PLCM - MODULE 4 17ME835

MODULE 4

TECHNOLOGY FORECASTING
4.1 Introduction
Technology forecasting is a tool used to anticipate and understand the potential direction
rate and effects of technological change. Technology forecasting attempts to predict the future
characteristics of useful technological machines, procedure or techniques.
The word ‘technology’ has a wider connotation and refers to the collection of production
possibilities, techniques, methods and processes by which resources are actually transformed by
humans to meet their wants. Ferré (1988) has defined technology as “practical implementations of
intelligence”. However, Gendron (1977) has provided a more comprehensive definition:
“A technology is any systematized practical knowledge, based on experimentation and/or
scientific theory, which is embodied in productive skills, organization, or machinery”.
And other definitions are,
“A group of techniques that predict the direction, character, rate, implication and impact of
technological advances”
or
“A prediction of the future characteristics of useful machines, procedures or techniques”
or
“Anticipation of the character, intensity and timing of changes in technology”

4.2 Reasons/ Need for Technology Forecasting

Some reasons why technology forecasting is important
1. Increased competition in the global market for innovative and cost competitive products.
2. The survival, growth and profitability of companies need to predict future technological
changes in order to create a solid and sustainable technological base that can withstand or
adapt to rapidly changing market requirements.
3. Identify sustainable technologies by evaluating various alternatives
4. To provide suggestions for future research (R&D projects).
5. To invest scarce funds in emerging technologies
6. To analyze the effect of technology on the socio economic aspects of the society.

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4.3 Role (Benefits) of the Technology Forecasting

The purpose of technology forecast is to aid in decision making. A forecast may be valuable if it
leads to a more informed, and possibly a better decision. The role of technology forecast in
planning is as follows:
1. Identify the limits beyond which it is not possible to plan activities.
2. Establish a feasible rate of progress, so that the plan can be made to take full advantage of
such rates.
3. Describe the available alternatives and those which can be chosen form.
4. Provide a reference standard for the plan. The plan can thus be compared with the forecast
at any point in time to determine whether it can still be fulfilled, or whether, because of
changes in the forecast, it has to be changed.
5. Indicate possibilities that might be achieved, if desired.
6. Furnish warning signals, which can alert the decision maker regarding the impossibility to
continue present activities.
4.4 Elements of Technology Forecasting
There are four basic elements in a technology forecast that can be specified as follows
1. Time period: The time element deals with resource time relationship and may be stated
generally or given precisely.
2. Qualitative: The qualitative element attempts to identify the factors that are likely to
change the activities or technology trends in areas of interest to the forecaster.
3. Quantitative: The quantitative element attempts to measure quantitatively and assess the
level of performance of various technologies.
4. Probability of occurrence: The elements of probability of occurrence attempts to predict
different alternatives and its confidence level, like as high or low.
The role of technology in fostering economic growth of nations and enhancing their industrial
competitiveness has been widely recognized, through its domineering influence over industrial
productivity. Further, technology has emerged as the most important resource that contributes
directly to socio-economic development. Hence, technology is viewed from various perspectives:
as an ‘engine for economic development’, as a ‘strategic resource’, and as a ‘competitive weapon’.
This necessitates effective management of technology - at both national and firm levels.
Technology Management (TM), which inter alia aims at planning and developing the technological
capabilities of an organization or a nation, has now occupied the centre stage of decision-making.
Gaynor (1989) has provided the following description of TM:

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“Managing technology is a method of operation that leverages human resources, technology and
other business assets by optimizing the relationships between the technology functions of the
business enterprise. It is the process of integrating science, engineering and managing with
research, development and manufacturing in order to meet the operational goals of the business
unit effectively, efficiently and economically. It includes managing the totality of the technology
operations from concept through commercialization”.
TM embraces several interconnected issues such as: technology policy; technological forecasting
and assessment; technology strategy; technology transfer; technology-induced as well as market-
oriented Research and Development (R&D); process technology and product technology and their
continuing improvement; human resource management in terms of innovative capabilities,
flexibility and contribution; and technology project management.
Gaynor (1989) has provided the following description of TM:
“Managing technology is a method of operation that leverages human resources, technology and
other business assets by optimizing the relationships between the technology functions of the
business enterprise. It is the process of integrating science, engineering and managing with
research, development and manufacturing in order to meet the operational goals of the business
unit effectively, efficiently and economically. It includes managing the totality of the technology
operations from concept through commercialization”.

4.5 Technological Change

Technological change can be defined as an increase in the efficiency of a physical process, product,
materials, machinery or equipment, which results in an increase in the output, without an increase
in the input. In other words, it is the process of invention or improvements of technology to yield
a bigger reward for the same amount of work input.
The following are a few example related to technological change:
1. A telephone that has undergone many technological changes since its inception, for a
better, efficient, and reliable mode of communication.
2. Advanced cutting tools that permits to produce more parts in an hour of work.
3. Automation that allows companies to produce more products/services with respect to unit
input.
4. System/Tools that help people to create, manage and share knowledge such as the internet,
etc.

