Research-Technology Management

ISSN: 0895-6308 (Print) 1930-0166 (Online) Journal homepage: http://www.tandfonline.com/loi/urtm20

Managing Invention and Innovation

Edward B. Roberts

To cite this article: Edward B. Roberts (2007) Managing Invention and Innovation, Research-
Technology Management, 50:1, 35-54

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 MANAGING INVENTION AND INNOVATION
Technological innovation can alter the competitive status of firms and nations
but its purposeful management is complex, involving the effective
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integration of people, organizational processes and plans.

Edward B. Roberts

OVERVIEW: 2007 is Research-Technology Manage- innovation during the previous 50 years since the Indus-
ment’s 50th year of publication. To mark the occasion, trial Research Institute’s founding in 1938. Following a
each issue will reprint one of RTM’s six most frequently- discussion of definitions of the invention and innovation
referenced articles. The articles were identified by N. process, it focused on three major dimensions of the
Thongpapanl and Jonathan D. Linton in their 2004 study process: staffing, structure and strategy. Taken together,
of technology innovation management journals, a their improved management was found to contribute
citation-based study in which RTM ranked third out of critically to achieving successful institutionalized inno-
25 specialty journals in that field (see RTM May–June vation.
2004, pp. 5–6). The article reprinted here was Number 1
on their list. Published in 1988 and updated now with its
author’s “reflections,” the article surveyed what had KEY CONCEPTS: management of R&D, invention,
been learned about the management of invention and innovation, staffing, strategy, structure.

Edward Roberts has been a leader for over 40 years in Medical Information Technology, Inc., a producer of
research and education on the management of techno- healthcare information systems, and also co-founded
logical innovation and its practical applications to man- and is a director of Sohu.com, Inc., a Chinese Internet
agement. He is the David Sarnoff Professor of firm. In addition, Roberts co-founded and was for 20
Management of Technology at the Massachussetts years a general partner of the Zero Stage Capital and
Institute of Technology, where he long chaired the Sloan First Stage Capital Equity funds, a group of venture
School’s Management of Technological Innovation and capital funds investing in early-stage technology-based
Entrepreneurship Group. He co-founded and co-chaired firms. He has been a co-founder and/or director of
for nearly 20 years the MIT Management of Technology numerous emerging technology companies, including at
(MOT) Program, and also founded and chairs the MIT present Advanced Magnetics, PR Restaurants, Interac-
Entrepreneurship Center. He developed and heads the tive SuperComputers, and Visible Measures.
new Entrepreneurship & Innovation Program within the Professor Roberts has authored 160 articles and 11
MIT Sloan School’s MBA Program. He also served as books, the most recent being Entrepreneurs in High
co-director of the MIT International Center for Research Technology (Oxford University Press, 1991) and Inno-
on the Management of Technology. vation: Driving Product, Process and Market Change
In his entrepreneurial activities Roberts co-founded and (Jossey-Bass/Wiley, 2002). A member of RTM’s Board
was CEO of Pugh-Roberts Associates, an international of Editors, he first published in the journal in July 1968.
management consulting firm specializing in strategic Roberts has four degrees from MIT in electrical engi-
planning and technology management, now a division of neering (B.S. and M.S.), management (M.S.), and
PA Consulting Group. He co-founded and is a director of economics (Ph.D.). [email protected].

January—February 2007 35
0895-6308/07/$5.00 © 2007 Industrial Research Institute, Inc.
 When the Industrial Research Institute was founded in Using the generally accepted (broad) definition of
1938, industrial research in the United States had expe- innovation—all of the stages from the technical
rienced 20 years of dramatic growth, despite the shock of invention to final commercialization—the technical con-
the Depression, and was poised on the brink of World tribution does not have a dominant position (3).
War II expansion that gave it the form and scope we
see today. MIT historian Howard Bartlett reported that This leads me to a simple definition of my own, but none-
from 1921 to 1938 the number of U.S. companies with theless one that I feel is critical to emphasize: Innovation
research staffs of more than 50 persons grew from 15 to = Invention + Exploitation.
120 (1).
The invention process covers all efforts aimed at creating
Despite continued rapid increases in industrial R&D
new ideas and getting them to work. The exploitation
involvement and resource commitment over the
process includes all stages of commercial development,
following 25 years, in 1962, when we founded the MIT
application and transfer, including the focusing of ideas
Sloan School of Management’s Research Program on
or inventions toward specific objectives, evaluating
the Management of Science and Technology, we
those objectives, downstream transfer of research and/or
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encountered an academic tradition that for the most part

development results, and the eventual broad-based utili-
had paid little attention to the organization and manage-
zation, dissemination and diffusion of the technology-
ment of large-scale technology-based programs. Indeed
based outcomes.
it was for the purpose of bringing academic research-
based insights to bear on such technological enterprises
The overall management of technological innovation
that James Webb, the visionary administrator of the
thus includes the organization and direction of human
National Aeronautics and Space Administration, urged
and capital resources toward effectively: (1) creating
us with exhortation and funds to begin our research
new knowledge; (2) generating technical ideas aimed at
program.
new and enhanced products, manufacturing processes
Prior to our start, academics had concentrated largely on and services; (3) developing those ideas into working
two themes: historical romanticism about the lives and prototypes; and (4) transferring them into manufactur-
activities of great “creative inventors,” like Edison and ing, distribution and use.
Bell, and psychological research into the “creativity
process.” While those writings made interesting reading, Technologically innovative outcomes come in many
in my judgment neither track contributed much useable forms: incremental or radical in degree; modifications of
knowledge for managers of technical organizations. existing entities or entirely new entities; embodied in
Indeed with such rare exceptions as Jewkes et al. (2), the products, processes or services; oriented toward con-
few university researchers who were focusing at that sumer, industrial or governmental use; based on various
early time upon issues of R&D management were not single or multiple technologies. Whereas invention is
paying much attention to organizational variables or to marked by discovery or a state of new existence, usually
innovation as a multi-stage, multi-person, complex at the lab or bench, innovation is marked by first use, in
process. Perhaps not surprisingly, industry in the early manufacturing or in a market.
1960s appeared rather unenthusiastic about social
science attempts to probe the underpinnings of effective Most organized scientific and engineering activity,
research, development and technology-based innova- certainly within the corporation, is beyond the idea gen-
tion. In contrast, I sense broad acceptance in the 1980s of erating stage and produces not radical breakthroughs
the results of many academic studies of RD&E, with the but rather a broad base of incremental technological
Industrial Research Institute especially noteworthy in its advance, sometimes leading cumulatively over time to
efforts to advance collaboration in the field of manage- major technical change. Academic research in the area of
ment of technological innovation. technology management has focused primarily on incre-
mental product innovations oriented toward industrial
Invention and Innovation markets. (Interestingly academic marketing research has
focused primarily on incremental product innovations
Roundtable discussions at the 1970 annual IRI spring
aimed at consumer markets.) Neither the less frequently
meeting provide a useful starting point for this review—a
arising areas of radical innovation nor process innova-
set of definitions of the invention and innovation
tion has received much systematic attention from
process:
academia, unfortunately.
Innovation is composed of two parts: (1) the generation
of an idea or invention, and (2) the conversion of that One of my favorite visual aids is Figure 1, portraying a
invention into a business or other useful application . . . process view of how technological innovation occurs,

36 Research 䡠 Technology Management

 and emphasizing two key generalizations. First, techno- At the outset, for example, emphasis is on finding a moti-
logical innovation is a multi-stage process, with signifi- vating idea, a notion of possible direction for technical
cant variations in the primary task as well as in the endeavor. Coming up with one or more technical and/or
managerial issues and effective management practice market goals that stimulate initiating a research, devel-
occurring among these stages. Figure 1 presents six opment and/or engineering (RD&E) project is the task
stages, but the precise number and their division are undertaken during Stage 1. The relevant managerial
somewhat arbitrary. What is key is that each phase of question for this stage is, how do more and better targets
activity is dominated by the search for answers to get generated? Which people, which structures, which
different managerial questions. strategies can be employed toward more effective idea
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Figure 1.—The process of technological innovation can take as long as 20–30 years,
according to some studies, but for most industrial product innovations the duration
from initial idea to market is more likely to be three to eight years. (Reprinted with
permission from E. B. Roberts and A. L. Frohman, “Strategies for Improving Research
Utilization,” Technology Review, vol. 80, no. 5, March/April 1978.)

