framework to create strategic change through technological innovation and internal entrepreneurship. It is necessary to forecast technology trends, anticipate customer needs, predict competitor moves and strategies as well as environmental conditions and respond in flexible ways via mid-course corrections. Business plan generation and implementation is a combined product management and engineering activity. There are very good examples in technology areas where Indian firms have managed to make the conceptual leap from follower to leader by investing in R&D. The most visible are the pharmaceutical industry and the automotive components industry. In the face of intense global competition, Indian firms in both these sectors have done remarkably well by leveraging Indian skills in engineering, reverse engineering, and re engineering. In particular, the pharmaceutical sector has remarkable for its rapid emergence as an IPR generation machine. Thus there is a need for a strategic re-evaluation of what Indian knowledge-industry firms need to do. In addition to creating a strategy, it is important to translate it into an implementation framework and methodology on the ground that enables the firm to create an architecture and a specific action plan. Many, but not all, of the instances considered will be from the information technology industry, partly because it has seen rapid cycles of innovation and the concomitant creative destruction, and partly because of the immediate relevance to many Indian firms. Since the Case Study Method is best suited for critical analysis and problem-solving, that is the method adopted in this course. __________________________________________________________________________ Pedagogy:

Case analysis and readings. Emphasis on class discussion of the cases, relating them to similar experiences from participants own experience (if any), and applying the principles learned to current, real-life situations

_________________________________________________________________________ Evaluation Scheme:

Components Weightage (%) Surprise Quizzes or Tests 20% Case Presentation 20% Project or Term Paper 20% End Term Exam 40%

Syllabus and References:

Textbook: Burgelman, R. A., Christensen, C. M. and Wheelwright, S. C., Strategic Management of Technology and Innovation, Fifth Edition, Indian Edition available, Tata-McGraw-Hill/Irwin, 2009. (Called "BCW" in this course description.)

REFERENCE BOOKS (OPTIONAL READING) Davila, T., Epstein, M. J., and Shelton, R., Making Innovation Work: How to Manage It, Measure It, and Profit from It., Wharton School Publishing/Pearson Education, 2005. There are two copies in the Library. Grove, Andrew S., Only the Paranoid Survive, Harper Collins Business, 1997 Moore, Geoffrey A., Crossing the Chasm, Harper Collins Business, 1991 Moore, Geoffrey A., Inside the Tornado, Harper Collins Business, 1995 Bronson, Po, The Nudist on the Late Shift, Random House, 1999 Collins, Jim, Built to Last, Harper Collins, 1994 Collins, Jim, Good to Great, Random House, 2001 Ghoshal, Sumantra, Managing Radical Change What Indian Companies must do to become world-class, Viking, 2000 Porter, Michael E., Competitive Advantage, The Free Press, 2004 Pressman, David, Patent It Yourself, Tenth Edition, Nolo Press, 2004 Rackham, Neil, Rethinking the Sales Force, Tata McGraw-Hill, 2001 _

SESSION PLAN Session

No. Topics Readings Cases/Caselets

1. Dominant design and Standard-setting, Appropriability and capturing value, Co-specialized assets, Impact of policy, Role of distribution channels

Technology, Innovation, and Strategy: A General Management Perspective (BCW, pp. 1-12) Profiting from Technological Innovation: Implications for Integration, Collaboration, Licensing, and Public Policy (BCW, p. 32-48)

Elio Engineering Inc(A) (BCW, pp. 13-31)

Preparation Questions for the Case: 1. What is the structure of the automotive seat industry in 1998? How attractive is this industry? 2. What are the potential sources of competitive advantage that Elio Engineering has? How sustainable are they? Why/Why not? 3. What are Elio Engineering's strategic options in entering the automotive market? Please evaluate these options and reach a conclusion on the most attractive one. 4. How well is Elio Engineering's technology strategy aligned with the requirements for a successful entry into the automotive seat market? What, if anything, should they change?

2. Moving to innovation from invention, Creating utility, Focusing on value levers of customer, Identifying and nurturing core competency of organization

Designing and Implementing a Technology Strategy (BCW, pp. 141-155) The Core Competence of the Corporation (BCW, pp. 102-112)

Advent Corporation (BCW, pp. 49-61)

Preparation Questions for the Case: 1. What are the key elements in Advent's strategy? How successful has Advent been? Why? 2. What are Advent's distinct technological competencies? Please construct a matrix showing the technological competencies embodied in the different segments of the audio business. How is this different for the video business? 3. What are the key issues and problems facing Advent? Please prepare a detailed action plan. 4. Characterize Kloss's style as a general manager. Does he need to change? How?