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4.5.1 Impact of Technology Change on Society

Science and technology are essential ingredients of modern life. They transcend local boundaries
and touches lives of everyone. Evolution of mankind can be seen in terms of technological
evolution as well. Invention of fire and wheel changed the face of mankind. Various historical
epochs - hunter-gatherers, agrarian society and industrialist society are distinguished from each
other in term of technological advancement. The technological factors represent the conditions
created by men that have a profound influence on his life. Technology is product of civilization.
4.5.2 The major effects of technological change on society are briefed as follows:
1. Different products with different features & characteristics like superior in quality, free
from pollution, safer, more comfortable, etc., enter into the market in a short span of life.
2. Technological developments make life easy and improve the standard of living in the
society.
3. New technologies give way for opportunities related to jobs and trade. On the other hand,
technologies related to automation replace human labors increasing unemployment in
society.
4. Technology has changed the education system and learning methods to a great extent,
thereby uplifting the learning interests and abilities of people, and in turn eradicating
illiteracy in the society. On the other hand, technological changes have created unethical
principles and practices in the society, especially young generations.
5. Many Technological changes tend to build relationships and bring people together.
4.5.3 Technological Change - Monitoring process consists of the following steps.
Step 1: Information scanning
Step 2: Screening the scanned information
Step 3: Evaluation of the screened information and development of ideas
Step 4: Utilization of the evaluated ideas for R &D planning, project formulations, product
diversification, etc.
1. Information Scanning: There is no specified methodology for technology scanning; the
general principle is to have access to as much relevant information as the resources pennit
not only from primary sources like journals/patents documents etc. but also from
commercial data exchanges/sources etc.
2. Screening the scanned information: Volumes of information stored may not be of much
use to the organization unless they are properly screened and subjected to further
evaluation. It is, therefore, essential that the information of relevance be identified,

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according to short and long term objectives of the organization, for detailed scrutiny and
evaluation.
3. Evaluation of the screened information and development of ideas: At this stage, the
forecaster or the group of forecaster will subject the relevant information to detailed
scrutiny and evaluate them in-house or even in consultation with external experts as to their
usefulness to trigger newer activities in the organization.
4. Utilization of the evaluated ideas: The decision maker would now be in a position to
dovetail all relevant inputs i.e. technological forecast, government policies, financial
commitments, business environments etc. in order to make up his mind as to whether
particular course of action could be pursued or not.
4.6 Forecasting
Because more valuable resources are expended as the concept moves through the new product
development process, it is critical that firms estimate the revenue and profit potential of the concept
as early as possible in the process. One way to focus concept development on high-potential
concepts is to classify concepts as (1) clearly worth further development, (2) clearly worth
dropping, and (3) questionable – need more data. One output of concept evaluation is a rough sales
forecast. It may not be sufficiently accurate for a final launch decision, but it is often sufficiently
accurate to make early decisions to focus on a few high-potential concepts.
As in all forecasting, there is a tradeoff between accuracy and cost. For example, the more realistic
the concept (prototype vs. paper-and-pencil) the more accurate the forecast. As the product concept
moves through the new product development process, concepts are refined and more accurate
forecasts become available.

4.6.1 Concept Evaluation

Concept evaluation is a well-developed science based on both survey research and laboratory test
markets (LTMs). Predictions are highly accurate and provide important information to new
product teams so that they might evaluate concepts and improve the concepts. In a typical survey-
based approach, a representative sample of respondents are presented with 3-4 concepts and asked
to evaluate them. Respondents evaluate the concepts on their ability to fulfill customer needs and
on overall preference and they often indicate their intentions to purchase a product based on the
concept. The typical laboratory approach approximates the purchase environment.

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The setting is more realistic, many elements of the marketing mix are used, and the concepts are
closer to the product or service that will appear in the marketplace, For example, respondents might
be presented with advertising for the concepts, often simply storyboards rather than finished
advertising, and presented with prototype products. In some cases, respondents indicate their
intentions to purchase, but, if the concept is well along, they might get a chance to purchase the
product in a simulated store. The key outputs are (1) a sales forecast that is sufficiently accurate
for a go vs. no-go decision and (2) diagnostic information that helps the new product team refine
the concept so that it better meets customers’ needs and expectations.

4.7 Technology Forecasting Methods

4.7.1 Forecasting
Forecasting is nothing but predicting what the future is going to be. Technological forecasting is
the process of predicting the future characteristics and timing of technology. The primary function
of forecasting is to predict the future using data we have in hand. The technology forecasting
methods can be classified as exploratory and normative forecasting methods. There are many
changes being performed in different technologies such as software technologies, computing
technologies, hardware technologies, etc. There is a need to find the trends and predict the future
of these technologies. The technology forecasting methods are useful to find the trends and predict
the future
4.7.2 Methods
The technology forecasting methods can be classified as exploratory and normative forecasting
methods. Exploratory technological forecasting starts from today’s assured basis of knowledge
and is oriented towards the future, while normative technological forecasting first assesses future
goals, needs, desires, mission, etc., and works backwards to the present.

