Technology and Innovation

Management
Lecture 5: Technology Forecasting

Department of Mechanical, Energy & Industrial Engineering

Dr. K. Setswalo
[email protected]
Block 52, Room 01
Lecture 5
 Technology Forecasting

• “The future is not what it used to be.”

-[according to Valery]

• “The future is not even when it used to be.”

• “All that we know about the future is that it will be

different from the present.”
 Presentation Outline
▪ Introduction to Technology Forecasting

▪ Technology forecasting & technology innovation chain

▪ Necessity of technology forecasting

▪ Benefits of technology forecasting

▪ Techniques of technology forecasting

▪ Comparison of techniques

▪ Common mistakes and pitfalls

 Learning Outcomes

▪ Be able to demonstrate understanding on technology forecasting

▪ Be able to differentiate the technology forecasting techniques.

 Technology Forecasting
▪ A group of techniques that predict the direction, character, implication,
rate, and impact of technological advances.
-[according to Vanston]
▪ A prediction of the future characteristics of useful machines,
procedures, and or techniques.
-[according to Martino]

▪ Anticipation of the character, intensity, and timing of changes in

technology.
-[according to Porter]
 Introduction to Technology Forecasting
❑ A planning tool or technique applied to predict:
▪ The potential direction at which technology change is taking place.
▪ The rate of technology transfer.
▪ The effects of technological change on process, products, market, society, etc.,

❑ The forecast is not an attempt to predict how these characteristics will be achieved,
and is not oriented towards profitability.
❑ The benefit and value of technological forecasting lie in its contribution to planning
and decision making.
❑ Decision-makers are concerned about the desirable and undesirable effects of fast
growing technologies.
 Necessity of Technology Forecasting?
▪ It is indispensable – “absolutely necessary”
▪ It improves Quality and Decision making

▪ Scanning the technological environment

▪ Anticipating emerging technological changes

▪ Identifying suitable technologies by evaluating various alternatives

▪ Planning for future technology needs.
 Role of Technology Forecasting
▪ Identifies limits beyond which it is not possible to go.

▪ Establish a feasible rate of progress.

▪ Describe the available alternatives and those which can be chosen from.

▪ Provide reference standard for the plan. The plan can be compared with the
forecast at any point in time to determine whether it can still be done.

▪ Indicate possibilities that might be achieved, if desired.

▪ Furnish warning signals, which can alert the decision maker regarding the
impossibility to continue present activities.
 Benefits of Technology Forecasting
▪ Increased competition in the global market for innovative and cost competitive
products. Forecasting helps to incorporate technological changes into strategic
planning process.
▪ 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 rapid changing market requirements.
▪ Identify suitable technologies by evaluating various alternatives.
▪ To provide suggestions for future research (R&D) projects.
▪ To invest scarce funds in emerging technologies.
▪ To analyse the effect of technology on the socio-economic aspects of society.
Technology Forecasting Model
• Viewed as Input – Process – Output System
 Elements of Technology Forecasting
There are four basic elements in a technology forecast;

1. Time period

2. Qualitative

3. Quantitative

4. Probability of occurrence.
 Elements of Technology Forecasting
Time period - deals with resource-time relationship and may be stated
generally or given precisely.
Qualitative - attempts to identify the factors that are likely to change
the activities or technology trends in areas of interest to the forecaster.
Quantitative - attempts to measure quantitatively and assess the level
of performance of various technologies.
Probability of occurrence - attempts to predict different alternatives
and its confidence level, like as high or low.
 Objectives of Technology Forecasting
▪ First step in a technology forecasting project is to determine
the purpose the forecast is to serve.

▪ Vanston suggests five purposes;

1. Projections of the rates at which new technologies will replace

older ones
❑ Important to companies dependent on the old as well as the new
technology.
 Objectives of Technology Forecasting

▪ Vanston suggests five purposes;

2. Assistance in the Management of Technical Research and

Development
❑ Forecasting the technology emergence process can facilitate
allocation of R&D resources.