January—February 2007 37
 generation for these objectives? Good managerial
practice at this stage frequently involves loose control,
“letting many flowers bloom,” pursuing parallel and A major mistake is to
diverse approaches, fostering conflict or at least conten-
tiousness, stimulating a variety of inputs. Critical at this
early stage is ready access to small amounts of R&D
set up stringent
financing, free of heavy and discouraging evaluative pro-
cedures. A major mistake is to set up stringent formal
formal processes for
processes for approval of the small sums needed to try
out an idea. Distributing small “pots of gold” for first- or approval of the small
second-level R&D supervisors to dispense at their dis-
cretion, akin to Texas Instruments’ heralded “$25,000
money,” makes good sense.
sums needed to try
out an idea.
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Later, the Stage 5 commercial development for example,

the task involves in-depth specification and manufactur-
ing engineering of ideas that have by now already been
reduced to an acceptable working prototype. The mana- First, for ease of presentation all stages are shown at
gerial issues in this stage involve coordinating a number equidistant intervals, inappropriately suggesting perhaps
of engineers of different disciplinary backgrounds the similarity of these phases from a time duration and/or
toward achieving, within previously estimated develop- resource consumption perspective. This is by no means
ment budget and schedule, a predefined technical output true. In particular, while each technical field is character-
ready for manufacture in large volume, reliably, and at ized by quite different schedule and resource require-
competitive production costs. Effective managerial ments, Stage 5, commercial development, usually takes
practice in this stage might well involve tight control, as long as the several earlier stages combined and
elimination of duplication, strong financial criteria for requires more resources than most of the other stages
resource use accompanied by formal evaluation, single- together. That is the reason for tight financial standards
minded even somewhat rigid adherence to plan, espe- being properly applied immediately prior to a project’s
cially in regard to those resources—in many ways the entry to this stage.
opposite of what is encountered in Stage 1!
Second, for simplicity sake no feedbacks are pictured in
The next generalization embodied in Figure 1 is that Figure 1 from later stages back to earlier ones. Yet, inevi-
innovation occurs through technical efforts carried out tably, these feedbacks exist and cause reiteration to occur
primarily within an internal organizational context, but among the stages. For example, involvement in the
involving heavy interaction with the external technologi- problem-solving process, Stage 3, generates new
cal as well as market environment. Proactive search for insights as to alternative idea formulations, Stage 2; and
technical and market inputs, as well as receptivity to efforts at transfer into manufacturing as part of technol-
information sensed from external sources, are critical ogy utilization, Stage 6, often create new requirements
aspects of technology-based innovation. All studies of for problem-solving, Stage 3. Indeed a recent article by
effective innovations have shown significant contribu- Kline (4) argues that the multiple feedback loops are the
tions of external technology and have found success essence of the innovation process. Thus, the real process
heavily dependent upon awareness of customer needs of technical innovation involves flows back and forth
and competitor activity. Indeed one of the most over time among differing primary activities, internal
important trends in industrial innovation activity during and external to the dominant innovating organization,
the 1980s is the continuing increase in the use of external with major variations arising throughout the process in
sources of technology as critical supplements to internal regard to specific tasks, managerial issues and manage-
R&D efforts. rial answers.

The details of Figure 1 specify a set of key flows and Beyond my descriptive perspective on how innovation
decision points that occur during the process of innovat- occurs is Peter Drucker’s (5) prescriptive advocacy as to
ing. A number of major managerial elements that are how it ought to happen: “Systematic innovation . . .
embodied in those details will be treated in the remainder consists in the purposeful and organized search for
of this article. Two aspects of the diagram, however, are changes, and in the systematic analysis of the opportuni-
potentially misleading and deserve immediate mention. ties such changes might offer for economic or social

38 Research 䡠 Technology Management

 innovation.” Drucker identifies seven sources for inno- article concentrates on three dimensions—staffing,
vative opportunity, listed in Table 1. Most challenging to structure and strategy—each subject to managerial
those of us committed to the development and use of new influence and/or control. (I will discuss innovation
science and technology is Drucker’s assertion that sources much more in the section on Structure.) A fourth
“contrary to almost universal belief, new knowledge— dimension, systems support, will be treated in depth in
and especially new scientific knowledge—is not the another article in this Golden Anniversary series. Taken
most reliable or most predictable source of successful together, improved management of these dimensions
innovations.” As with most Drucker “truths,” this one is contributes critically to achieving successful institution-
intuitively attractive, as well as unverified in any system- alized innovation. Throughout the article I shall be
atic manner. Whether or not new science is a critical seeking to blend the findings from academic research on
“source” of successful innovations no doubt depends on the management of invention and innovation with the
how you define both “science” as well as “source.” But experiences and observations of successful industrial
there is no doubt that advances in science and technology and government technology managers.
are instrumental to the development and implementation
of almost all successful product and process innovations.
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Staffing Considerations
It is the rare case that a success stems from merely a
repacking of previously existing science and technology. Two primary issues arise in regard to staffing the tech-
nological organization: what kinds of people need to be
Rather than focusing at this point on the claimed sources involved for effective technical development, and what
from which innovations arise, the remainder of this managerial actions can be taken to maximize their

Awareness of customer needs plays a powerful role in invention and innovation. For
example, shortly after transistor co-inventor William Shockley started at Bell Labs in
1936, he was alerted to the need to replace relays in telephone exchanges by research
director Mervin J. Kelly. Kelly’s “eloquent pep talk” started Shockley on the solid state
research that paid off with the invention of the point-contact transistor in December
1947. The photo at left, taken a few months later, shows Shockley seated at the
apparatus used in his investigations with co-inventors John Bardeen (standing left) and
Walter Brattain. Another 1947 invention—“one-step photography”—is shown in the
photo at right. It is being demonstrated by its inventor, Edwin H. Land, who has
credited his little daughter with asking why she could not see at once the picture he had
just taken of her on a sunny day vacationing in Santa Fe, New Mexico. In his 1965
Charles F. Kettering Award address, Land recalled how he immediately “undertook the
task of solving the puzzle she had set before me.” Within the hour, as he walked around
the town, the camera, the film and the physical chemistry became clear enough to Land
that he was able to describe the dry camera in detail to Polaroid’s patent attorney.
Three years of “timeless intensive work” were then required before this demonstration
could take place at a meeting of the Optical Society of America on Feb. 21, 1947.
Photos courtesy of AT&T Bell Laboratories (left) and Polaroid Corporate Archives.