4.7.3 Business Activity and Technology Forecasting Technique

Searching for relevant scenario
a) Expert opinion
b) Panels
c) Brainstorming
d) Delphi
e) Technology Monitoring
f) Scenario Development

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Searching for trends among parameters

a) Extrapolation
b) Growth curves
c) Substitution
Searching for alternative among various choices to reach a goal
a) Relevance Tree
b) Morphology
c) Cross impact Analysis
d) Dynamic modelling & simulation
e) Scenerio Building
f) Modelling & Simulation

Classification
Technology Forecasting Methods
Exploratory Normative
Mission
Delphi Trend Growth Technology Relevance Morphological
Brainstorming Flow
Technique Extrapolation Curves Monitoring Trees Analysis
Diagram

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4.8 Brainstorming
Brainstorming as an approach or technique can be an effective way of generating many ideas on a
specific issue which can then be filtered and reviewed to determine which idea or approach is the
most appropriate.
Brainstorming is a situation where a group of people meet to generate new ideas and solutions
around a specific domain of interest by removing inhibitions. People are able to think more freely
and they suggest as many spontaneous new ideas as possible. All the ideas are noted down and
those ideas are not criticized and after brainstorming session the ideas are evaluated.

4.8.1 Steps Involved in Brainstorming

1. Identification of a person as the group leader
2. Identification of the problem by a group
3. Definition and Redefinition of the problem
4. Idea generation process
5. Recorded ideas are reviewed and streamlined.
6. Rearranged ideas are evaluated by reverse engineering.

4.8.2 Advantages

a. Obtaining new ideas of products/process

b. For identifying new users or market segments
c. For identifying alternate options or methods.
4.8.3 Disadvantages
a. Sufficient time is needed
b. Considerable preparation has to be made before the actual exercise begins

4.8.4 Applications: Brainstorming has been applied to a wide range of R&D, technological and
business problem solving.
a. For obtaining new ideas of products/process/services/procedures
b. For identifying new uses or markets segments
c. For overcoming bottlenecks
d. For identifying alternative options or methods

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4.9 The Delphi method

The Delphi method, which is subjective in nature, is arguably the most popular forecasting tool in
vogue. Though statistical or model-based forecasting techniques are preferred over expert opinion
techniques, there are two scenarios where subjective (or intuitive) methods are found to be
relevant.
• When there is no precedent - mostly in the case of new technology forecasting where expert
opinion is the only possible source of forecasting or in situations where the impact of factors which
were previously considered to be relevant have lost their strength.

• Ethical evaluation is required – instances where ethical issues are more important than technical
and economic issues.

The basic idea of a Delphi survey is to interview experts on a topic. But the exercise is not restricted
to collection of opinions but also to provide each expert the facility review based on the
recommendations of his/her peers. This exercise contains a minimum of 2 stages in which the
outcomes of the first round of interviews are provided back through a controlled feedback to the
experts during the second round.

The Delphi method has three unique characteristics that differentiate it from other methods such
as committee approach and brainstorming.

 Anonymity: During the Delphi procedure, a member does not know the specific
contributions of the other members. In most cases a person would not even know who the
members of his/her group are. This methodology has its unique benefits. It avoids any bias
of opinion owing to the reputation of other members. The anonymity also provides the
experts an opportunity to revisit their articulated opinions, without the fear of
embarrassment, when they encounter any evidence contrary to their expectations.
 Iteration with controlled feedback: The survey coordinator extracts responses which are
deemed relevant to the topic and these are sent back to the group. This sort of mediation
throughout the process ensures that biased opinions are not pushed by merely repeating or
restating them over and over again.
 Statistical group response: In a committee approach only the majority opinion emerges
out of the discussion while the minority recommendations are lost. But in the Delphi
method, for every item the responses are depicted with statistics that describe both the
dominant view as well as the degree of spread.

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4.9.1 The Delphi process involves the following steps:

• Identify the subject in which the Delphi survey is to be conducted.
• Recruit a group of experienced people who can prepare the questionnaire for forecasting the
technological developments.
• During the first round the questionnaire is then distributed among experts to address all possible
aspects of the issues. These participants are asked to forecast events or predict trends regarding the
issue. The responses are collected and all opinions including the extreme ones are taken into
cognizance.
• In the second round, results of the first round are sent back to the participants and it contains a
consolidated list of all the responses. The participants are then asked to forecast the possible
occurrences enlisted in each of the responses.
• In the third round, all the responses are sent back to the participants. This time, along with the
inclusion of statistical details, they are also asked to reevaluate their responses. After the end of
the third round, the moderator processes the response by combining it with similar responses,
summarizing lengthy ones, etc.
• The questionnaire for the fourth round contains the responses, the statistical information and the
summary of points for modifying the forecasts, if any. Here the participants are required to provide
reasons for any change in a given forecast value.
• At the end of the fourth round, the moderator collects and summarizes the results and comes out
with forecasts, the degree of disagreement and a summary of critical issues for each forecast.
4.9.2 The Delphi method is mostly used in the following contexts:
 To determine critical factors that might impact the development of technology.
 To forecast statistical estimates on the progress of a particular technology over a specified
duration.
 When forecasting cannot be made using other methods.
 To evaluate the chance of a particular event occurring under given conditions.
4.9.3 There are three situations in which expert opinion may be resorted to
a. When there is no historical data, especially situation in which new technologies are
involved expert opinion is the only possible source for a forecast
b. When impact of external factors is more important than the factors that governed the
previous development of the technology. Under this condition forecast using past data is
irrelevant

