Technology and Innovation

Technology and Innovation is a featured research topic at Harvard Business School.

The early works of William Abernathy on roadblocks to innovation and Richard Rosenbloom on technology and information transfers in the 1960's and 1970's started the Technology Strategy field and helped pave the path for our research today, which focuses on value creation of platforms and two-sided markets; use of open architecture and leverage of its collective value; development and execution of innovation strategies; innovative attributes of executives and firms; development of new markets through the creation of disruptive innovations that displace earlier technologies; development of innovations in sectors; and the impact of innovation on economic growth.

Featured Works

Article | Management Science | December 2014
The Distinct Effects of Information Technology and Communication Technology on Firm Organization
Nicholas Bloom, Luis Garicano, Raffaella Sadun and John Van Reenen
Empirical studies on information communication technologies (ICT) typically aggregate the "information" and "communication" components together. We show theoretically and empirically that this is problematic. Information and communication technologies have very different effects on the decisions taken at each level of an organization. Better information access pushes decisions down, as it allows for superior decentralized decision making without an undue cognitive burden on those lower in the hierarchy. Better communication pushes decisions up, as it allows employees to rely on those above them in the hierarchy to make decisions. Using an original dataset of firms from the U.S. and seven European countries we study the impact of ICT on worker autonomy, plant manager autonomy, and span of control. Consistent with the theory, we find that better information technologies (Enterprise Resource Planning, ERP, for plant managers and CAD/CAM for production workers) are associated with more autonomy and a wider span of control. By contrast, communication technologies (like data networks) decrease autonomy for both workers and plant managers. Treating technology as endogenous using instrumental variables (distance from the birthplace of ERP and heterogeneous telecommunication costs arising from different regulatory regimes) strengthens our results.
Keywords: Communication Technology; Information Technology; Organizational Structure;

Citation:
Bloom, Nicholas, Luis Garicano, Raffaella Sadun, and John Van Reenen. "The Distinct Effects of Information Technology and Communication Technology on Firm Organization." Management Science 60, no. 12 (December 2014): 2859–2885. View Details
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Working Paper | HBS Working Paper Series | 2014
Bridging Science and Technology Through Academic-Industry Partnerships
Sen Chai and Willy C. Shih
Scientific research and its translation into commercialized technology is a driver of wealth creation and economic growth. Partnerships to foster the translational processes from public research organizations, such as universities and hospitals, to private firms are a policy tool that has attracted increased interest. Yet questions about the efficacy and the efficiency with which funds are used are subject to frequent debate. This paper examines empirical data from the Danish National Advanced Technology Foundation (DNATF), an agency that funds partnerships between universities and private companies to develop technologies important to Danish industry. We assess the effect of a unique mediated funding scheme that combines project grants with active facilitation and conflict management on firm performance, comparing the likelihood of bankruptcy and employee count as well as patent count, publication count and their citations and collaborative nature between funded and unfunded firms. Because randomization of the sample was not feasible, we address endogeneity around selection bias using a sample of qualitatively similar firms based on a funding decision score. This allows us to observe the local effect of samples in which we drop the best recipients and the worst non-recipients. Our results suggest that while receiving the grant does bring an injection of funding that alleviates financing constraints, its core effect on the firm's innovative behavior is in fostering collaborations and translations between science and technology and encouraging riskier projects rather than purely increasing patenting.
Keywords: innovation; firm performance; public-private partnership funding; translational research; small and medium enterprises; Partners and Partnerships; Public Sector; Private Sector; Performance; Science-Based Business; Innovation and Invention;