3. Evaluation of the Present Value of Technology Under

Development
❑ Forecasting the commercial value of a technology in the
development process.
Objectives of Technology Forecasting
▪ Vanston suggests five purposes;

4. Identification and Evaluation of New Products or Processes

that May Present the Organization with New
Opportunities or Threats
❑ Forecasting new business opportunities or threats to present markets.

5. Analysing of New Technical Developments that Might

Change Organizational Strategies or Operations
❑ Forecasting technology that might change the internal operations of
the organization itself.
 Technology Forecasting Methods
(techniques)
❑ The two methods of technology forecasting:

▪ Exploratory: is based upon the past and the present knowledge and
oriented towards the future.

▪ Normative: first sets up the future needs and objectives and then
specifies the means to achieve them.
Technology Forecasting Methods
 Technology Forecasting Methods
(techniques)
❑ Exploratory methods:

▪ Intuitive method: based on the ability of one or more experts in their

respective areas to forecast the future possibilities.
▪ Extrapolation: making statistical forecasts by using historical trends that are
projected for a specified period of time into the future.
▪ Technology monitoring: monitoring breakthroughs through precursor events.
▪ Growth curves: 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.
 Brainstorming Technique

❑ Exploratory methods:

▪ Intuitive method:
o Brainstorming (5 to 10 members):
➢Involves a group of people under a leader encouraging forecasting about a specific
technology by collecting/contributing all the ideas simultaneously.
➢Major objective is to stimulate the generation of ideas on a give technology.
➢Ideas are analysed and evaluated in depth.
➢Least favoured ideas are rejected.
➢Preferred ideas are analysed and forecasts are prepared in consultation with functional
expects.
 Brainstorming Technique
❑ Steps involved in Brainstorming technique:

▪ Step 1: Identification of a group leader.

▪ Step 2: Identification of a problem by the group.
▪ Step 3: Definition and redefinition of the problem.
▪ Step 4: Idea generation process is initiated.
▪ Step 5: The recorded ideas are reviewed, classified and streamlined clusters.
▪ Step 6: Rearranged ideas are evaluated, through reverse brainstorming.
 Brainstorming Technique
❑ An effective brainstorming group comprises of:
▪ Users of technology
▪ Experts, knowledgeable in technology
▪ Experts, knowledgeable about market
▪ Economists/financial analyst
▪ Dreamers with ideas
▪ Persuaders who can help acceptance of an idea technology forecasters
▪ Consultants.
 Brainstorming Technique
❑ Applications of brainstorming:

▪ For obtaining new ideas of products/process/services/procedures.

▪ For identifying new users or market segments.

▪ For overcoming bottlenecks.

▪ For identifying alternative options or methods.

 Brainstorming Technique
❑ Exploratory methods:

▪ Intuitive method:

o Brainstorming [Advantages and disadvantages]:

➢It is easy to organise, and resources needed are modest.

➢The disadvantage of this method is that, sufficient time is required.

➢The other disadvantage is that, an experienced leader is needed to conduct the technique.
 Delphi Technique
❑ Delphi technique is resort to when:

1. The is no historical data, especially situations in which new technologies are

involved; expect opinion is the only possible source for a forecast,

2. Impact of the external factors is more important than the factors that govern
the previous development of the technology. Under this condition,
forecast using past data is irrelevant.

3. Ethical considerations rather than technical and economic considerations

govern the development of a technology.
 Delphi Technique
An objective forecast should have a sound
logical framework to ensure its repeatability.
 Delphi Technique
❑ Exploratory methods:

▪ Intuitive method:
o Delphi “programmed, sequential questionnaire” approach:
➢A core group of experts prepare questions regarding the desirability of technology
development, its feasibility and impact, time frame, resources required etc.

➢The questions are then later sent through mail to a panel of experts in the relevant field to
forecast events or trends regarding the issue.