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c. When ethical consideration rather than technique and economic consideration govern the
development of technology.
 Advantages
a. Obtaining forecasts when there is a limited amount of historical data
b. For fields which are highly interactive and interdisciplinary involving diverse
parameters such as social, technical, economic, political and managerial.
c. This provides opportunities for experts for the desired changes and revisions between
subsequent rounds of questionnaire.
 Disadvantages
a. It does not have any logic underlying each prediction and if repeated, it may not give
reproducible results
b. Although it may produce a high degree of convergence, yet this convergence does not
imply a high degree of reliability
c. The process is time consuming due to the slow rate of discussion in view of the non-
interaction of panel members.
4.10 Trend Extrapolation
This method uses historical data rate to determine the rate of progress of technology in the past
and extends it into the future. This type of forecasting implies that the factors which affected the
past trends would continue to impact in the same known manner. But this methodology cannot be
applied in every technology context. There are instances where natural limits exist for the
governing factors and hence, extrapolation will give skewed results. There are two types of
extrapolation based on the rate of progress of past behavior – linear and exponential methods.
 Linear extrapolation is used where a linear growth function is predicted. The trend is
explained using the linear equation y = Ax + B
where y is the value of the dependent variable
x is the value of the independent variable
A & B are constants obtained by the method of sum of squares and minimizing them from
the projected extrapolation
 Exponential method is used where certain technological capabilities and parameters grow
exponentially with time. The exponential growth could be assumed to be in the form as Y =
A.Bx
where Y is the value of the variable to be estimated
X is the impact variable and

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A and B are constants to be estimated as stated before

4.11 Growth Curves: Certain technological capability or parameters attain an ultimate saturation
level i.e., the growth is restricted due to practical limitations. Growth curves could be used for
forecasting how and when a given technical approach will reach its upper limit. The growth
phenomena can be described by an S-shaped (sigmoidal) curve as shown in fig, with initially slow
growth speeding up before slowing down to approach a limit. The process involves fitting a growth
curve to a set of data on technological performance, then extrapolating the growth curve beyond
the range of the data to obtain an estimate of future performance. This activity involves three
assumptions:
 The upper limit to the growth curve is known
 The chosen growth curve to be fitted to the historical data is the correct one.
 The historical data gives the coefficients of the chosen growth curve formula correctly.
Of the several mathematical models used to generate growth curves, the two commonly used
models are Pearl curve and Gompertz curve.
 Pearl Curve
Pearl’s growth curve equation can be used to predict the growth of the performance of technology
with reference to functional capability. It is given in the form as : Y= L/(1+ae-b.t)
Where Y = forecast variable
L= Upper limit of Y
t= time period
a= location coefficient &
b=shape coefficient
The coefficient a determines where the curve will be on the time axis, and b determines the
sleepness of the sharply rising portion. On the basis of some historical data points, it is possible

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to determine the values of a and b which give a good fit to the data and then use the equation to
forecast future progress. As shown in fig(a), pearl’s growth curve is symmetric about the point of
inflection, indicating the growth rate is maximum at this point. One can assume that nearly 50%
of potential customers have adopted the product at that time period.

 Gompertz Curve
The Gompertz Curve is described using the equation: Y = L.e^ − 𝑒 −𝑏(𝑡−𝑘)
Where Y = forecast variable,
L=Upper Limit of Y, and t= time period
B= location coefficient & k= shape coefficient

Gompertz Curve can be used to predict the state of technology for which there is a limit, and when
the growth in the initial stages is comparatively faster than that of the Pearl curve. As shown in fig
(b), the Gompertz curve is not symmetrical about the inflection point. The percentage at which the
point of inflexion reaches is about 37% which happens before 50% as in the case of Pearl’s growth
curve.

Growth curves are the only approach that can be used to forecast a system that is bound by a limit.
However growth curves depend on historical data without forecasting is impossible. When using
growth curves, the forecaster must be sure that the data are self-consistent, i.e., all data come from
the same data set or population.

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 Normative Methods
Normative forecasting methods begin with setting up future needs, goals or objectives, and work
backwards to the present to find out the best approach to realize the predetermined objective.
4.12 Relevance Trees
It is an organised ‘normative’ approach starting with a particular objective and used for forecasting
as well as planning. The basic structure looks like an organisational chart and presents information
in a hierarchical structure. The hierarchy begins with the objectives which are further broken down
into activities and further into tasks. As one descends down, the details increase at every level. The
entries when taken together at each level describe the preceding level completely. Also, all
activities and tasks depicted should be mutually exclusive.
The principle behind using the relevance tree is to evaluate systematically all the related
technologies that would lead to the success of the intended objective.
From the forecasting perspective, the branches represent alternatives that are traced to a number
of points, which represent deficiencies in the existing technology. Thus, the relevance tree provides
a framework for identifying the deficiencies that need to be overcome. It is usually relevant in
situations where distinct levels of complexity can be identified and the same can be simplified by
further breaking them down.