Citation:
Chai, Sen, and Willy C. Shih. "Bridging Science and Technology Through Academic-Industry Partnerships." Harvard Business School Working Paper, No. 13-058, January 2013. (Revised July 2014.) View Details
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Article | Emotion | April 2014
Botsourcing and Outsourcing: Robot, British, Chinese, and German Workers Are for Thinking—Not Feeling—Jobs
Adam Waytz and Michael I. Norton
Technological innovations have produced robots capable of jobs that, until recently, only humans could perform. The present research explores the psychology of "botsourcing"—the replacement of human jobs by robots—while examining how understanding botsourcing can inform the psychology of outsourcing—the replacement of jobs in one country by humans from other countries. We test four related hypotheses across six experiments: (1) Given people's lay theories about the capacities for cognition and emotion for robots and humans, workers will express more discomfort with botsourcing when they consider losing jobs that require emotion versus cognition; (2) people will express more comfort with botsourcing when jobs are framed as requiring cognition versus emotion; (3) people will express more comfort with botsourcing for jobs that do require emotion if robots appear to convey more emotion; and (4) people prefer to outsource cognition-oriented versus emotion-oriented jobs to other humans who are perceived as more versus less robotic. These results have theoretical implications for understanding social cognition about both humans and nonhumans and practical implications for the increasingly botsourced and outsourced economy.
Keywords: Technology; Job Cuts and Outsourcing; Emotions; Cognition and Thinking;

Citation:
Waytz, Adam, and Michael I. Norton. "Botsourcing and Outsourcing: Robot, British, Chinese, and German Workers Are for Thinking—Not Feeling—Jobs." Emotion 14, no. 2 (April 2014): 434–444. View Details
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Article | Harvard Business Review
Digital Ubiquity: How Connections, Sensors, and Data Are Revolutionizing Business
Marco Iansiti and Karim R. Lakhani
When Google bought Nest, a maker of digital thermostats, for $3.2 billion just a few months ago, it was a clear indication that digital transformation and connection are spreading across even the most traditional industrial segments and creating a staggering array of business opportunities and threats. The digitization of tasks and processes has become essential to competition. General Electric, for example, was at risk of losing many of its top customers to nontraditional competitors—IBM and SAP on the one hand, big data start-ups on the other—offering data-intensive, analytics-based services that could connect to any industrial device. So GE launched a multibillion-dollar initiative focused on what it calls the industrial internet: adding digital sensors to its machines; connecting them to a common, cloud-based software platform; investing in software development capabilities; building advanced analytics capabilities; and embracing crowd-based product development. With all this, GE is evolving its business model. Now, for example, revenue from its jet engines is tied to reduced downtime and miles flown over the course of a year. After just three years, GE is generating more than $1.5 billion in incremental income with digitally enabled, outcomes-based business models. The company expects that number to double in 2014 and again in 2015.
Keywords: Digital Innovation; digitization; industrial internet; Technological Innovation; Production; Competitive Strategy; Engineering; Aerospace Industry;

Citation:
Iansiti, Marco, and Karim R. Lakhani. "Digital Ubiquity: How Connections, Sensors, and Data Are Revolutionizing Business." Harvard Business Review 92, no. 11 (November 2014): 90–99. View Details
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Working Paper | HBS Working Paper Series | 2016
Building the Agile Enterprise: IT Architecture, Modularity and the Cost of IT Change
Alan MacCormack, Robert Lagerstrom, David Dreyfus and Carliss Y. Baldwin
Recent contributions to information systems theory suggest the primary role of a firm’s IT architecture is to facilitate agility, ensuring the continued alignment of a firm’s capabilities with a changing business environment. Despite advances in our understanding of the role of IT, however, we lack robust empirical data on the precise mechanisms by which IT architecture impacts agility. As a result, it is difficult to identify specific managerial actions that can improve a firm’s architecture and thereby lower the cost of responding to changing future demands. We address this gap in the literature by exploring the relationship between IT architecture and IT agility at the level of the individual components in the architecture. In particular, we draw upon modular systems theory to develop and test a series of propositions about the impact of component coupling on the cost of IT change. Our methods make use of “Design Structure Matrices” (DSMs), a novel network analysis technique that addresses the limitations of prior work in this area. DSMs allow us to i) identify discrete layers in the IT architecture associated with different types of components and ii) capture data on the dependencies between components, hence assessing their relative levels of coupling and position within the architecture. We test our propositions using empirical data from a large pharmaceutical firm encompassing 407 architectural components and 1,157 dependencies between them. We show that different components occupy different positions in the IT architecture and possess different levels of coupling. We find measures of coupling predict IT agility—defined as the cost of making changes to software applications. The measure of coupling that best predicts agility is one that captures all direct and indirect connections between components (i.e., it captures the potential for changes to propagate via all possible paths between components). Our results reveal that different business groups within the firm face different costs of adaptation, deepening our understanding of the roots of organizational agility.
Keywords: Information Technology; Organizations; Pharmaceutical Industry;

