Understanding Technology Businesses
Course Number 2173
Professor of Management Practice Willy Shih
Winter; Q3Q4; 3 credits
This course is intended for future managers who will be confronted with understanding the drivers of performance and change in industries in which science or advanced technology play a critical role. These challenges may arise as part of investment or portfolio strategies, consulting work, or the assumption of operational roles. Of special interest is understanding and responding to the creative destruction wrought by major technology shifts. A background in science or engineering is not a prerequisite. This course is targeted at people who recognize that understanding more about technology and science will give them an advantage in managing across these sectors, and they are open to learning about technology. This course will try to give the same level introduction to science-based and technology businesses that the RC Technology and Operations Management course does for operations.
This course aspires to equip future managers with frameworks and insights for guiding the management of science and technology-intensive businesses. The focus will be on what is different about managing technology and science-based businesses, technical professionals, and how to decode complex issues like technology shifts and ask the right questions. Among the questions we seek to address in the course are:
- How do investments in basic scientific research translate into innovative products and services?
- What do I have to do differently to successfully manage a scientific research organization? How do I foster innovation in organizations?
- How do I assess the innovative capabilities of my organization?
- How do I ensure that I capture returns from my investments in innovation?
- Can I foresee value chain evolution and commoditization?
- What are the long-term drivers of my competitiveness?
- How do I manage long time horizon investments?
Unlike the traditional HBS course architecture where we inductively search and discover unifying themes, in this course we adopt a deductive architecture in which we start with widely cited framework papers and apply them in case settings in the technology and sciences sector. We use the readings as lenses to see if they adequately explain what is happening in the circumstances of the case, as well as for recommending what management should or should not do. Thus typical class days have a theory reading and a case. Many of the theory readings are landmark papers from the literature of management research. Others are higher-level overviews prepared specifically for our discussions.
The course is organized as a number of modules:Managing Complexity
In this module we examine a key framework for understanding the structure of much of today's technology sector: modularity and the associated vertical specialization found in many industry value chains. We also look at the concept of abstraction, the isolation of a subsystem or component of a larger system into a reusable component. The technological progression of many industries, especially computer software and semiconductors, can be analyzed as progressive increases in the level of abstraction.Innovation and Industry Evolution
In this module we focus on technological transitions and how innovations force dramatic changes on firms and whole industries. While this is an extremely broad topic, our interests are in focusing on several key questions:
- What is the nature of scientific and technological change, and why is it that outsiders are more likely to recognize them?
- Are there some changes that are readily identifiable that make existing technical configurations obsolete, forcing dramatic change upon incumbent firms?
- Why do firms have difficulty navigating some of these transitions?
- Are there activities an organization can engage in that enhance its ability to spot trends or recognize the importance of new ideas?
In this module we focus on capability building in organizations, looking first at activities that contribute to an organization's ability to assimilate and apply new ideas. In parallel with this, we will also see in our case settings the varied sources where ideas come from, and some of the ways of evaluating them. This is a valuable construct as it applies to M&A as much as to innovation and product development: how do I recognize ideas and trends early so that I can get a jump on my competitors. We then look at several organizations that have been particularly successful in fostering innovation, and try to discern the management principles and methods of their leaders.
We close the module with two sessions specifically focused on intellectual property (IP). This area has drawn considerable interest with some recent high profile patent litigations that have been in the news. We will read a widely cited foundational paper that introduces the ideas of an appropriability regime - how does a firm think about earning economic returns from its investments in innovation, and some of the challenges it faces on this path. We incorporate this material because too often managers leave these issues to the legal department or general counsel rather than taking an active role in IP strategy formulation and execution.Technical Decision-Making
The focus of this module is on the process for making decisions on complex technical subjects. We adopt the point of view of a manager who does not possess deep subject matter expertise, a circumstance that is increasingly likely given the sophistication of the science and technology investments in many organizations. While this does not completely remove the burden of learning something about the subject, we examine processes that organizations have developed for facilitating robust decision-making and seek generalizable lessons around good practices.