Session

No. Topics Readings Cases/Caselets

3. Strategy in a context of punctuated equilibrium of industry cycles, the dynamics of vertically integrated ecosystems and how they are broken by open systems, managing technology risks

What is Strategy? (BCW, pp. 113-129) Technology, Innovation, and Strategy: A General Management Perspective (BCW, pp. 1-12) Profiting from Technological Innovation: Implications for Integration, Collaboration, Licensing, and Public Policy (BCW, p. 32-48)

Electronic Arts in 1995 (BCW, pp. 67-82) Electronic Arts in 2002 (BCW, pp.83-101)

Preparation Questions for the Case: 1. In 1995, what are the key characteristics of the video game industry? In which ways is it similar/different from the movie industry? 2. Until 1995, how successful has EA been? Why? What is the basis of their competitive advantage? 3. Until 1995, what has been EA's technology strategy? How is it linked to their business strategy? 4. In 1995, how should EA top management think about the platform development decisions it faces? 5. By 2002, how has the Internet affected the video game industry? How does it affect EAs corporate strategy? What should EAs corporate strategy be for the next 5 years? Why? How execute the strategy?

4. Internal factors of technology evolution: Strategic Action and Structural Inertia of Organization, Resource-based model for long-term strategic advantage

Intraorganizational Ecology of Strategy Making and Organizational Adaptation (BCW, pp. 511-528) Strategic Intent (BCW, pp. 550-561) Gunfire at Sea: A Case Study of Innovation (BCW pp. 431-441)

None

Session

No. Topics Readings Cases/Caselets

5. Cultural impediments to innovation based on aversion to change, NIH or the not-invented-here syndrome, Risk-taking based on long-term strategic purpose

Note on New Drug Development in the United States (BCW, pp. 410-414)

Eli Lilly and Company: Drug Development Strategy (BCW, pp. 415-430)

Preparation Questions for the Case: 1. What are the environmental factors facing the pharmaceutical industry especially in the US? What is Eli Lillys strategic response to these? 2. Compare the various competitors balance sheet summaries in Exhibit 4 (page 418). Compare R&D expenses and net earnings as a % of sales. How do you account for the discrepancies in return on equity? 3. Diagram the new product development process in place at Eli Lilly as applied to the migraine project. What are the advantages and disadvantages you can see in this process? Compare this to the process in a smaller firm, example Advent (and Kloss) in an earlier case. 4. What are the human factors issues creating resistance to the new techniques of combinatorial chemistry and high throughput screening? Compare this to the issues in the reading Gunfire at Sea 5. What are the possible financial implications of gaining first mover advantage? See Exhibit 9. On the other hand, what is the downside of bringing an immature product to market? 6. What would you recommend to the PTAC if you were Bianca Sharma? Why?

6. Innovation in business model including channel dynamics, Evolution of structure, Product life cycle and relating innovation to it

Crossing the Chasm and Beyond (BCW, pp. 362-367)

SAP America (BCW, pp. 348-361)

Preparation Questions for the Case: 1. What are the external and internal forces that explain why SAP America has grown so rapidly? What are the challenges associated with this explosive growth? 2. What are the key features of SAP's approach to partnering, sales, and consulting? What are the advantages and potential disadvantages of this approach? 3. What is your evaluation of the new organization? What problems was it designed to solve? 4. As Eileen Basho, what is your action plan for dealing with the strategic and organizational challenges that you face? Be specific!

Session

No. Topics Readings Cases/Caselets

7. Pitfalls in innovation, The perils of listening too hard to customers, Failure of technology leaders due to fear of cannibalization

Architectural Innovation: The Reconfiguration of Existing Product Technologies and the Failure of Established Firms (BCW, pp. 441-454)

Hewlett-Packard: The Flight of the Kittyhawk (BCW, pp. 529-540)

Preparation Questions for the Case: 1. Who were the key players in the emergence of the Kittyhawk project? What did each of them contribute? 2. What are the strengths and weaknesses of the way Hewlett-Packard structured and supported the Kittyhawk development team? 3. Why did Hewlett-Packard pursue the Kittyhawk project this way? What should they do differently if they could do it over?