Citation:
MacCormack, Alan, Robert Lagerstrom, David Dreyfus, and Carliss Y. Baldwin. "Building the Agile Enterprise: IT Architecture, Modularity and the Cost of IT Change." Harvard Business School Working Paper, No. 15-060, January 2015. (Revised August 2016.) View Details
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Working Paper | HBS Working Paper Series | 2014
The Decoupling Effect of Digital Disruptors
Thales S. Teixeira and Peter Jamieson
While the Internet's first wave of disruption was marked by the unbundling of digital content, the second wave, decoupling, promises to generate more casualties in an even broader array of industries. Digital start-ups are disrupting traditional businesses by inserting themselves at every juncture in the customer's consumption chain. By decoupling—the act of separating activities that people are used to co-consuming—new digital businesses are disrupting retailing, telecom and other industries. Decoupling allows consumers to benefit from the value created at a lower cost or effort compared to what is delivered by traditional businesses. For those companies, the only solutions are to either recouple activities or rebalance to create and capture value (i.e., revenues) from both activities separately. Here, digital technologies can be seen as an instrument that will both disrupt traditional business models and potentially preserve them.
Keywords: Disruptive Innovation; Information Technology;

Citation:
Teixeira, Thales S., and Peter Jamieson. "The Decoupling Effect of Digital Disruptors." Harvard Business School Working Paper, No. 15-031, October 2014. View Details
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Recent Publications

Case | HBS Case Collection | February 2018
Amazon, Google, and Apple: Smart Speakers and the Battle for the Connected Home
Rajiv Lal and Scott Johnson
Amazon, Google, and Apple all offer their own smart speaker. The devices represent each firm's entry point into the connected home market. All three companies come into the space with their own strenghs and weaknesses. Who will win?
Keywords: Apple; Apple Inc.; google; Amazon; Amazon.com; google home; homepod; echo; smart home; connected home; voice; artificial intelligence; Machine learning; Internet of Things; smart speaker; connected speaker; intelligent assistants; virtual assistants; voice assistants; alexa; google assistant; siri; Technological Innovation; Disruptive Innovation; Competitive Strategy; Business Strategy; Adoption; Hardware; Information Technology; Internet; Mobile Technology; Search Technology; Software; Technology Adoption; Technology Platform; Household; Electronics Industry; Technology Industry; United States;

Citation:
Lal, Rajiv, and Scott Johnson. "Amazon, Google, and Apple: Smart Speakers and the Battle for the Connected Home." Harvard Business School Case 518-035, February 2018. View Details
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Working Paper | HBS Working Paper Series | 2018
Different Strokes for Different Folks: Experimental Evidence on Complementarities Between Human Capital and Machine Learning
Prithwiraj Choudhury, Evan Starr and Rajshree Agarwal
The advent of artificial intelligence in the form of machine learning technologies ushers new questions regarding the pace at which it may substitute both older technology vintages and human capital. Rather than assuming superior productivity of one vintage over another, we examine contingency effects on productivity by heterogeneity in prior specialized knowledge bases in complementary human capital and provision of concurrent expert advice. Within the research context of patent examination by the U.S. Patent and Trademark Office, which has developed both machine learning and Boolean search technologies, we hypothesize that absorptive capacity from skill-technology matches will result in higher productivity, and these effects will be stronger in the presence of expert advice constituting technology and task specific information. We test and find support for our hypotheses using experimental methods that permit causal inferences and examination of underlying mechanisms. Our study contributes to literature streams on artificial intelligence, endogenous technological change, and strategic management of the pace of technological substitution by providing insights on complementarities between technologies and horizontally differentiated human capital.
Keywords: Technological Innovation; Human Capital; Performance Productivity; Technology Adoption;