 Advantages: The advantages of Relevance Trees are (a) It provides a systematic method for
estimating the route to be used for achieving a defined future objective or solving a given
problem. (b) Helps in deciding whether an objective is likely to be achieved or not. (c) Helps
in determining alternative ways by which a given objective might be achieved.

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 Disadvantages: The relevance tree for a large complex technology could become too
complicated to be handled.
 Applications: Relevance tree is a powerful and general-technique with wide range of
applicability. It can be used for identifying new system alternatives and this can be a technique
for obtaining different solutions to a given problem.

RELEVANCE TREE

OBJECTIVE

ACTIVITY 1 ACTIVITY 2 ACTIVITY 3

TASK 1 TASK 2 TASK 3

SYSTEM 1 SYSTEM 2

DIFICIENCY 1 DIFICIENCY 2

PROJECT 1 PROJECT 2
OR OR
ACTION 1 ACTION 2

Relevance tree enables the planner to assess systematically all the interlinked technologies and
tasks which could lead to the achievement of an objective. Then the most appropriate path can be
selected.

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The method consists of the following steps.

1. Arrange in hierarchical order the objectives, sub objectives, activities, 20 missions or tasks.
2. Ensure that all possible ways of achieving the objectives have been included or assessed.
3. Evaluate the relevance of individual tasks and sub-objectives to the overall objectives.

The relevance tree techniques serve as a tool both for forecasting and planning process.

Fig: Relevance Tree [Source: Burgelman et al. (1996)]

4.13 Morphological Analysis

It is a normative technique developed by Fritz Zwicky which provides a framework for exploring
all possible solutions to a particular problem. The morphological analysis involves the systematic
study of the current and future scenarios of a particular problem. Based on this study, possible gaps
are identified and the morphological analysis further provides a framework to explore other
alternatives to fill these gaps.

From the forecasting perspective, the method enables creation of a list of all the possible outcomes
of a technology in order to determine different categories of its applications. For example, even

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though cardboard was developed as a material for packaging, a morphological analysis would
assess its performance and utility in other applications - given its strength, density, and other
properties, the analysis considers the possibility of using it for sound insulation, heat insulation,
and other applications.

 Advantages and Disadvantages: Morphological models can be used to identify

requirements for individual technologies of a specific system, but cannot be used to obtain
quantitative estimates of relative importance of various technological goals. This is a static
model and is not suited to take care of systems that change with time or describe the logical
sequence of events.
 Application: Morphological analysis is a useful technique for encouraging the thinking
process and allows examination of all combinations of alternatives to achieve the objective.

4.14 Mission Flow Diagrams

Mission Flow Diagrams have been originally conceived by Harold Linstone as a means of
analyzing military missions. This involves mapping all the alternative routes or sequences by
which a given task can be accomplished. The analyst needs to identify significant steps on each
route and also determine the challenges/costs associated with each route.

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Fig: Forecasting using mission flow diagram

The performance requirements can then be derived for each associated technology and the same
can be used as normative forecasts.

 Advantages of Normative methods: The advantages are (a) It is more dynamic. (b) It can
generate range of alternatives. (c) It is cost effective and simple in application.
 Disadvantages of Normative methods: The disadvantages are, (a) the decision variables and
hierarchical structure of technology must be known and weightages are to be objective in
nature. (b) Time period is usually not clearly forecasted. (c) Accuracy cannot be clearly
defined.
4.15 Combining Forecast of Technologies
The forecasting accuracy can be improved by combining forecasts derived from different methods
that differ substantially and draw information from different sources. The use of more than one
forecasting method often gives the forecaster more insight into the processes at work which are
responsible for the growth of the technology being forecast. For example, combining forecast
obtained growth curves and trend curve for some technology. It is quite common that one forecast
method performs well in certain periods/situations, while other methods perform better in other
periods/situations. For example, with growth curves alone, the forecaster cannot conclude anything
about the time at which a given technical approach is likely to be supplanted by a successor
approach. On the other hand, with the trend curve alone, the forecaster cannot conclude anything
about the ability of a specific technical approach to meet the projected trend, or about the need to
look for a successor approach. However, the use of growth curves and a trend curve in combination
allows the forecaster to draw some conclusions about the future growth of a technology which
might not be possible, were either method used alone.