January—February 2007 39
 overall productivity. In regard to people requirements, as
explained by Roberts and Fusfeld (6), a number of
“critical behavioral roles,” not just technical skills, must The active presence
be practiced by the people involved in a technical devel-
opment. By combining the management of technological
innovation literature with our own consulting experi-
of a product
ences we identified five key roles for achieving success-
ful innovation, which we have been able to use to champion is a
enhance RD&E organizational performance. Following
us others have since added to this list, generating as many
as 12 key roles needing separate monitoring and support.
necessary condition
Critical innovation roles.—First are idea generators,
the creative contributors of new insights that both initiate
for success.
projects and contribute to problem solutions throughout
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technical projects (7,8). Ideas can be drawn from the they have generated (10,11). This holds true whether the
“market pull” of sensing real or potential customer needs ideas are born in universities, government labs or in
or demands, or from the “technological push” of envi- industry. The generally low rate of energetic pursuit of
sioning the possible extension of technological perfor- newly created RD&E ideas mandates the requirement for
mance of a material, component or system. Ideas include the second key role in technical innovation-seeking
not just those which lead to project initiation, but also the activities, that of the entrepreneur or product champion.
many throughout an innovation-seeking endeavor which Entrepreneurs advocate and push for change and innova-
contribute importantly toward invention or innovation tion; they take ideas, whether their own or others’, and
outcomes. Thus idea generators for technical projects attempt to get them supported and adopted. Most major
may be scientists or engineers, sales or marketing studies of factors affecting product success have found
persons, or even managers! The rare but valuable idea the active presence of a product champion to be a
generators are those who come up with multiple ground- necessary condition for project success (12). For
breaking ideas over their careers, such as S. D. Stookey at example, in recent years the late Ken Estridge gained
Corning Glass Works who among other successes came widespread repute as the product champion behind
up with key ideas for photosensitive glass and Pyroceram IBM’s successful development and launch of its personal
(9). Individual differences that are either innate or computer. Lew Lehr rose to the presidency of 3M as an
developed over long periods no doubt account for many eventual outgrowth of his own championing of 3M’s
of the distinctive characteristics of effective idea- health products business (13). And despite not being a
generators. But many sources of heightened idea creativ- family member of the closely-held Pilkington Glass
ity arise from managerial influences, for example from company, Alistair Pilkington became “process
the internal organizational climate or environment and champion” for the revolutionary float-glass process
especially from supervisory practices. These are which dramatically changed the company and the
discussed in greater detail in my later section on Indi- industry and again, not incidentally, led this “champion”
vidual and Organizational Productivity. into the chairmanship of the firm.
There are, however, significant differences between As I reported in my first Research Management article,
“idea-havers” and “idea-exploiters”—those who come the entrepreneurial “role” is the same, whether carried
up with ideas and those who do something with the ideas out internally in existing organizations or “externally” in
their own newly founded companies (14). But the mode
of behavior and what is needed for “internal” vs.
“external” entrepreneurial success may well be different,
Table 1.—Seven Sources for Innovative Opportunity as expanded by Maidique (15). My own studies of
“internal entrepreneurs” found that they needed to be
The unexpected sensitive to company politics and the latest corporate
The incongruity “buzzwords” in order to gain internal support, and as
Process need
Changes in industry or market structure indicated below required a high level “sponsor” to lead
Demographics them through the corporate jungle. Lehr (13) argues that
Changes in perception, mood, and meaning strong entrepreneurial efforts are needed even within
New knowledge, both scientific and nonscientific companies that have long traditions of fostering entre-
From P. F. Drucket, Innovation and Entrepreneurship: Practice preneurship, in order to overcome inevitable managerial
and Principles. New York: Harper & Row, Publishers, 1985. resistance.

40 Research 䡠 Technology Management

 A third required role in effective innovative activities is listeners), have depth in at least one discipline, have a
the program manager or leader, sometimes strangely wide range of interests, and be oriented toward problem
called the “business innovator,” supplying the support solving. As I have argued repeatedly (6) a vital extension
functions of planning, scheduling, monitoring and of the concept is the recognition that some gatekeepers
control, technical work supervision, business and can “bridge” to market or manufacturing inputs, rather
financial coordination relating to the R&D project than just technical information, often bringing in raw or
(16,17). This is the one “role” which is also usually an processed information, or points of view, that are
assigned job in the organization, the other roles being otherwise lacking within the R&D organization itself.
incidental to an individual’s specific work assignment.
The final key role is that of the sponsor or coach,
Gatekeepers, or special communicators, are the fourth performed usually by a more senior person who is neither
critical role identified, the link-pins who frequently bring carrying out the R&D itself nor is directly and personally
information messages from sources outside of a project aggressively championing the change. The role is one of
group into that group (18). These human bridges join providing encouragement, psychic support, facilitation
technical, market and manufacturing sources of informa- to the more junior people involved in the task implemen-
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tion to the potential technical users of that information. tation, often including important help in “bootlegging”
Gatekeepers may bridge one technical group to another the resources needed by those trying to move technologi-
within the same company, or may link university cal advances forward in an organization (14). My
research activities to a corporate advanced technology research data affirmed the logical—the higher up in an
center, or may tie customer concerns into a supplier’s organization a sponsor was located, the higher the prob-
design team. ability of success of internal efforts to generate new
product lines. Sponsors are often needed for idea genera-
Tom Allen’s pioneering empirical studies of the func- tors, project managers, and especially for entrepreneurs.
tioning of the technical gatekeeper have been extended A good example of the effectiveness of the “ultimate
by many other academics and broadly accepted and sponsor,” the corporate chief executive officer, is
applied throughout industry and government. For Chapman’s sponsorship of Gorman’s work on “available
example, a study of so-called “bridge scientists” at light motion pictures” at Eastman Kodak (20). But CEOs
Stanford Research Institute found that such individuals as project sponsors can be organizationally dangerous
are rare but easily identified (19). Effective “bridgers” too! Who is to turn off the CEO’s pet project when it runs
were found to be interpersonally able (e.g., good amok?

An Inventor Considers the Process elegance and beauty of a simple solution to a complicated
problem and the appreciation of this elegance, beauty, and
I think the processes of invention are like creativity in the simplicity is as much a form of art as putting together
arts. The artist does not start with a blank piece of paper. notes, words, or colors by an artist.
He may have a blank piece of paper in front of him, but he The question has often been raised as to whether public or
starts with his prior training, his culture, and a bag of tricks even private incentives, drives, and promotional schemes
based on his own past experience. A poet uses the words can increase the output of inventions. I have no doubt that
he has learned, the words of his language, and no other. the answer is a resounding “yes.” A climate of good music
His appreciation of beauty is the result of his training and for an appreciable time would produce great musicians
culture. He is driven by ambition, ego, or desire for glory and composers. There is a great deal of potential talent of
and reward. all kinds in the genes of the human race. If one wants to
This is identical to the drives and mechanisms of the produce great soccer players, one has to encourage the
inventor. The inventor also starts with a blank piece of playing of soccer, and now and then a great Pele does
paper, but he uses his training, experience, and intuition result. If you teach a great many young people how to play
not only to create a solution, but often to invent a problem. the violin, you would get a few great violinists; if you
The invention of a problem is a far greater achievement teach them how to sing, you will get some great singers.
than inventing a solution. Great inventions are the mothers Similarly, you can encourage inventions.
of necessity and not the other way around. This requires creation of glory, rewards, “hoopla” in the
An inventor may recognize a need before the rest of the media, and all the things that encourage people to pursue
world does, or he may create the need because he recog- any field of activity—Jacob Rabinow, holder of more
nizes that his invention could make life richer, easier, or in than 200 patents including the magnetic particle clutch,
some other way, better. He uses his technology as an artist the automatic clock regulator and, most recently, a
uses his. Technology is only a means to an end. The pickproof lock; writing in Chemtech, March 1980, p. 145.

January—February 2007 41
 These several critical roles are all needed within or in
close contact with each internal working group in order
for it to achieve successfully the goals of an innovative Stages of a scientist
outcome. But in addition, the effective development and
maintenance of a technical organization requires recog-
nition of these differentiated roles in order to create and
or an engineer’s
implement appropriate people management processes,
including recruiting, job assignment, personnel develop- career and
ment and training, performance measurement and
rewards. composition of
Individual and organizational productivity.—Beyond
the people and role behaviors needed for effective
staffing are the principal managerial acts that can affect
his/her immediate
staff creativity, inventiveness and productivity. The 30
work group are
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years of Research Management reveal plentiful discus-

sions of approaches for stimulating creative idea-
generating among scientists and engineers, including
such techniques as brainstorming, Synectics, and mor-
primary influences
phological analysis. (See 21 and 22 for extensive
reviews.) Despite the enthusiastic testimony in the upon technical
various articles, I remain unconvinced that systematic
evidence supports the use of these methods, which
frankly I view as mainly gimmicks. As documented
productivity.
below, effective individual and group supervision,
including proper maintenance of group diversity and task colleagues in a project team heightens technical perfor-
challenge, seem to me more likely to produce useable mance (7). Variations in age, technical background, even
ideas. personal values, correlate with enhanced group produc-
Stages of a scientist or an engineer’s career, and the com- tivity. This need for internal challenge is further reflected
position of his/her immediate work group are primary in the findings that the average years a group has worked
influences upon technical productivity (or creativity or together significantly impacts upon that group’s
inventiveness, if you prefer). This generalization rests technical productivity (25). The long-term stable
upon a broad foundation of research into the perfor- technical group apparently becomes too self-secure,
mance of technical people and project groups. Katz (23) diminishes its outside technical contacts, and decreases
has demonstrated that technical professionals evolve its performance. Supervisory intervention at the
through three career stages which he labels socialization, technical group or RD&E project level seems able to
innovation and stabilization. As with the different stages affect this performance, however. For example, technical
of a project cycle, each stage of an individual’s career skills of the first-level group leader, and not human
provides a new set of managerial challenges for maxi- relations skills, enhance a group’s effectiveness (26).
mizing personal productivity. The setting of work norms, And even the stable technical team can be moved to high-
providing task direction, and joining new employees into performing status with proper leadership, in this case
the internal technical communications network are requiring strong direction and control by the project
managerial issues confronted during the socialization or manager (17). Thamhain and Wilemon (27) support the
job “break-in” stage. In contrast, maintaining the importance of the project manager’s technical expertise
employee’s earlier motivation and renewing technical and reliance upon work challenge as major sources of
skills are among the very different sort of questions effective technical performance.
needing treatment in the stabilization or job maturity
phase. Organization Structure
But personal and group productivity are not just influ- The design of organization structures that will enhance
enced by the individual’s job cycle. The nature of the technological innovation requires focusing on both the
immediate work group, its composition and supervision, organization’s inputs and its outputs.
matter greatly. In general what Kuhn (24) called Effective RD&E organizations need appropriate
“creative tensions,” a mix between comfort-reinforcing technical and market information inputs, and their
stability and conflicting challenge, seems desirable. For outputs need to be integrated toward mission objectives
example, multi-dimensional diversity among technical and transferred downstream toward their ultimate users.