Citation:
Choudhury, Prithwiraj, Evan Starr, and Rajshree Agarwal. "Different Strokes for Different Folks: Experimental Evidence on Complementarities Between Human Capital and Machine Learning." Harvard Business School Working Paper, No. 18-065, January 2018. View Details
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Case | HBS Case Collection | January 2018
STRIVR: Changing the Game in Virtual Reality
Rajiv Lal, Matt Denison, Robert Higgins and Scott Johnson
The CEO of a growing virtual reality company that trains athletes must decide whether or not to stay in sports or expand into other areas.
Keywords: Virtual reality; strivr; Internet of Things; football; retail; training; Startup; start-up; Start-up growth; Sports; ＂sports organizations,; experiential marketing; Business Startups; Technological Innovation; Sports; Hardware; Software; Technology Platform; Technology Adoption; Sports Industry; Technology Industry; Retail Industry; United States;

Citation:
Lal, Rajiv, Matt Denison, Robert Higgins, and Scott Johnson. "STRIVR: Changing the Game in Virtual Reality." Harvard Business School Case 518-048, January 2018. View Details
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Case | HBS Case Collection | January 2018
AT&T: Managing Technological Change and the Future of Telephone Operators in the 20th Century
Daniel P. Gross and William R. Kerr
By the 1930s, AT&T dominated the American phone industry, serving 10 million telephones and employing over 100,000 switchboard operators. But beginning in the mid-1910s, the company began changing from manually-operated switchboards to mechanical switching systems that were faster and more cost-effective and did not require human operators. By the 1930s, the changeover has been completed or is underway in most American cities with over 50,000 people. The rollout of the new technology is garnering a good deal of public attention, not just for the unfamiliar new “dialing” process that customers are required to learn, but also because of the mass layoffs of the women who served as operators. The job cuts have even resulted in reports from the Department of Labor and Congressional hearings. As the rollouts continue across the country, AT&T questions how to handle the layoffs and the reaction to the new system.
Keywords: AT＆T; Bell Telephone; phone lines; phone operators; mechanical switching; disruption; layoffs; technological change; Transition; History; Innovation and Invention; Technological Innovation; Technology; Disruption; Change Management; Communications Industry; Telecommunications Industry; United States;

Citation:
Gross, Daniel P., and William R. Kerr. "AT&T: Managing Technological Change and the Future of Telephone Operators in the 20th Century." Harvard Business School Case 718-486, January 2018. View Details
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Article | Research-Technology Management | November–December 2017
Innovation Streams and Executive Leadership
Michael Tushman
Incumbent firms face steep challenges in dealing with technological change and associated innovation streams. The firm's senior leadership team, and especially R&D leadership, plays a central role in shaping a firm's ability to both exploit existing capabilities and explore new technological domains.
Keywords: Ambidexterity; exploit vs. explore; dynamic capabilities; Organizational Change and Adaptation; Technology Adoption; Innovation Leadership;

Citation:
Tushman, Michael. "Innovation Streams and Executive Leadership." Research-Technology Management 60, no. 6 (November–December 2017): 42–47. View Details
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Working Paper | HBS Working Paper Series | 2017
Threat of Platform-Owner Entry and Complementor Responses: Evidence from the Mobile App Market
Wen Wen and Feng Zhu
We examine how app developers on the Android mobile platform adjust their innovation efforts (rate and direction) and value-capture strategies in response to Google’s entry threat and actual entry into their markets. We find that, after Google’s entry threat increases, affected developers reduce innovation and raise the prices for the affected apps. Once Google enters, the developers reduce innovation and increase prices further. However, app developers’ incentives to innovate are not completely suppressed; rather, they shift innovation to unaffected and new apps. Given many apps already offering similar features, Google’s entry may reduce such social inefficiency.
Keywords: platform-owner entry; entry threat; innovation; complementors; mobile app industry; Mobile Technology; Innovation Strategy; Market Entry and Exit;