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Under ideal conditions, it has been found that combined forecast were more accurate and superior
to the individual forecasts. When inexpensive, it is sensible to combine forecasts from at five
methods, but not more than five.
4.16 Integration of Technology Production Innovation and Product
Development in Business Processes within Enterprises.
In many companies, product development technology is usually a key instrument in the
organization of manufacturing as well as administrative tasks (Walters and Millward, 2011).
Integration of technology and business processes presents a strategic link for creating efficiencies
in the development of highly complex products (Narasimhan et al., 2010). Integration of individual
technological processes and their inputs and outputs, integration of technology and other business
processes, or integration of market demands and technological capacities, etc., all these processes
require building up a functional technology infrastructure/network. This technology infrastructure
should be designed to run production as well as other business processes, including data centres
that enable ICT to be used as a platform upon which business decisions are made(Gold et al.,
2001). Purposeful technological infrastructure should be a functional part of an organizational
structure, especially as regards to the distribution of technological competence, information and
responsibilities among business departments.

An organizational absorptive capacity is critical for establishing an appropriate technology

infrastructure. If an organization considers its better learning culture as a prior step in the utilization
of a new technology infrastructure, then the new technology can have a more positive impact on
the conditions that stimulate business innovation (Cegarra Navarro et al., 2010). Usually, top
management plays an important link ineffective deployment of new technological know-how, but
their impact is usually indirect and a function of the technology management (TM) absorptive
capacity (Elbashir et al.,2011).

Therefore, strategic and technology management should share their objectives, e.g., to help
transforming the organization into a more effective, innovative and responsive form through the
technology (Kamal, 2011). A creative teamwork environment, creation and absorption of
technology-related know-how with a higher value added, continual learning, more complex
innovation, and the creation of business and market-accepted technology should be central to
integrated TM.

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There is need to coordinate perfectly several disciplines related to human, business (economic)
and technological skills. These three aspects have a significant influence on the value of a new
product. The details of the three aspects are briefed as follows:

1. Human aspects: Successful innovation maximizes the user appreciation of the products
offered. Understanding and treating the human interests is key to define your design
drives.
 User Function Analysis-the reaction of the user on the character and usability of the
product.
 Ergonomics – the product must correspond to the physical capabilities of the user.
 Socio cultural context of a product requires a good analysis, and especially a good vision,
of the situation in which the user will be at the time that the new service or product will
be offered.

2. Technological aspects: Technological aspects in product development are typically

related to materials, design & construction, optimization, physics and development of
mechanical/electronic systems, manufacturing and assembly technology. These aspects
are determined by criteria such as mechanical and thermal load, interface capabilities,
limitations and compatibility by other system, environmental impact and aging effects.
3. Economic aspects: Economic aspects include, knowledge of the competition and its offer,
total cost of development and other production preliminary costs, approach of the
distribution, the development time (time-to market), and the price that the prospective user
is willing to pay for the provided product/service.

Figure: Systematic processes of integrated technology management

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Integrating technology capacities with customers’ needs, technology with business strategy,
technology and other business processes, and technology elements and processes often requires a
three-step mechanism of TM, namely integration of technology identification, implementation and
potential technology commercialization processes. All these processes should be properly
connected and realized systemically (Figure 1). Technology identification requires adequate
external and internal technology analyses, eventually the creation of Technology Radar (Veugelers
et al., 2010); further technology assessment should provide a course for technology planning and
for subsequent applied research and development (R&D). Technology implementation requires a
technological change/innovation, which calls for an adequate adaptation mechanism that should
allow tracking new technology in a company, including technology development needs, change in
organizational culture, and new personnel tasks (Kamath et al., 2011). The new object of business
in many industries has become subsequent technology commercialization (TC).
Technology commercialization is usually accompanied by the acquisition of adequate intellectual
property (IP) rights that can be a driver of shareholders values, but also an open-ended stopover
for economic growth of the company. Therefore, it is important to appropriately plan also TC
within a technology strategy and to adapt formal as well as informal integration mechanisms,
because these are usually positively associated with successful TC. Informal integration
mechanisms can also moderate required capability sources for TC (Zahra and Nielsen, 2002). This
study is mainly focused on identifying integrative aspects between strategic and technology
management and within technology identification processes that are most important for the
effectiveness of TM.
o Strategic and operative technology management integration aspects
The first step in the TM integration is to identify and “impose” strategic technological issues in
strategic management. The field of strategic management deals with major intended and emergent
initiatives taken by managers or owners of a company involving the determination of a vision,
mission, key long-term goals and plans, and the allocation of investment necessary for those goals
and plans. Technology managementis more operationalised management that includes effective
identification, selection, acquisition, research, use and protection of technology (elements,
processes and infrastructures) necessary to achieve and sustain market positions and business
performance of an organization in conformity with its strategic objectives. Strategic management
should provide TM with strategic technology goals, tasks, responsibilities, finance, investment,
information and control.