42 Research 䡠 Technology Management

 Market inputs.—Managerial research has repeatedly process, for its own internal “consumption.” That pro-
demonstrated that 60 to 80 percent of successful spective in-house manufacturing “customer” deserves at
technical innovations seem to have been initiated by least the same degree of involvement with the design and
activities responsive to “market pull,” i.e. forces reflect- development process as does an outside firm or indi-
ing orientation to perceived need or demand (28–30). Of vidual. If R&D’s “market-oriented” ties to its own manu-
particular note is the recent IRI study of basic research in facturing group can be improved, the potential for
industry (31), which among many other interesting con- significantly impacting company performance is high,
clusions produced the unsought finding that “most inno- especially given the recent IRI study results that show
vations come about as a result of the recognition of a R&D aimed at process innovation as far more likely to
market need or opportunity. While the push of new tech- succeed than that targeted toward new and improved
nology is also important, it plays a distinctly secondary products (33). But I am convinced that overcoming the
role.” These studies less frequently indicate how gap between the central lab and a major plant installation
technical organizations uncover these needs. Sometimes usually needs special efforts and sometimes creative
one person’s personal “hobby-horse” forces “market” organizational designs, in particular when important
consciousness to initiate and sustain a technical program, process changes are contemplated.
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especially when coupled with that individual’s entrepre-

Rather than seeking collaboration to provide market
neurial drive and skills, as in Peter Goldmark’s success-
information to the RD&E process, many companies have
ful pursuit of the long-playing record. As Goldmark
ill-advisedly substituted marketing-oriented control of
exclaimed, “My initial interest in the long-playing record
RD&E. Organizational subordination of research and
(LP) arose out of my sincere hatred of the phonograph
engineering to “product managers” (inevitably mar-
. . . it seemed to violate what I thought the quality of
keting or sales people) or tight budgetary control of
music should be” (32).
RD&E by these units may force market-based criteria to
dominate technical project selection. But this is usually
In organizations less dominated by one key figure,
accompanied by a short-term quick-fix orientation,
“market gatekeepers” or customer liaison personnel
erosion of technical capability, and gradual destruction
frequently aid the technical organization to better
of product/process competitiveness. Analyses by Souder
understand its customers’ requirements, priorities or
(34) have demonstrated that strong and positive relations
preferences. For example, Corning Glass supposedly
between R&D and marketing organizations significantly
discovered the need for optical waveguides as a result of
improve the track record on new product introductions.
one of its staff visiting the British Post Office. Organiz-
In my experience this is best achieved by welding part-
ing to gain meaningful market inputs for research and
nerships among equals, rather than by extracting compli-
engineering use may depend upon explicit assignments
ance from subordinates. Good examples of such R&D/
of such responsibilities to cooperating marketing staff or
marketing partnerships are evident in the team structures
to RD&E people themselves. The product development
used by both Hewlett-Packard and 3M in their new-
cycle should be organized, as suggested in Figure 1,
product pursuits.
to bring market inputs into design repeatedly, during
the early product specification stage, and again during Market research techniques have long been used to help
prototyping through active involvement of selected cus- define consumer preferences in new product designs
tomers. As a sharp contrast to desirable practice, in one (35). These methods have been less helpful for develop-
consulting project for a major chemical company I found ing industrial goods. Recently von Hippel (36) has dem-
the sales organization prohibiting R&D people from onstrated that potential industrial customers whose needs
visiting “their” customers, lest the R&D people agree place them at the leading edge of technological demands
with customer complaints! can be used to specify detailed desired performance char-
acteristics and features for as yet nonexisting products.
A special prospective customer for innovations, often Military or space research requirements are frequent
overlooked when R&D does occasionally seek market sources of such “leading edge” requirements. Fusfeld
inputs, is the company’s own manufacturing activity. (37) has long used this insight in developing forecasts of
Yet depending on the company and industry, the manu- the rate of market penetration of new technologies. The
facturing organization turns out to be the eventual problem however is to distinguish a customer demand
“customer” of anywhere from one- to two-thirds of the that is truly in the vanguard of future broader market
company’s technological developments. Manufacturing, needs from the “cry for help” from what amounts to the
similar to an outside unrelated potential product “lunatic fringe” that exists in almost every technical
customer, has to decide whether or not it wants to “buy” field. That fringe also has needs that are real and extraor-
an internally developed improvement in materials, com- dinary, but unfortunately not representative of future
ponents, manufacturing equipment or overall production growth opportunities.

January—February 2007 43
 Technical inputs.—Despite the presumed dominant role
of “market pull” as a source of innovative projects, “tech-
nology push,” i.e. undertaking projects for advancing the Many companies
technical state-of-the-art in an area without anticipation
of the specific commercial benefits to be derived, is also
the critical source of many significant product and
have ill-advisedly
process successes. The many studies cited earlier still
show these technology-push successes to be in the substituted
minority, but unfortunately do not clearly indicate the
relative worth of the two approaches. One confusion
leading to arguments is to assert that if market pull is the
marketing-oriented
key, then market research should be more effective than
it has proven to be! Collier (38) for example quotes
Barnes’ listing of “Neoprene, nylon, polyethylene,
control of RD&E.
silicones, penicillin, Teflon, transistors, xerography, and
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the Polaroid Land camera” as not resulting from “a outside world, whether in the technical literature, in
market research study of what people said they wanted.” already developed products and processes, or especially
While market research is not the only or even the primary in the minds of other technical professionals. For
indicator of “market pull,” many research directors espe- example, as illustrated in Table 2 several studies point
cially sympathize with Collier’s point of view. Guy Suits out that for innovations eventually developed within a
(39), long-time leader of General Electric’s research firm, about 60 percent of the sources of the initial
efforts, cites Langmuir’s work on hydrogen dissociation, technical ideas had outside origins (28). Allen (43) has
leading to a new type of welding, as a good example of demonstrated the relative differences among channels
technology push. Indeed Casey (40) goes further, for technical information input to an organization, distin-
arguing that misleading market research was a contribu- guishing what is readily accessed from what is used most
tor to the long period required for commercial develop- effectively in coming up with high-rated problem
ment of high fructose corn syrup. More logs are heaped solutions. His work as well as that of others (44,45)
on this fire when one cites the supposed market research indicates the minor role played by the literature, espe-
studies (often claimed to have come from the same large cially in contributions to engineering and development,
consulting organization!) that demonstrated no meaning- in contrast with personal contacts, experience and
ful market prospects for computers, instant photography training.
or the dry copier.
One factor that inadvertently has significant effect on
When technical advancement is the goal, managers have technical inputs to RD&E groups is the architectural
long understood that professional depth in an organiza- layout of their work space. Early observations by Jack
tion is achieved by grouping people together in their own Morton, then vice president of semiconductor research at
area of specialization, with work assigned and perfor- Bell Laboratories, led to his concern for the physical
mance supervised by a more accomplished person of the separation between technical organizations that were
same specialization (41). This approach is called func- intended to relate to each other (46). Research at MIT by
tional or discipline-based or specialty-oriented organiza- Muller-Thym in the early 1960s empirically established
tion. It is the traditional organization structure of the craft spatial effects on the frequency of communication
guild and of the university. Multiple specialists working among engineers and scientists in the same laboratory.
together interact comfortably, using the same general
knowledge base, analytic skills and tools, and vocabu-
lary. When technical people are organized in functional
arrays, their natural interplay brings depth of specialized Table 2.—Sources of Ideas for Innovations
capabilities to bear on technical problems. Indeed, Developed within the Firm
Marquis and Straight found that technical groups
% from Outside
organized in functional forms have the highest technical Author Study N the Firm
excellence (42).
Langrish et al. Queen’s Award 51 65
But in any nontrivial technical field the vast majority of Mueller DuPont 25 56
applicable technical knowhow exists outside of a per- Myers/Marquis 5 Industries 157 62
forming technical organization. For technical effective- Utterback Instruments 32 66
ness even a strong functional team needs to draw upon From data contained in J. M. Utterback, “Innovation in Industry
the pre-existing technical knowledge that is in the and the Diffusion of Technology,” Science 183, February 15, 1974.