8. Battling corporate inertia, Dealing with industry structural changes, The perils of collaboration, Managing the customer base at a time of disruption

Customer Power, Strategic Investment, and the Failure of Leading Firms (BCW, pp. 245-264)

Hewlett Packards Merced Division (BCW, pp. 233-244)

Preparation Questions for the Case: 1. In summer 1998, what is the position of the Enterprise Server Group (ESG) in its industry? How has it evolved? Why? 2. Why did HP get involved in developing the IA-64 architecture? 3. Who will benefit the most from the introduction of the Merced chip in the markets served by ESG? Who will benefit the least? Why? 4. In summer 1998, what should Jim Davis recommend?

Session

No. Topics Readings Cases/Caselets

9. Internal Corporate Venturing, Re-engineering Technology Development, the role of executive sponsors

Managing the Internal Corporate Venturing Process (BCW, pp. 915-924)

R.R. Donnelley: The Digital Division (BCW, pp. 889-901)

Preparation Questions for the Case: 1. How do the critical success factors for Donnelleys traditional printing business compare with those for digital printing? 2. Is digital printing a disruptive or a sustaining technology for Donnelley? Why? 3. What were the key stages in the development of the Digital Division? 4. In June 1995, what is the key strategic challenge facing Barb Schetter, general manager of the Digital Division? How do you evaluate these? Prepare an action plan.

10. Reinventing processes, Using technology for creating competitive advantage, Capturing value from ecosystem

The New Product Development Map (BCW, pp. 1089 1098)

Apple Computer, 1999 (BCW, pp. 1110 1127)

Preparation Questions for the Case: 1. Historically, what were Apples major competitive advantages? 2. Analyze the structure of the personal computer industry over the last 10 years. How have the dynamics of the PC industry changed? 3. Evaluate Apples strategies since 1990. 4. What are Steve Jobs options?

Session

No. Topics Readings Cases/Caselets

11. Technology strategy implementation through acquisition, challenges of manufacturing integration after acquisition, new product development process

Enactment of Technology StrategyDeveloping a Firms Innovative Capabilities (BCW, pp. 657-670)

Cisco Systems, Inc.: Acquisition Integration for Manufacturing (A) (BCW, pp. 745-761)

Preparation Questions for the Case: 1.What are the most important elements (criteria, processes, specific actions, etc.) of Ciscos approach to selecting and integrating acquisitions? Why? 2. How can Cisco improve its acquisition selection and integration process? What should they add or modify? Why? 3. What are the specific challenges of the Summa Four acquisition? How well does the Cisco process address these challenges? Why?

12. New product development as a competitive weapon, Structuring teams for efficient delivery, How informal and formal networks help innovation

Organizing and Leading Heavyweight Development Teams (BCW, pp. 1012-1023)

Product Development at Dell Computer Corporation (BCW, pp. 957-970)

Preparation Questions for the Case: 1. How does Dell Computer differentiate itself from its competition in the desktop market? What is its business strategy and its core competence? How is it able to appropriate value from its innovations? 2. What are the advantages or disadvantages of Dells new product development process as compared to others you have seen such as Cisco or 3M? What improvements would you recommend? 3. What are the possible choices before Mark Holliday at the time of the case? What would you recommend and why? What are the risks (including financial) associated with your choice?

Session

No. Topics Readings Cases/Caselets

13. Disruptive Technologies and white Space business opportunities Characteristics of a Good Business Model; Choices and Consequences of Business Models

Bower and Christensen (1995). Disruptive Technologies: Catching the Wave. Harvard Business Review, Jan-Feb. Johnson, Christensen and Kagermann (2008). Reinventing Your Business Model. Harvard Business Review, Dec. Casadesus-Masanell and Ricart (2011). How to Design A Winning Business Model. Harvard Business Review, Jan-Feb

Spring Hospitals, Vonage, Gyan Shala, Salesforce.com, Nucor Minimills Technology Spin-off Companies of Xerox Corporation Dow Corning Hilti Ryannair Airlines

14. Managing Process Innovations

Utterback and Abernathy, 1975. A Dynamic Model of Process and Product Innovation. Omega, Vol. 3 (6): 639-656. Pisano and Wheelright, 1995. The New Logic of High-Tech R&D. Harvard Business Review, Sep-Oct, 1995: 93-105.

Gujarat Ambuja Cements Cost Leader in the Indian Cement Industry

15. Barriers to Consumption and Value Innovation to capture untapped Markets

Kim and Mauborgne (1999). Creating New Market Space. Harvard Business Review, Jan-Feb (1-13). Govindarajan and Trimble (2011). The CEOs Role in Business Model Reinvention. Harvard Business Review, Jan-Feb (109-114).

Bloomberg, NABI, Charles Schwab, Starbucks, Blyth Industries, Novo Nordisk, Chotukool