Citation:
Wen, Wen, and Feng Zhu. "Threat of Platform-Owner Entry and Complementor Responses: Evidence from the Mobile App Market." Harvard Business School Working Paper, No. 18-036, October 2017. View Details
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Case | HBS Case Collection | October 2017 (Revised January 2018)
Bitfury: Blockchain for Government
Mitchell Weiss and Elena Corsi
In the Republic of Georgia, legend had it their land was a precious gift from God he had intended to keep for his mother. But over time, the land had been under intermittent threat from without and within. In 2017, the Bitfury Group, which Valery Vavilov had co-founded, had helped publish 300,000 Georgian land titles onto the blockchain, making them immutable and, many believed, unhackable. What came next, Vavilov’s team envisioned, were smart purchase and sale contracts via the blockchain; and from there, a full suite of property-related services and, eventually, blockchain as the foundation for a transformation in government services. Vavilov, who had co-founded Bitfury and expanded it substantially from its bitcoin mining roots, felt a blockchain-driven makeover of this sort would take place not just in Georgia's government but also around the world. It was not a matter of "if?" anymore; although that still left the question of "when?"
Keywords: Blockchain; Bitcoin; cryptocurrency; public entrepreneurship; public innovation; government innovation; property rights; property registry; entrepreneurship; Georgia; Tbilisi; technology strategy; distributed networks; Entrepreneurship; Innovation and Invention; Technology Adoption; Business and Government Relations; Technology Industry; Real Estate Industry; Public Administration Industry; Georgia (nation, Asia);

Citation:
Weiss, Mitchell, and Elena Corsi. "Bitfury: Blockchain for Government." Harvard Business School Case 818-031, October 2017. (Revised January 2018.) View Details
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Case | HBS Case Collection | September 2017
Tencent
John R. Wells and Gabriel Ellsworth
Tencent had undergone many transformations since it was founded in 1998 as a simple messaging service. In 2017, it was the largest online games provider in China with a wide range of game types, China’s largest social networking service provider with several of the largest social networking applications in the world, and China’s favorite Internet portal. It was challenging Alibaba’s Alipay as the leader in online payments systems, and it had established strategic relationships with many service providers to help exploit new opportunities in online-to-offline (O2O) services and leverage its huge user base in e-commerce and search. However, there was no room for complacency. Competition from the other big local Internet companies such as Baidu and Alibaba was fierce, and there were always thousands of start-ups looking to enter the sector. Founder and CEO Ma Huateng (“Pony” Ma) remarked, “In America, when you bring an idea to market you usually have several months before competition pops up, allowing you to capture significant market share. In China, you can have hundreds of competitors within the first hours of going live. Ideas are not important in China—execution is.”
Keywords: Tencent; Tencent Holdings; WeChat; social networking; social networks; gaming; gaming industry; Video Games; computer games; mobile gaming; portals; payments; mobile payments; O2O; online-to-offline; e-commerce; messaging; subscription model; freemium; mobile app industry; smartphone; PC; monetization strategy; antitrust; streaming; Cloud Computing; artificial intelligence; big data; Alibaba; Facebook; JD.com; Tesla; bundling; synergies; digital strategy; imitation; licensing; Agility; entry barriers; online platforms; Advertising; Online Advertising; Business Ventures; Acquisition; Mergers and Acquisitions; Business Conglomerates; Business Units; Business Growth and Maturation; Business Organization; For-Profit Firms; Joint Ventures; Restructuring; Communication; Communication Technology; Blogs; Interactive Communication; Interpersonal Communication; Entertainment; Film Entertainment; Games, Gaming, and Gambling; Music Entertainment; Investment; Investment Portfolio; Price; Profit; Revenue; Geographic Scope; Cross-Cultural and Cross-Border Issues; Global Strategy; Multinational Firms and Management; Globalized Markets and Industries; Business History; Innovation Strategy; Technological Innovation; Business or Company Management; Goals and Objectives; Growth and Development Strategy; Product Positioning; Social Marketing; Network Effects; Emerging Markets; Market Entry and Exit; Market Platforms; Two-Sided Platforms; Industry Growth; Monopoly; Media; Distribution Channels; Product Development; Service Delivery; Organizational Change and Adaptation; Organizational Structure; Public Ownership; Problems and Challenges; Business and Government Relations; Groups and Teams; Networks; Opportunities; Social and Collaborative Networks; Strategy; Adaptation; Business Strategy; Commercialization; Competition; Competitive Advantage; Competitive Strategy; Cooperation; Corporate Strategy; Diversification; Expansion; Horizontal Integration; Vertical Integration; Segmentation; Information Technology; Internet; Mobile Technology; Online Technology; Search Technology; Software; Technology Networks; Technology Platform; Web; Web Sites; Wireless Technology; Value Creation; Communications Industry; Entertainment and Recreation Industry; Financial Services Industry; Information Industry; Information Technology Industry; Media and Broadcasting Industry; Motion Pictures and Video Industry; Music Industry; Service Industry; Technology Industry; Telecommunications Industry; Video Game Industry; Web Services Industry; Asia; China; Canton (province, China);