44 Research 䡠 Technology Management

 These concepts have been well-developed by Allen (18) science centers” across the United States, established
into careful findings on specific design elements of adjacent to concentrations of innovative users to learn
RD&E architecture. The distance between two potential about new software and hardware developments and
communicators, vertical separation, walls and other transfer that technical information back into IBM’s
architectural features importantly influence technology product development groups. IBM’s Cambridge
flows. operation in Technology Square, working closely with
MIT’s pioneering Project MAC, thus became the source
Thus far I have addressed what affects technical inputs in of IBM’s first commercial computer time-sharing
support of an organization’s internal invention activities, system, a field adaptation of an innovative user’s devel-
the first element of the two-step innovation process I opment. As one approach to overcome biases against
defined initially. What about technical inputs not aimed outside sources of technology, increasingly corporations
at invention but rather at innovation directly? Clearly are establishing the position of Chief Technical Officer
technological solutions (inventions) already exist or Vice President of Technology, with broad responsibil-
elsewhere, and an innovating organization might merely ity for both internal technology development as well as
adopt or adapt them by slight modification for a new external technology acquisition. Organizational experi-
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purpose. This would permit skipping the first stage of ments to enhance both technical and market information
invention and going directly to the exploitation stage. An inputs are underway across a broad front.
early U.S. study determined that 22 percent of key suc-
cessful innovations had been adopted or adapted (44) Output-focused organization.—Just as the functional
while comparable U.K. data indicated a 33 percent organization structure maximizes technical inputs, the
adoption rate (45). Japanese data on license fee payments project, program, mission or product organization is
for foreign technology show a long-established pattern intended to integrate all inputs toward well-defined
of heavy use of outside technology. A small study of outputs. By placing in the same group, under a single
Taiwanese innovations found adoptions to have leader, all the contributors toward a given objective, the
accounted for the bulk of successes (47). While specific project organization maximizes coordination and control
percentages no doubt have changed in recent years, toward achieving output goals. The Marquis and Straight
adoption or adaptation of prior outside inventions is a study (42) cited earlier supports these findings. But
major source of innovation worldwide, but apparently project structures have a fundamental flaw that seriously
still substantially underutilized by U.S. firms. In recent affects many technical organizations. The project form
years the growth of research consortia, effective or not, tends to remove technical people from organizational
and the rapidly growing number of “strategic alliances” groups in which they interact with colleagues of their
between large corporations and new firms in areas of own scientific or engineering discipline. Furthermore,
emerging technologies indicate that more looking to the the project manager may be technically expert, but inevi-
outside for technology is taking place, even by U.S. tably in only one of the disciplines of his or her subordi-
companies. I will discuss this development further in the nates, not all of them. If the project has long duration,
section on Strategy. especially when the technology base is rapidly changing,
the technical skills of the project members erode over
One unique source of potential adoptions is the user. Von time due to lack of stimulating technical reinforcement
Hippel (48) has shown that users frequently create and and supervision.
implement innovations for their own use, followed later
by manufacturer adoptions of those innovations for This dilemma has led to the creation of an organization
large-scale production and distribution. His research on that is intended to be a “compromise”—the “matrix”
scientific instruments and several areas of manufacturing structure in which technical performers are supposed to
equipment demonstrated that heavy percentages of new maintain active membership in two organizations, their
products had been user-developed. original discipline-based functional group as well as the
focused project group. In theory the “matrixed” person
Technical organizations need to be designed to facilitate thus has two bosses, one functional and one project, each
accessing these several different sources of technical of whom will extract his appropriate “due,” thereby
information inputs, whether as contributions toward attempting simultaneously to maintain the technical
internal inventions or as sources for adoption more skills and performance of the individual, more or less,
directly as innovations. A variety of approaches are while orienting his loyalty and contributions toward the
suggested, ranging from such simple considerations as project’s output goals, more or less! However, most
ensuring that at least some salespeople have technical technical “matrix” organizations are only “paper”
skills and/or incentives so that they bring back a custom- matrices, not “real” matrices—they appear to be matrices
er’s ideas in addition to his orders. Much more ambitious on organization charts but do not strongly pull the
are the IBM marketing department’s several “applied engineer between two conflicting masters.

January—February 2007 45
 “Managing Invention and tors. Those “actors” provide clear guidance, sometimes
incorrectly, as to what is demanded in terms of alterations
Innovation” Revisited of current offerings. (Upon reflection it’s even amazing
In rereading “Managing Invention and Innovation,” I find that only 80 percent of successful innovations are seen
little to regret and nothing to retract. The framing as resulting from “market pull.” Given the market
approach of Staffing, Structure and Strategy seems rea- dominance of incremental innovation, I can imagine that
sonable and I still believe in the advice I provided almost more like 90–95 percent of innovations are in effect
20 years ago. However, two critical aspects have changed generated by “market pull”!)
over these years that bear comment: With this demand situation and pressure for changes in
First, today I would focus more on the big differences primarily familiar technological areas, the internal
between managing incremental innovation and major/ projects to accomplish the innovations are usually simply
breakthrough/radical innovation. We understand well staffed with technical people, a linkage to the market from
how to manage the incremental innovation efforts that regular sales/marketing channels, and a skilled project
consume most R&D budgets and keep mid-to-large size manager. No unique internal entrepreneur or senior
firms moving forward, albeit with relatively slow pace sponsor is needed to move these projects forward. The
and occasional hiccups. But we do not understand well existing product organization smooths the way for accom-
how to manage major/breakthrough/radical innovation plishment and then downstream integration of incremen-
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efforts, and that inability creates large failures, cyclical tal advances. The organization structure to do this can be
company performance, stagnation, and even erosion. the straightforward functional organization, with project
coordination, or it can be a dedicated project team because
Second, the world of invention and innovation has the usual short-term nature of an incremental project will
become far broader than it had been, and internal-external not produce technical deterioration of the group during the
integration has become today’s most important manage- project life.
rial challenge.
Most companies know how to manage these efforts. The
Incremental Innovation result is that most incremental innovation attempts
succeed, but frequently only incrementally in terms of
Established companies spend 80–90 percent of their tech- market size and profitability. And eventually, overdepen-
nology budgets on upgrades, modifications, extensions, dence upon this strategy leads to failure of the product line
and add-ons to present product lines. The strategy behind and perhaps the firm.
this is the conventional drive for continuity and reason-
able growth, if possible, of the existing businesses. The
inputs that call for the incremental changes come largely Major/Breakthrough/Radical Innovation
from the existing marketplace.
In contrast, established firms devote a small fraction of
I hasten to specify that I regard the “market” as having the their resources to trying to pull off big things, whether
three dimensions of customers, competitors and regula- they are big in scale (i.e., major projects) or big in degree