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TM should provide strategic management with information, proposals for investment, technology
infrastructure and support. Each assessment of TM should consider its three vertical levels:
 Strategic management level − How technology should be implemented and managed in
different areas of our business (in production, supply chain, marketing, management,
administration, control, etc.)?
 Strategic technology management level – What value-added, profit and competitive
advantages does technology bring to a specific business unit?
 Operative technology management level – How to optimize internal processes in order to
manage technology and its components effectively? (Figure 2)

Figure : integration of different levels of Technology Management Involvement

Strategic technology management attempts to address technology-related priorities contained in

the field of strategic management through technology goals, strategy and budgets and thus
provides an overlap/integration within technology-related managerial activities. Technology goals,
strategy and budgets thus serve as the basis for implementation of business strategy through the
technology. Strategic technology management should create conditions to enhance and sustain a
technology system and an infrastructure of an institution in order to improve its technological
capacities and effectiveness.
4.17 Methodologies and tools in product innovation process

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The methodologies and tools of most interest to the innovator are those that directly enable, support
and direct the right methods and practices for the innovation process. Some of the common tools
in this regard are briefed as follows:
1. Deep Drive: Deep drive is a brainstorming technique, wherein a group of people meet to
generate new ideas and solutions around a specific domain of interest. Deep drive provides
a quick means for tapping the creativity of a limited number of people for a large number
of ideas.
2. Prototyping: A prototype is an early sample, model, or release of product built to test a
concept or process, or to act as a thing to be replicated or learned from. It is mostly
regarded as a demo-like of a future product. However prototyping is a crucial aspect as it
helps to understand, define and refine the features and specifications of a future product,
or an idea or a concept.
3. Design thinking: Design thinking draws on logic, imagination, intuition and systematic
reasoning to explore the possibilities of what could be, and to create desired outcomes that
benefit the end user (the customer). Design thinking informs human-centered innovation,
which begins with developing an understanding of customers’ or users’ unmet or
unarticulated needs, thereby helping the innovator to gain greater clarity, tofind viable,
feasible and desirable ideas.
4. TRIZ (Theory of Inventive Problem Solving): TRIZ is methodology or a technique for
innovation that provides excellent principles (or models) and concrete tools for creative
thinking for technology development. TRIZ is more or less similar to brainstorming,
however owing to its complexity; it can be a barrier to its use and application.
5. Open innovation: Open innovation is an innovation technique that involves flow of ideas
or knowledge within and outside the organization during the innovation process. Ideas are
evaluated and only the best and promising ones are selected for their development and
commercialization.
6. Co-creation: Co-creation is an innovative technique that makes use of people external to
the company in the ideation phase of new product or service development. The people
involved in the process may include customers, suppliers, distributors, or the general
population, who are made aware that they are contributing towards the development of
ideas and concepts.
7. Agile innovation: Agile innovation refers to an iterative, incremental method of managing
the idea related to design, and build activities of engineering, information technology and

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other business areas that aim to provide new product or service development in highly
flexible and interactive manner.

**Extra Material - Other Methods**

Theories and Measurement
Technological change has been broadly defined as: “the process by which economies change over
time in respect of the products and services they produce and the processes used to produce them”.
More specifically, it has been termed as:
“Alteration in physical processes, materials, machinery or equipment, which has impact on the
way work is performed or on the efficiency or effectiveness of the enterprise”. Technological
change may involve a change in the output, raw materials, work organization or management
techniques - but in all cases it affects the relationship between labor, capital and other factors of
production. While the policies to stimulate technological progress and productivity growth - at
both national and firm levels - must be formulated in a broad socio-economic context, their focus
ought to be on the internal dynamics of technological change. It has been suggested that the
knowledge pertaining to technological change in the less developed countries would be a crucial
input to the understanding of the phenomenon in industrialized nations. In this light, the following
paragraphs provide a selective survey of theories and measurement of technological change (Saren,
1991; Sharif, 1986; Stoneman, 1983; Saviotti, 1985).

Formulation of Technology Strategy

Burgelman et al (1996) conceptualize technology strategy as an evolutionary organizational

learning process, which highlights the links between technical competencies and capabilities,
technology strategy and experience. The authors opine that technology strategy can be realized
through the enactment of several key tasks such as (i) internal and external technology sourcing,
(ii) deploying technology in product and process development (iii) using technology in technical
support activities. In turn, performing these activities provides valuable experience that serves to
augment and change firm’s technical competencies and capabilities.

Maj Saren (1991) proposed a comprehensive framework for technology strategy

formulation. In this framework, paradigms, trajectories and frontiers of a given technology forms
the basis for the development of a reliable technology forecast.

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A ‘technology paradigm’ is a model or pattern of solution of selected technological

problems, based on selected principles from natural science and on selected material technologies.
‘Technological trajectories’ are a series of technical developments along the path which have
common features either in application of the same principle or by their application to the same
technological system. ‘Technology frontier’ can be defined as the highest level reached upon a
trajectory in terms of those technological and economic dimensions, which are prescribed by the
relevant paradigm.
The following are the key questions/issues addressed in a firm’s technology strategy:
• Strategic decisions made with reference to technology and/or R&D.
• Can technology provide a distinctive competence and competitive edge?
• Do technology and R&D decisions augment firm’s business strategy?

The basic steps for the development of technology strategy have been given in the following figure
(Maj Saren 1991).

The ability of a firm to evolve a technology strategy depends on its understanding of the
process and dynamics of technological change and diffusion; identifying the objectives of the
technology forecast; and selection of the right technological forecasting technique. The objective
of technology strategy is to identify technological opportunities (for acquisition and/or
exploitation) in the context of its internal resources/competences and availability of market growth
avenues.