➢Experts opinions and responses are collected, summarized and any irrelevant material is
removed, based on the common viewpoints.
 Delphi Technique
❑ Exploratory methods:

▪ Intuitive method:
o Delphi:
➢It provides opportunities for experts for the desired changes and revisions between
subsequent rounds of questionnaire.

➢The is no interaction between panel members and as such individual members need not
worry about their opinions.

➢The technique has the ability to produce a high degree of convergence towards a consensus
forecast.
 Delphi Technique
❑ Steps involved in Delphi technique:

▪ Step 1: Identify the specific area in which Delphi exercise has to be carried out.
▪ Step 2: Identify a set of users, technology experts who can help prepare questions.
▪ Step 3: Form a small core group to prepare the questionnaire with the help of experts.
▪ Step 4: the questionnaire is administered to a wide variety of participants.
▪ Step 5: The first round responses are obtained and processed.
▪ Step 6: the second round questionnaire, of the processed responses of the first round
questionnaire is sent back to the participants to give their revised comments.
▪ Step 7: the second round results are then processed to get the consensus results.
 Delphi Technique
❑ Applications of the Delphi technique:

▪ Identify new factors likely to influence the future state of technological development,

▪ Obtain probabilistic estimates of technological performance over a specified time,

▪ Obtain forecasts of a time scale for an event where other methods cannot be used,

▪ Ascertain the feasibility of a given event occurring under specified conditions,

▪ Obtain subjective quantitative measures of technological performance in the absence of

objective data.
 Delphi Technique
❑ Advantages:
▪ Obtaining forecasts when there is a limited amount of historical data.
▪ For highly interactive and interdisciplinary fields involving diverse parameters.

❑ Disadvantages:
▪ Does not have any ‘logic’ underlying each prediction, and if repeated, it may not give
reproducible results,
▪ Although it may produce a high degree of convergence, yet this convergence does not
imply a high degree of reliability.
 Scenario Writing Technique
❑ Exploratory methods:

▪ Intuitive method:
o Scenario Writing:
➢Usually preferred when the company’s long-term future is far too difficult to
predict.

➢Or when quantitative forecasting methods may be inadequate for forecasting.

➢The forecaster starts with different sets of assumptions, and for each assumption, a
likely scenario of the business outcome is charted.
 Scenario Writing Technique
❑ Exploratory methods:

▪ Intuitive method:
o Scenario Writing:
➢The forecaster thus generates several different future scenarios corresponding to
different sets of assumptions allowing the decision maker to decide which
scenario is most likely to prevail.

➢This technique gives three different study alternatives from the one that is the best,
to the middle one and the worst case scenario.
 Scenario Writing Technique
❑ Exploratory methods:
▪ Technology Monitoring method:
➢It can be used for monitoring breakthroughs through forerunner events.

➢The major steps involved in technology monitoring are:

• Scanning involves collecting as much information that is available on the

particular field of technology.
 Business Activity and TF Technique
Business Activity Technology forecasting technique
•Expert opinion, •Panels
i) Searching for relevant Scenario •Brainstorming, •Delph
•Technology monitoring, •Scenario development

ii) Searching for trends among •Extrapolation

parameters •Growth curves
•Substitution
iii) Searching for alternatives •Relevance tree
among various choices to reach a •Morphology, •Cross impact analysis
goal •Dynamic modelling & simulation

iv) Identify implications for action •Expert consultation, •Scenario building

•Modelling & simulation
 Comparison of Techniques

The choice of selecting the technique to use depends on the following

factors;

▪ Purpose for which the forecast is being made,

▪ Reliability needed for the forecast,

▪ Precision of the available data,

▪ The time frame for the forecast.

 Common mistakes and pitfalls
The common mistake and/pitfalls in technological forecasting:

▪ Failure to use appropriate data.

▪ Selecting a wrong technique,

▪ Lack imagination in the form of reliance on limited information.

▪ Biases introduced by personal factors.

Summary
 Next Lecture

Intellectual Property
Rights (IPR)
The End!!