Citation:
Wells, John R., and Gabriel Ellsworth. "Tencent." Harvard Business School Case 718-426, September 2017. View Details
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Case | HBS Case Collection | September 2017 (Revised March 2018)
Chai Point: Disrupting Chai
Shikhar Ghosh, Ramana Nanda and Rachna Tahilyani
Chai Point is India’s largest organized chai retailer. It has missed its target for retail store openings by approximately 25%, goals that are very important to its investors who are also board members. However, it has developed an exciting new internet-based tea dispenser that has the potential to dramatically increase Chai Point’s market opportunity and growth rate but can be seen as a change in their growth strategy. The founder needs to decide his strategy for his next board meeting. Should he focus on past performance? Or should he spend time outlining boxC.in’s technology and potential, since this will be the first time that the institutional investors will be seeing this new capability?
Keywords: strategy; venture capital; stock; business model; mobile technology; Technological Innovation; Marketing; Marketing Strategy; Internet; Mobile Technology; Food; Selection and Staffing; Employee Stock Ownership Plan; Resignation and Termination; Compensation and Benefits; Resource Allocation; Product Positioning; Distribution Channels; Product Design; Supply Chain; Governing and Advisory Boards; Food and Beverage Industry; Retail Industry; Asia; India; Karnataka; Bangalore;

Citation:
Ghosh, Shikhar, Ramana Nanda, and Rachna Tahilyani. "Chai Point: Disrupting Chai." Harvard Business School Case 818-020, September 2017. (Revised March 2018.) View Details
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Case | HBS Case Collection | May 2017 (Revised November 2017)
Talent@Tencent
Tarun Khanna, Nancy Hua Dai and Shu Lin
On November 11, 2016, Xi Dan, Senior Vice President of Tencent, and Ma Yongwu, Dean of Tencent Academy, were discussing how Tencent could develop new capabilities to sustain its growth miracle and entry into new technologies, expansion into B2B businesses, and internationalization.
Keywords: Talent and Talent Management; Training; Emerging Markets; Entrepreneurship; Globalization; Human Resources; Innovation and Management; Leadership Development; Business Strategy; Technology; Internet; China;

Citation:
Khanna, Tarun, Nancy Hua Dai, and Shu Lin. "Talent@Tencent." Harvard Business School Case 717-500, May 2017. (Revised November 2017.) View Details
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