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270624_Lesson_1_Tech_Innov_Mgmt

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realhulk1528
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TECHNOLOGY AND

INNOVATION Lesson #1
By Shashank Verma

MANAGEMENT
AGENDA
Concepts of Technology
Nature of Technological Change
Economics of Technology
Technology Ecosystem and Linkages
Concepts of Technology
DEFINITION AND SCOPE
What is the difference between:
- Science
- Technology
- Innovation
DEFINITION AND SCOPE Example

Science
Science is the systematic study of the natural world through
observation, experimentation, and theoretical explanation .

Semiconductor Physics
Technology
Technology is the application of scientific knowledge and
principles to create tools, systems, and devices that
solve practical problems and improve human life.

Innovation Microprocessor
Innovation is the process of creating new or
significantly improved products, services, processes,
or business models that provide value to society,
businesses, or individuals.

Cloud Computing
TECHNOLOGY LIFE CYCLE
 Introduction, Growth, Maturity, and Decline phases.
Nature of Technological Change
DRIVERS OF
TECHNOLOGICAL CHANGE

R&D Market Demand Regulation Collaboration


TYPES OF
TECHNOLOGICAL CHANGE
How does technology evolve?
1. Incremental
Small improvements over time 2. Disruptive
- Revolutionary technology
- Has the potential to change the
status quo
- However, it is quite primate
initially
- Takes time to get adopted, as it
needs other technologies to
develop
DISRUPTIVE TECHNOLOGY

In 1905, horse carriages were By 1910, cars become the primary


the primary mode of mode of transportation replacing
transportation horse carriages
EXAMPLES OF DISRUPTIVE
TECHNOLOGY

Telephone Light Bulb Automobile Computer

Internet Smart Phone


EXAMPLES OF DISRUPTIVE
TECHNOLOGY
1. They are quite primitive
initially
2. They take time to
disrupt the status quo
3. Need the development
of other technologies

First Computer
DISRUPTIVE TECHNOLOGY
What was the computing power of the AGC?

Apollo – 11 Mission Apollo Guidance Controller (AGC)


Apollo Guidance Controller Smart phone
RAM 4 KB RAM 16 GB
ROM 72 KB ROM 2 GB
Processing Speed 2 MHZ Processing Speed 1.8 GHZ
DIFFUSION OF TECHNOLOGY
DIFFUSION OF TECHNOLOGY
Penetration of Technology

S-Curve
DIFFUSION OF TECHNOLOGY
DISRUPTIVE TECHNOLOGIES
- EXAMPLES
Economics of Technology Management
ECONOMIC IMPACT OF
TECHNOLOGY
What does bringing a new technology do?

Productivity Increase Costs Savings New Markets


ECONOMIC IMPACT OF
TECHNOLOGY
What does innovation do?

- Innovation allows to capture new


markets and have a monopolistic
position
- Each Innovation rewards the
innovation with market power that
rewards the innovator with
supernormal profits
ECONOMIC IMPACT OF
TECHNOLOGY These companies went out of business
What did iPhone do to the mobile phone market?

Blackberry Nokia Motorola


ECONOMIC IMPACT OF
TECHNOLOGY
What if you don’t innovate?
• Kodak went out of business in 2012
• The market shifted from films to
digital cameras and phone cameras
ECONOMIC IMPACT OF
TECHNOLOGY
How do you decide whether to invest in a
technology?

Productivity Increase Costs Savings New Markets

Decreases Costs Increases Revenues


ECONOMIC IMPACT OF
TECHNOLOGY
Assessing the financial viability of adopting new technology.

NPV IRR Payback Cost Benefit


Period Analysis

Scenario
Analysis
NPV EXAMPLE
XYZ Manufacturing Company is considering expanding its operations by
investing in a new production line. The company has estimated the
following financial details for the project:
Initial Investment: $1,000,000
Project Duration: 5 years
Annual Cash Inflows:
 Year 1: $200,000
 Year 2: $250,000
 Year 3: $300,000
 Year 4: $350,000
 Year 5: $400,000

Discount Rate: 10%


Calculate the NPV
NPV EXAMPLE
NPV Calculation:
Year 1: 200,000/1.10=181,818
Year 2: 250,000/1.21=206,612
Year 3: 300,000/1.331=225,409
Year 4: 350,000/1.4641=239,122
Year 5: 400,000/1.61051=248,422
Total PV of Cash Inflows: $1,101,383
NPV: $1,101,383 - $1,000,000 = $101,383
NPV is Positive, so we should go ahead with the project
BREAK-EVEN ANALYSIS
Calculate the break-even point where total revenues equal total
costs. For simplicity, assume fixed costs and variable costs per unit
are as follows:
Fixed Costs: $600,000
Selling Price per Unit: $50
Variable Cost per Unit: $30
Answer
$600,000 / (50 – 30) = 30,000 units
BREAK-EVEN ANALYSIS
Calculate the break-even point where total revenues equal total
costs. For simplicity, assume fixed costs and variable costs per unit
are as follows:
Fixed Costs: $600,000
Selling Price per Unit: $50
Variable Cost per Unit: $30
Answer
$600,000 / (50 – 30) = 30,000 units
COST BENEFIT ANALYSIS
Calculate the break-even point where total revenues equal total
costs. For simplicity, assume fixed costs and variable costs per unit
are as follows:
Fixed Costs: $600,000
Selling Price per Unit: $50
Variable Cost per Unit: $30
Answer
$600,000 / (50 – 30) = 30,000 units
COMPARISON
NPV (Net IRR (Internal
Break-even Cost-Benefit
Criteria Present Rate of
Analysis Analysis
Value) Return)
Difference Discount rate Compares the
Point where
between the that makes the benefits of a
total revenues
Definition present value NPV of all cash decision or
equal total
of cash inflows flows equal to project to its
costs
and outflows zero costs
Determine the
Evaluate Assess Evaluate the
minimum
profitability profitability economic
Purpose output level
and value and efficiency worthiness of a
needed to
addition of investments project
cover costs
Sum of Fixed costs /
Rate that sets
discounted (Selling price Ratio of total
NPV to zero
Calculation cash flows per unit - benefits to
using cash
minus initial Variable cost total costs
flows
investment per unit)
Technology Ecosystem and Linkages
TECHNOLOGY
ECOSYSTEM

Stakeholders Infrastructure Policies and Regulations


TECHNOLOGY
ECOSYSTEM

Stakeholders Infrastructure Policies and Regulations


• Companies, Physical, Make in India
• Startups, Digital, and PLI (Production Linked Incentive)
• Investors, Financial
• Universities,
• Government
bodies,
• Customers
TECHNOLOGY
ECOSYSTEM
Exercise
- How has the UPI Ecosystem helped innovation in India?

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