If one wanted to obtain truly matrixed individuals, the achieved results reflecting the characteristics of the
influences that push a technologist’s time and attention dominant organization form, either functional or project
toward competing sets of objectives (e.g., functional but seldom both. Recent studies suggest that certain
excellence vs. project schedule demands) would have to patterns of dominance among these contending influence
be roughly balanced between those objectives. A sources achieve better performance of matrix organiza-
technical contributor’s priorities are influenced by: (a) tions (25).
who is responsible for his/her performance evaluation
and reward distribution; (b) who makes the individual’s Output transfers.—But in addition to generating
specific task assignments; (c) where is the individual outputs, the technical organization needs to be designed
physically located relative to the two “competing” to enhance output transfer downstream toward eventual
managers; (d) what is the longer-term career relevance of customers and users. Downstream is where innovation
the competing groups; and (e) what is the relative persua- takes place and where benefits are realized! A consulting
siveness (whether based on personality or power) of the survey of prestigious major corporate research laborato-
two managers. Achieving even a rough balance among ries has indicated a high degree of dissatisfaction with
these influences would only be practicable by dominance the extent and effectiveness of transfer of results to
of the functional manager on some of these dimensions, potential recipient groups (49,50). Three different
dominance of the project manager on others, and perhaps clusters of bridging approaches were found helpful in
rough equivalence of the two managers on still other increasing transfer in those labs—procedural, human and
influences upon matrixed persons. The absence of rea- organizational. Most organizations used a variety of
sonable balance in most “paper matrixed” cases leads the these approaches, often several simultaneously. My
actual situation to its “default” condition, with the findings have been reaffirmed by recent comparative

46 Research 䡠 Technology Management

 of market or technical change (i.e., breakthroughs or labs, now collaborate in pursuit of successful innovation.
radical undertakings). Here, managerial understanding is Along every stage of the life cycle discussed in my
weak and failure dominates. The staffing for such efforts reprinted article are now many key external “venture-
needs to follow the arguments made in my 1988 article: oriented” alternatives and complements (2).
full innovation teams of idea generators, entrepreneurs
and champions, technical and market gatekeepers, project In my 1988 article, these venture approaches earned
managers, and senior sponsors. The organization struc- merely a few ending paragraphs, despite my long-held
tures might be large-scale complex project groups, led by enthusiasm. But today more large companies than ever
“heavyweight project managers” (including possibly the before are operating their own corporate venture capital
most senior executives as the “heavyweights” or at least as groups, and a new organization in which I am personally
the “sponsors”), or they might be matrix stuctures with involved, Synchrony Ventures, is trying to bring the same
their own internal conflicts to resolve. strategic benefits to equity-based alliances with emerging
technology firms to Fortune 2000 companies. Indeed,
The strategic issues here are those three that I argue in my these corporate mechanisms may well replace the tradi-
recent article in Research–Technology Management (1): tional venture capital firm, which has backed away from
senior executives need to provide linkage between their early-stage investing.
own insights to corporate vision and direction and tie them
to the choices and priorities of major undertakings; the Alliances for both incremental and breakthrough innova-
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firm’s internal resources need to be leveraged by selected tion are now commonplace globally. “Open Innovation”
elements of the vast numbers of alternative outside at the community level has moved us in several fields far
sources of especially technical capabilities; and the firm beyond the more limited assumptions of external user
must push for technological leadership, not followship, of contributions (3). The resulting challenge is that now
at least its key competitors. invention and innovation must be managed across organi-
zations rather than just inside of them, as well as around
Two of the more stiking approaches being taken toward the world. What will the next 20 years bring?—E. B.
large-scale innovation objectives are IBM’s “Emerging Roberts, Jan 2007.
Business Opportunities” and P&G’s “Connect and
Develop” programs. Both follow all three dimensions that
I have proposed, but persistence of CEO commitment and References
follow-through may well become the determinant of their 1. Roberts, Edward B. 2004. Linkage, Leverage and Leadership
eventual impacts. Drive Successful Technological Innovation. Research-
Technology Management, May–June, pp. 9–11.
2. Roberts, Edward B. and Liu, W. Kathy. 2001. Ally or
The Outside World of Invention and Innovation Acquire? How Technology Leaders Decide. MIT Sloan Man-
agement Review. Fall (43, 1), pp. 26–34.
The past 20 years have dramatically changed the way that 3. von Hippel, Eric. 2005. Democratizing Innovation. The MIT
firms of all sizes, along with university and government Press, Cambridge, MA.

case studies by an internal task force at IBM (51) and by downstream: (a) carries expertise for post-transfer
a consulting project at Union Carbide (52), among problem-solving; and (b) not unimportant, conveys the
others. risk-reducing impression that the receiving unit will not
Procedural methods include: joint planning of RD&E be stuck with solving post-transfer problems by itself.
programs by the performing group and the organization Other human bridges that are widely used include
that is expected to be the receiver, often resisted by R&D rotation programs, market gatekeepers, joint problem-
as an “invasion” of its turf; joint staffing of projects, solving sessions, and other formal and informal
especially pre- and post-transfer downstream; and joint meetings.
project appraisal after project completion, done cau- Organizational techniques for enhancing transfer are
tiously if at all after failures in order to avoid destructive usually more complicated to design and implement than
fingerpointing. procedural or human bridge approaches. “Integrators,”
Human bridges are the most effective transfer mecha- sometimes named “transfer managers,” or integrating
nisms, especially the upstream and downstream transfers departments are frequently appointed to tie together the
of people. Movement of people upstream: (a) brings with sending and receiving organizations. This person or unit
them information on the context of intended project use; is given the responsibility for moving the project from
(b) establishes direct person-to-person contacts that will the sender into operating condition in the receiver orga-
be helpful in later post-transfer troubleshooting; and (c) nization, either lacking authority in one or the other orga-
creates the image that the project eventually being trans- nization or being matrixed between both.
ferred has involved prior ownership and priority inputs More ambitious organizational approaches include
from the receiving unit. Later movement of people dedicated transfer teams, established solely for the

January—February 2007 47
 period during which technical results are being trans-
ferred to their “customers,” done especially for moving
purchased process technology. Venture teams, discussed Most technical
further below, are also employed to reduce functional
organizational transfer issues, shifting leadership
responsibility among the many-disciplined team
“matrix”
members as the primary phase of the project shifts from
research to engineering to manufacturing to sales. organizations are
Strategy only “paper”
Strategic management of technology includes both
strategic planning and strategic implementation aspects matrices, not
at either of two levels: (a) overall, for the entire
technology-dependent firm, government agency, “real” matrices.
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division or product line; or (b) more focused, for just

the technology development/acquisition process/
department/laboratory of the entire organization. As
recently as ten years ago neither of these levels of between the first two “modes,” the entrepreneurial
strategy was the subject of much serious scholarship, smaller firm and the successfully innovative larger cor-
or even management consulting practice. Few research- poration (55–58; see also 14). Maidique and Hayes
ers carefully studied the overall management of the conclude that to be innovative the large corporation
technology-intensive company. And fewer still ad- needs to manage the “paradox” of chaos versus continu-
dressed the questions of how to incorporate technologi- ity, similar to the “creative tensions” required for the
cal considerations into overall business strategy. innovative technical person (7,24).
Strategic planning focuses upon the formulation of an In moving from strategic thinking toward strategic
organization’s goals and objectives, and upon develop- planning we need principles for developing more
ing the policies needed to achieve those objectives, detailed technology strategies. But what are the under-
including identification of the organization’s primary pinnings of technological change, especially as it relates
resources and priorities. But developing corporate to the corporation, upon which overall technology
strategy with such a global perspective, including tech- strategy should be based? Three general observations
nological dimensions, is quite new. Indeed the evolution seem critical here, all linked to the dynamics of techno-
of corporate strategic planning as a field of practice is logical innovation processes: (1) there are characteristic
divisible more-or-less into three decades: the 1960s, patterns over the life cycle of a technology in how fre-
during which multi-year budget projections became the quently product versus process innovations occur; (2)
earliest forms of financial planning, sometimes misla- each stage of technology has differing critical implica-
belled “long-range planning”; the 1970s, when market tions for innovation, including type, cost, degree of
growth/share matrices and market attractiveness consid- invention, and source; and (3) an organization’s efforts to
erations added a new dimension to strategic analysis; and generate technological innovation create almost inevi-
the 1980s, during which technology as a strategic factor table internal dynamics in the allocation of R&D efforts,
became so widely acknowledged as to cause firms and generating multiple management problems. Each of
even countries to realize that financial, marketing, and these is discussed more fully below, with suggestions of
technological considerations needed to be integrated in related technology planning and strategy development
overall strategy development (53). approaches.
Strategic thinking and planning.—Horwitch and Utterback and Abernathy (59) demonstrated that a tech-
Prahalad (54) provided an early set of perspectives at the nology tends to evolve in three stages. Most technologies
overall strategic level, differentiating the key issues of move from an early “fluid stage,” dominated by frequent
technology-oriented strategic management among three product innovations, through a “transition stage,” char-
modes: the small, usually single-product, high-tech firm; acterized by significant process innovation and the
the large, multi-market, multi-product corporation; and emergence of a dominant product design, into a “specific
the multi-organization, even multi-sector societal stage,” featuring lower rate of and more minor product
program. For each of these, Horwitch and Prahalad find a and process innovations. While variations in this pattern
primarily non-overlapping set of strategic issues and pri- of course occur, some of which are already well under-
orities. More recent writing has focused upon similarities stood (60,61), this generalization becomes one important