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While firms incorporate technology issues within their overall business strategies, governments
formulate technology policies for strengthening institutional mechanisms that infuse technological
dynamism in industries (Sharif, 1994).

Major Theories of Technological Change

Neo-Classical Theory
The basic tool for the study of technological change is the notion of a production function which
specifies a quantitative relation between inputs and outputs. The most common inputs are capital
and labor, which are called factors of production. The production function can be represented as a
series of isoquants - curves corresponding to the constant output obtainable by the infinite number
of available combinations of the factors of production. At any given time there is a given level of
technology which determines the techniques available for production.
According to this theory technological change takes place in the form of shifts of the production
function towards the origin.
Some of the major limitations of neo-classical theory are:
• Only labor and capital are incorporated as factors of production. The inclusion of more
factors, however, makes the application of the production function analytically more
complicated.
• The presence of infinite techniques at a given level of technology is rather unrealistic. Real
life situations often imply a choice between a restricted numbers of options.

• Only cost-reducing improvements can be described by the production function.

Improvements in performance or the appearance of new services find no place in this
theory.

• Though an efficient tool for equilibrium analysis of economic life, it is ill at ease when dealing
with dynamic problems.

Marxist Theory
Karl Marx perceived technology as not self-generating, but as a process directed by willful,
conscious, active people and molded by historical forces. He held that technological change - the
development of the productive forces - was the prime mover of history. The individual
entrepreneur invests and innovates because it is rational for profit maximization or necessary for
survival. Marx seemed to be under the spell that innovations simply must be labor-saving.
Major limitations of the Marxist theory are:
• Undermining of capital-saving innovations.
• Underemphasizing the concept of productivity.
• Controversy involved in the theory of the falling rate of profit.

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Schumpeter’s theory
This theory views innovation as the engine of economic development and as a disequilibrium
phenomenon. Innovation is defined as the carrying out of new combinations of means of
production, which include a wide variety of cases such as: the introduction of a new good or of a
new quality of a good, or of a new method of production, the opening of a new market, the conquest
of a new source of supply of raw materials, the carrying out of a new organization of any industry.
The emphasis is laid on the notion that technological change is to be understood as a case of
innovation more generally and not as another piece of routine economic behavior. Schumpeter’s
formulation of production function differed from neo-classical theory in that capital was excluded
and only labor and land were included as inputs.
Major limitations of this theory are:
• Psychology of the entrepreneur (the embodied aspect of innovation) is an elusive
phenomenon.
• No explicit attention is paid to the process by which innovation is generated.
• Lack of empirical evidence.

Evolutionary Theory
This suggests a biological analogy to explain technological change. The Darwinian two-state
process of mutation (invention) and selection (innovation) has been employed to understand the
evolution of technology. Biological evolution appears to have a certain correspondence with the
interpretation of technological changes in industrial sectors - from a state of flux when product
innovation prevails in the search for a successful design, to a maturity phase where incremental
process innovation prevails.
Major limitations of the evolutionary theory are:
• Dearth of quantitative models.
• Many propositions need to be validated.

Market-Pull Theory
Markets govern the innovation process. The market constitutes a communication channel through
which political, economic, social and ecological forces influence buyers in their demand for
technological products. Continuous changes in these forces have an impact on the response
provided by technology with respect to the type, capabilities, performance, safeguards, solutions,
etc. These messages are transmitted and communicated through the market where buyer’s
requirements (themselves influenced by external forces) are matched with technological changes
and where future demands can be detected by the producers of technology.

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Major limitations of this theory are:

• The logical and practical difficulties in interpreting the innovation process.
• Difficulties of defining demand functions as determined by utility functions.
• The incapability of defining the ‘why’, ‘when’ and ‘where’ of certain technological
developments instead of others.
Technology-Push theory
Technology is defined as an autonomous or quasi-autonomous factor. It assumes a one-way causal
determination approach, i.e., from science to technology to the economy. It proposes that
technological developments occur exogenously through discoveries, theories, ideas and R & D
work, which may or may not then create (or be matched with latent) demand for their output.
Major limitations of this theory are:
• Failure to take into account the intuitive importance of economic factor in shaping the
direction of technological change.
• Lack of understanding of the complex structure of feedbacks between the economic
environment and the directions of technological change.

Question Bank
1. Define Technology Forecasting and its role in planning activities.
2. What is technology forecasting? State the need for the technology forecasting
3. Explain technological change with various stages.
4. Define technology change and its impact on society.
5. Explain the essential elements of technology forecast and their influence in decision
making.
6. What is the necessity of Technology Forecasting?
7. Explain the various technology forecasting methods.
8. With neat sketch explain Relevance Tree.
9. Write short notes on Morphology Methods, Delphi Technique and Growth curves.
10. Explain various methods and tools in product innovation process.
11. Discuss the approach behind integrating technological product innovation and
development within enterprises.
12. What is the need for combining technology forecasts? Discuss the benefits
involved.

*********All the Best**********

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