48 Research 䡠 Technology Management

 basis for developing a company’s or a product line’s stage, large corporations sometimes undertake long-term
technology strategy. development programs that combine many elements of
applied research and engineering. For example, General
One of the most significant findings from this research
Motors’ successful efforts in developing its two-cycle
has been the reaffirmed role of the smaller firm as the
diesel engine included more than ten major develop-
dominant source of innovation during the earliest
ments needed for the final system (69).
emerging stage of a technology, with the locus of inno-
vation shifting toward larger companies in the transi- The late stage of a technology features less frequent
tional and more mature stages of a technology (59). Most minor product and process innovations, contributed
studies that have sought to find differences in R&D pro- primarily by large corporations, motivated mostly by
ductivity as a function of company size have not made cost reduction and quality improvement operational
this critical distinction as to the stage of technology or objectives. As illustrated by Hollander’s (70) careful
type of innovation. Consequently, the findings of these analysis of DuPont rayon innovations, shown in Table 3,
economic analyses have varied unconvincingly all over these numerous minor innovations can produce dramatic
the lot, from some that have asserted the large company cumulative impact upon costs. In fact the so-called
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is most productive of innovations to others that have “learning curve,” i.e. decreasing unit manufacturing cost
claimed the exact opposite, to still other studies that have as cumulative production increases, results primarily not
found nonlinear ties between size and R&D results. from the volume itself but rather from the usual continu-
ing allocation of engineering efforts to incremental cost
The potential stability or predictability in patterns of
reduction projects as a product line’s volume increases.
technology evolution is the rationale for attempting to
Management of the technical investment is the primary
use technological forecasting techniques as part of tech-
source of the so-called “learning curve” competitive
nology planning and strategy development. Most tech-
advantage, not the share of market.
nology forecasting methods are simple, often inadequate
for the task (62,63). Indeed, despite recent “rediscovery” These key dimensions of a technology described above
by some consultants of technology S-curves for forecast- should strongly influence choices made by a firm or gov-
ing and planning (64), the intellectual development of the ernment agency in developing its technological strategy.
technology forecasting field more or less stopped over a A company’s detailing of its “product innovation
decade ago (65,66). Yet some corporations have charter” (71), or its application of project selection prin-
benefited enormously from thoughtful application of ciples or techniques (72) as part of technology planning,
technology forecasting methods to their strategic ought to reflect at least general consideration of the
analyses. Tracy O’Rourke, the chief executive officer of current stages of its principal technologies. In particular,
Allen-Bradley, for example, cites a comprehensive tech- the late stage of one technology usually corresponds to
nology forecast as the basis for planning his company’s earlier stages of other potentially threatening technolo-
successful transition from electromechanical to solid- gies. Most corporations fail to anticipate or even appro-
state electronic devices (67). priately respond to these technological threats (64,73).
Each stage of a technology is associated with different Technology life cycles occur in an industry as a whole,
strategic implications. The earliest stage in a technolo- thus providing an “environmental” set of influences
gy’s life cycle tends to feature frequent major product upon a single organization’s strategy. A different kind of
innovations, heavily contributed by small entrepreneur- cycle, however, is produced within a firm by its own
ial organizations, often closely tied to lead user needs.
The development of frozen orange juice concentrate by
the National Research Corporation and its spinoff
companies is one such example (68). The present rash of Table 3.—Cost-Reducing Innovation
biotechnology discoveries are coming primarily from in DuPont Rayon Plants
university laboratories directly or from young small Contribution of Minor Technical
enterprises, leading irresistably to the explosion of Change to % of Net Reduction in
biotech alliances between large companies and the new Unit Costs Due to
Plant Technical Change
startups. The same alliance pattern has evolved in the
areas of machine vision and artificial intelligence. Spruance II-A 83
Spruance I 80
The intermediate stage of a technology’s life cycle may Old Hickory 79
include major process innovation, with continuing but Spruance III 46
lessened product variation occurring, with increasing Spruance I 100
numbers of competitors, both large and small. To From data in S. Hollander, The Sources of Increased Efficiency.
achieve the dominant product-process design during this Cambridge: MIT Press, 1965.

January—February 2007 49
 attempts to develop and commercially exploit technol-
ogy. As a major project moves downstream through a
multi-stage research–design–development–production Japanese R&D
engineering–field trouble shooting technical organiza-
tion, decisions on acquisition and allocation of technical
resources can cause major instability in overall perfor-
strategy may be in
mance, including in the rate and character of new product
releases and resulting sales and profits (74,75). For many transition toward
small firms the resulting “boom then bust” often spells
disaster. Similar though less evident problems arise at the
product line level of large corporations and government
what has been
agencies. Self-induced cycles of primarily discovery
followed then by primarily exploitation seem to have a dominant
plagued the growth years of Polaroid Corporation, for
example, contributing to its financial crises of the late U.S. approach.
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1970s.

Large-scale and realistic computer simulation models

have been developed and increasingly employed in organization as it is being applied to a particular market
recent years for helping to cope with this aspect of tech- opportunity, and tries to evaluate relative technical
nology and overall organizational strategy development strength. Further developments of technology planning
(65,74–76). While these computer modeling methods are approaches, especially at the strategic level, are needed
primarily strategic support tools, the technological fore- and can be expected during the coming decade (78).
casting and project selection techniques that were
mentioned principally enhance tactical and operational Strategic implementation.—But beyond strategic
aspects of technology planning and management. Other planning must come strategic implementation. Tactics
approaches to technology planning have been developed and operations are the means of implementation of
and successfully applied at both the tactical and strategic strategy. Not much has yet been written about specific
levels. For example, Crawford (71) has conceptualized a implementations of technology strategies. At the
“product innovation charter” that contains five major national level, Johnson (79) has concluded that, relative
areas for inclusion in a formal strategy statement, with to American firms, Japanese industry has more heavily
each of the five subdivided into finer categories. invested in applied rather than basic research, adopting
Crawford argues for taking into account explicitly the and improving on pre-existing products and technolo-
company’s: target business arenas; objectives of product gies, in already well-developed market areas. He cites
innovation; specific program of activities; the degree of government policies in regard to patents, subsidies and
innovation sought; and any special conditions or restric- tax incentives as important in both countries. In his
tions on the strategy. recent survey studies while at MIT, Hirota (80) has
developed strong empirical evidence on U.S.-Japanese
Another most impressive technique for technology technology strategy differences, supporting but going
planning is “competitive product profiling,” in which an beyond Johnson’s observations. However, recent
organization’s product line is compared to its key com- Japanese pioneering efforts in such areas as compact-
petitors in terms of seven technology-based measures: disk technology and more advanced semiconductor
functional performance; acquisition cost; ease-of-use; memories suggest that Japanese R&D strategy may be in
operating cost; reliability; serviceability; and system transition toward what has been a dominant U.S.
compatibility (77). IBM adds “availability” to this list of approach (81).
competitive measures, making “reliability, availability,
serviceability” (RAS) a critical element of its internal Although now also of increasing interest to nontechnical
technology planning. Extending this approach to industries, the so-called “venture approaches” have been
analysis of competitive manufacturing processes has a unique means for implementing overall strategies
been attempted, but with less success due to relative lack seeking accelerated technology-based new business
of competitor data. Fusfeld (77) has tried to overcome development for growth and/or diversification. These
this limitation and bring technology planning to the level venture approaches involve larger organizations in
of assessment of overall organizational capability. He attempts to emulate or couple with smaller entre-
uses in his analytical framework the “technology preneurial units. The spectrum of possible strategic
planning unit,” the level of generic technology in the and organizational alternatives includes: venture capi-

50 Research 䡠 Technology Management

 tal investments in young “emerging technology” The variety of venture alternatives for entering new busi-
companies; sponsored spin-offs of new product devel- nesses has raised issues as to means for selecting among
opment-commercialization groups; “new style joint them. Roberts and Berry (88) have devised a research-
ventures” that feature alliances between large and small based matrix reflecting primarily the organization’s
companies; internal ventures; and integrated venture “familiarity” with the market and technology aspects of
strategies (82). Collaborative undertakings among U.S. the new business. The Roberts/Berry framework,
firms are growing dramatically, involving new linkages supported by a field test in a large diversified U.S. firm,
with universities and especially new investment/ concludes essentially that the further the new area is from
development/commercialization ties with young high the firm’s base “familiar” business, the less resource-
technology companies (83,84). intense the venture approach to be taken. An unpublished
Japanese analysis of corporate venture success and
A subject of active study and industrial practice off and
failure and a host of studies performed by members of my
on since the early 1960s, venture approaches have
mid-career MIT Management of Technology Program
recently become increasingly attempted by companies
have strengthened the data support for “familiarity” as a
and even countries as part of their strategies for inten-
powerful determinant of business development. Further
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sifying their technological industrial base. Venture

reaffirming this emphasis upon “familiarity” as a key
strategies require long-term persistence for effective
variable for eliciting strategic direction are the recent
implementation and dramatic differences in manage-
findings by Meyer and Roberts (89) that the more suc-
ment style and policies from traditional mainstream
cessful small high-technology companies pursue product
approaches. These demands for “managerial innovation”
development strategies that are focused upon moderate
are seldom adequately met, producing high failure rates
degrees of technological and market change. Much more
among corporate venturers (85,86). Yet the occasional
research is needed to test the applicability of these results
dramatic success, such as Texas Instruments’ entry into
in other industries and with larger companies.
the semiconductor business (87) or IBM’s Personal
Computer venture or 3M’s “Post-Its” offer sufficient With the exception of its brief mention above in regard to
upside attraction to keep companies making new venture U.S. and Japanese R&D investments, the role of govern-
attempts. ment policies and actions in affecting technology

Summing Up • Downstream transfer of RD&E results can be improved

through use of multiple procedural, human, and organiza-
• Technological innovation is a multi-stage process, with
tional “bridges.” Human bridges are the most effective
major differences needed for effective management of
transfer mechanism, and people movements, rotations,
each stage of activity.
and face-to-face meetings should be used routinely and
• To achieve effective innovation, an organization frequently.
requires that “critical role-players” collaborate in a formal
• Most technologies move through evolutionary stages:
or informal team relationship. These critical roles include
an early one dominated by frequent product innovations; a
the idea generator, the entrepreneur, the program
transition characterized by increased process innovation
manager, several types of gatekeepers, and the sponsor.
and the emergence of a dominant product design; and a
• Group diversity is a major influence upon technical per- mature stage featuring much lower rate and more minor
formance. A group that stabilizes its membership for too degree of both product and process innovation. A firm’s
long not only decreases its productivity but tends to innovation strategy and technological resource alloca-
become insular and to evidence “Not Invented Here” tions should differ markedly depending upon the stage of
behavior. its primary technology.
• Highest product development success rates are • “Competitive product profiling” is a useful method for
produced when marketing and R&D organizations work initiating technical planning in a company, comparing the
in close collaboration. key technical performance characteristics of a product
line with competitors’ related products.
• “Market pull” far more frequently leads to successful
innovations than does “technology push,” although both • Recent growth of venture capital and alliance methods
sources of initiating projects account for success and reflects increasing recognition of the need to link external
failure alike. technologies with internal capabilities.
• Users not only furnish critical “market needs” input • Top management commitment is essential to assure
data to designers, but in some industries supply the actual success of broad-based programs aimed at institutionaliz-
innovations that manufacturers later adapt, improve and ing the development of effective product and process
commercialize. innovations.

January—February 2007 51
 strategy has been ignored thus far. Yet government regu- innovation, each supported by literature, empirical
latory activities in regard especially to health and safety research, and practitioner experience. Some of these gen-
have had significant positive and negative influences on eralizations have already been widely diffused into
technological innovation (90–92). But, as pointed out practice, such as recognition of the gatekeeper’s impor-
by Abernathy and Chakravarthy (93), government’s tance to information flow and nearly everyone’s efforts
strategic role has also included actions to create tech- to stimulate internal entrepreneurship. Some of my other
nologies directly (via the Horwitch/Prahalad Mode III, contentions may still be subject to debate, modification
for example, 54) as well as indirectly through market and even rejection as we learn more.
modifications (94). In a sense, the variety of alternatives
facing governments for influencing technological Both academics and technology managers need to join in
change are equivalent to the corporate venture alterna- this continuing search for clearer managerial insights
tives described previously. about technological invention and innovation and more
effective organizational performance. The National
Research Council’s recent report, Management of Tech-
In Conclusion nology: The Hidden Competitive Advantage, summed up
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Recent work by Gobeli and Rudelius (95) provides a the goals: “Effective work in the field of Management of
fitting basis for finishing this article. In their integrative Technology can play a crucial role in devising the strat-
comparative analysis of five firms in the technology- egies and imparting the skills and attitudes to U.S.
intensive cardiac-pacemaker industry they observe the engineers and managers that they will need in the future
differing competitive impacts that have come from the technology-dominated economy” (96). It listed eight
multiple stages of the innovation process. Managing at challenges of critical importance to industrial competi-
the creativity phase is not enough, nor even is managing tiveness: How to integrate technology into the overall
manufactured quality sufficient, nor is managing that is strategic objectives of the firm; How to get into and out of
focused primarily upon any other single aspect of inno- technologies faster and more efficiently; How to assess/
vation. They reaffirm the importance of key innovation- evaluate technology more effectively; How best to
supporting people roles. Gobeli/Rudelius describe the accomplish technology transfer; How to reduce new
importance of market-technology linkages, effective product development time; How to manage large,
program management, government intervention, and complex, and interdisciplinary or interorganizational
appropriate goal-setting, planning and risk-taking for projects/systems; How to manage the organization’s
firms in this medical electronics industry. internal use of technology; How to leverage the effec-
tiveness of technical professionals. Hopefully more light
Technological innovation can provide the potential for will be shed on these key industrial needs prior to the
altering the competitive status of firms and nations. It can IRI’s Diamond Jubilee! 䡩 䊱

contribute to increased corporate sales and profits, as

well as individual and national security and well-being.
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MEASURING AND IMPROVING THE PERFORMANCE AND RETURN ON R&D

Fifty-five RESEARCH ⭈ TECHNOLOGY MANAGEMENT articles on this subject are now available in
paperback. To order, see inside back cover.

3000 Raw Ideas = 1 Commercial Success! Risk-Adjusted Valuation of R&D Projects

Assessing the Value of Your Technology Why Some R&D Organizations Are More
Metrics to Evaluate R, D & E Productive Than Others
Measuring R&D Performance—State of the Art Winning Businesses in Product Development:
R&D in an EVA World The Critical Success Factors
Identifying ‘Super-Technology’ Industries Reengineering for Revenue Growth
Evaluating R&D Performance Using the New Managing R&D as a Strategic Option
Sales Ratio Applying ‘Options Thinking’ To R&D Valuation
Evaluating R&D Performance Using the Cost Assessing Technology Projects Using Real
Savings Metric Options Reasoning
Managing Open Innovation Do’s and Don’ts of R&D Benchmarking
Measuring R&D Effectiveness Benchmarking Global Strategic Management of
Excellence in R&D Technology
The Strategic Measure of R&D Benchmarking Best NPD Practices
Maximizing the Returns from Research Connect & Develop Complements Research
Measuring R&D Productivity and Develop at P&G
Measuring R&D Performance . . . AND MORE

54 Research 䡠 Technology Management